Introduction:

In the dynamic world of currency trading, GBP/USD maintains a defensive stance below 1.2250, grappling with the divergence in Fed-BoE policies. Meanwhile, EUR/USD hovers around 1.0650, with a cautious market eyeing developments in the global economy. In the AUD/USD arena, the focus shifts to Australian CPI and US Core PCE data, while USD/JPY remains steady, shadowed by concerns about FX intervention. Stay tuned for these pivotal currency market movements.

GBP/USD:

GBP/USD remains in a defensive position, below 1.2250.

GBP/USD is still in a defensive position below the early Monday mid-1.2200s. While US Treasury bond yields are rising and the US dollar is holding onto its gains from the previous week, the Pound Sterling is weighing the Fed-BoE policy divergence amid a light economic calendar.

GBP/USD extended its decline to the 1.2250 region early on Friday after closing Thursday’s trading session in the red for the second straight day. The pair’s short-term technical picture shows oversold conditions, although a strong rebound may be difficult to achieve.

The BoE is expected to hold off on tightening policy further due to the deteriorating UK economic outlook. Therefore, the expanding policy gap between the Federal Reserve and the BoE may keep the GBP/USD pair in a downward trend.

Technical Overview :

Moving Averages:

Exponential:

• MA 5: 1.2247 | Negative Crossover | Bearish
• MA 20: 1.2329| Negative Crossover | Bearish
• MA 50: 1.2431 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2246 | Negative Crossover | Bearish
• MA 20: 1.2336 | Negative Crossover | Bearish
• MA 50: 1.2452 | Negative Crossover | Bearish

RSI (Relative Strength Index): 24.15 | Sell Zone | Negative

Stochastic Oscillator: 10.82| Sell Zone | Positive

Resistance And Support Levels: 

• R1: 1.2303 | R2: 1.2438
• S1: 1.2197 | S2: 1.2005

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2125 | Take Profit: 1.2005 | Stop Loss: 1.2217

EUR/USD:

Prior to the German IFO survey, the EUR/USD remained in a range of around 1.0650.

In the early European hours of Monday, EUR/USD maintained its range play near 1.0650. Markets remain risk apprehensive as they consider the Fed’s ‘higher-for-longer’ rate outlook and the continuing problems with China’s real estate market. The IFO survey for Germany is being considered. On Thursday, the EUR/USD nearly maintained its day’s performance below 1.0700 before entering a consolidation period around or near 1.0650 early on Friday.

According to figures from Germany and the Eurozone, the private sector’s business activity shrank more slowly in early August than it did in July.

Investors will also pay close attention to how people perceive risk. Wall Street’s major indexes appear to open in positive territory on Friday after a steep two-day fall, with US stock index futures climbing between 0.1% and 0.3%. The EUR/USD could move higher if risk flows dominate the trading in the financial markets during the American session.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0642| Negative Crossover | Bearish
• MA 20: 1.0665 | Negative Crossover | Bearish
• MA 50: 1.0712 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0644 | Negative Crossover | Bearish
• MA 20: 1.0661 | Negative Crossover | Bearish
• MA 50: 1.0709 | Negative Crossover | Bearish

RSI (Relative Strength Index): 38.38| Sell Zone | Bearish

Stochastic Oscillator: 23.29 | Sell Zone | Negative

Resistance And Support Levels: 

• R1: 1.0737| R2: 1.0842
• S1: 1.0627 | S2: 1.0472

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 1.0562| Take Profit: 1.0474 | Stop Loss: 1.0628

AUD/USD:

AUD/USD declines approaching 0.6400, with an eye on the Australian CPI and US Core PCE.

During Monday’s Asian session, the AUD/USD currency pair lost some of its gains from the previous day and fell to approximately 0.6420. However, the Australian PMI data release on Friday and the weak US Dollar (USD) provided support for the pair’s upward movement.

Market investors are probably anticipating the publication of economic data, particularly the preliminary September S&P Global PMIs for the United States (US). These databases could offer insightful information on the state of the economy and help traders spot potential trading opportunities surrounding the AUD/USD pair.

The Australian Services PMI also rose from 47.8 in August to 50.5 in September, marking a four-month high. The Manufacturing PMI, however, fell from 49.6 in the previous month to 48.2, remaining in the contraction zone. The Australian Dollar (AUD) has seen positive sentiment moderated because of the manufacturing sector decline, inhibiting strong optimistic bets on the currency.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6427 | Negative Crossover | Bearish
• MA 20: 0.6432 | Negative Crossover | Bearish
• MA 50: 0.6436 | Negative Crossover | Bearish

Simple:

• MA 5: 0.6432 | Negative Crossover | Bearish
• MA 20: 0.6438 | Negative Crossover | Bearish
• MA 50: 0.6426 | Negative Crossover | Bearish

RSI (Relative Strength Index): 44.67 | Neutral Zone | Neutral

Stochastic Oscillator: 31.47| Sell Zone | Negative

Resistance And Support Levels: 

• R1: 0.6467 | R2: 0.6590
• S1: 0.6397 | S2: 0.6316

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Buy: 0.6378 | Take Profit: 0.6316 | Stop Loss: 0.6425

USD/JPY:

Under 148.50, USD/JPY remains unchanged amid fears of FX intervention.

In the early hours of Monday’s European session, the USD/JPY pair is unchanged below the mid-148.00s. Markets become cautious out of concern for the Japanese government’s FX intervention. The pair is now down 0.01% for the day as it trades near 148.35.

Friday saw the post-September policy meeting news conference, which was led by BOJ Governor Kazuo Ueda. The BoJ Governor has stated that when they anticipate reaching 2% inflation, the BOJ may think about discontinuing yield curve management and changing its negative interest rate policy.

The preliminary US S&P Global PMIs for September are among the economic data releases that market participants are watching for. These numbers may offer insightful information on the state of the US economy and help traders spot potential opportunities to trade the US Dollar (USD).

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 148.30 | Positive Crossover | Bullish
• MA 20: 147.92 | Positive Crossover | Bullish
• MA 50: 147.32 | Positive Crossover | Bullish

Simple:

• MA 5: 148.28 | Positive Crossover | Bullish
• MA 20: 147.92| Positive Crossover | Bullish
• MA 50: 147.33 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.89 | Buy Zone | Bullish

Stochastic Oscillator: 72.29| Buy | Positive

Resistance And Support Levels: 

• R1: 148.55 | R2: 151.90
• S1: 147.36 | S2: 145.65

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 149.51 | Take Profit: 151.90 | Stop Loss: 148.18

Elsewhere in the Forex Market

NZD/USD down 0.1% to 0.5953. The EUR/JPY is down 0.04% to 157.83. The USDCHF is up 0.39% at 0.9103. USD/CAD is down 0.04% at 1.3478, and EUR/GBP is up 0.03% at 0.8694. The USD/CNY is up 0.16% at 7.3099, and AUD/SEK is down 0.61% at 7.1270, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German Ifo Business Climate Index (Sep) Actual 85.7, Forecast 85.2, Previous 85.7 at 13:30.

(EUR) ECB President Lagarde Speaks at 18:30.