Introduction:

In the world of currency markets, the GBP/USD is grappling with weakness below the 1.2300 mark, influenced by UK Retail Sales data and PMIs. Meanwhile, the EUR/USD holds steady near 1.0650 after German and EU PMI data. Over in the AUD/USD realm, the pair struggles to gain momentum above 0.6400 amidst a resurgent USD. Lastly, the USD/JPY awaits pivotal moves as the Bank of Japan’s interest rate decision looms, with expectations set at 148.50. The backdrop of central bank decisions and economic data casts a shadow of uncertainty across these major currency pairs.

GBP/USD:

Following UK Retail Sales figures and PMIs, the GBP/USD remains weak below 1. 2300.

A multi-month low recorded on Thursday is still within striking distance as GBP/USD is currently trading depressed around 1.2270. After a surprising BoE halt, depressing UK retail sales data weighs on the pair. The emphasis now is on the UK/US PMI statistics.

As anticipated, the Federal Reserve kept its policy rate at 5.25%–5.5%. It was verified by the updated Summary of Projections that policymakers still plan to raise the policy rate in 2023. More significantly, the prediction for a rate drop in 2024 was lowered from 100 bps to 50 bps. The hawkish dot plot gave the US Dollar (USD) a lift and kept the GBP/USD under bearish pressure.

The Bank of England (BoE) will make its interest rate decision later in the day. The market anticipates a 25 bps increase to 5.5%. However, numerous financial organizations, including Goldman Sachs, updated their predictions in response to the weak Consumer Price Index (CPI) data for August and stated that they were now anticipating the BoE to hold the rates constant following its September meeting.

Technical Overview :

Moving Averages:

Exponential:

• MA 5: 1.2283 | Negative Crossover | Bearish
• MA 20: 1.2361| Negative Crossover | Bearish
• MA 50: 1.2456 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2281 | Negative Crossover | Bearish
• MA 20: 1.2368 | Negative Crossover | Bearish
• MA 50: 1.2479 | Negative Crossover | Bearish

RSI (Relative Strength Index): 25.67 | Sell Zone | Negative

Stochastic Oscillator: 31.0| Sell Zone | Positive

Resistance And Support Levels: 

• R1: 1.2322 | R2: 1.2452
• S1: 1.2231 | S2: 1.2082

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2188 | Take Profit: 1.2082 | Stop Loss: 1.2279

EUR/USD:

After German and EU PMI data, the EUR/USD remains close to 1.0650.

During Friday’s European session, the EUR/USD exchange rate is still hovering around 1.0650. Early in August, the service sector’s economic activity showed signs of improvement according to PMI data from Germany and the Eurozone, which helped the euro keep its position.

On Thursday, the EUR/USD recovered losses and sank to a new multi-month low of 1.0615. Following US data, the pair touched its daily low before staging a comeback and touching 1.0670 thanks to a decline in the US Dollar.

The PMIs, which will give preliminary details about economic activity throughout September in the US and the Eurozone, will be the important data to pay attention to on Friday. These figures will be widely watched because central banks rely on statistics.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0652| Negative Crossover | Bearish
• MA 20: 1.0674 | Negative Crossover | Bearish
• MA 50: 1.0721 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0647 | Negative Crossover | Bearish
• MA 20: 1.0668 | Negative Crossover | Bearish
• MA 50: 1.0723 | Negative Crossover | Bearish

RSI (Relative Strength Index): 41.52| Neutral Zone | Neutral

Stochastic Oscillator: 47.36 | Buy Zone | Neutral

Resistance And Support Levels: 

• R1: 1.0728| R2: 1.0831
• S1: 1.0625 | S2: 1.0479

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 1.0583| Take Profit: 1.0478 | Stop Loss: 1.0656

AUD/USD:

AUD/USD holds above 0.6400, but higher potential remains restricted in the face of a rising USD

The AUD/USD pair struggles to build on the day before recovery from the 0.6385 area or more than a one-week low and oscillates between modest gains and slight losses during Friday’s Asian session. Prices for spot trade are just over the 0.6400 level.

The US Dollar corrected to the negative after the surge from the Federal Reserve meeting and US statistics, and the AUD/USD recovered during the Asian trading session to get back over 0.6400. The market environment is still unstable, and new data could result in more price changes.

The Australian S&P Global PMI preliminary reading for September will be made public on Friday. The US PMIs are scheduled for later in the day. If the Bank of Japan meeting surprises markets, it might spark some activity during Asian hours. The mood of the market will be important for the pair as well.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6429 | Positive Crossover | Bullish
• MA 20: 0.6432 | Negative Crossover | Bearish
• MA 50: 0.6436 | Positive Crossover | Bullish

Simple:

• MA 5: 0.6416 | Positive Crossover | Bullish
• MA 20: 0.6439 | Negative Crossover | Bearish
• MA 50: 0.6429 | Positive Crossover | Bullish

RSI (Relative Strength Index): 51.04 | Buy Zone | Bullish

Stochastic Oscillator: 30.61| Sell Zone | Positive

Resistance And Support Levels: 

• R1: 0.6443 | R2: 0.6525
• S1: 0.6377 | S2: 0.6292

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6473 | Take Profit: 0.6525 | Stop Loss: 0.6439

USD/JPY:

On the BoJ’s decision to maintain the same interest rates, USD/JPY is expected to reach 148. 50.

Due to the BoJ’s decision to keep interest rates unchanged, USD/JPY has recovered some of its recent losses. When the 2% inflation objective is within sight, the BoJ may think about changing its ultra-loose monetary policy. Investors eagerly anticipate US data to learn important details about the nation’s economic situation.

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: 148.03 | Positive Crossover | Bullish
• MA 20: 147.76 | Positive Crossover | Bullish
• MA 50: 147.18 | Positive Crossover | Bullish

Simple:

• MA 5: 148.01 | Positive Crossover | Bullish
• MA 20: 147.76 | Positive Crossover | Bullish
• MA 50: 147.17 | Positive Crossover | Bullish

RSI (Relative Strength Index): 60.33 | Buy Zone | Bullish

Stochastic Oscillator: 35.17| Sell | Neutral

Resistance And Support Levels: 

• R1: 148.38 | R2: 151.93
• S1: 147.25 | S2: 145.86

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 149.02 | Take Profit: 150.45 | Stop Loss: 148.04

Elsewhere in the Forex Market

NZD/USD up 0.4% to 0.5954. The EUR/JPY up 0.32% to 157.82. The USDCHF is up 0.15% at 0.9058. USD/CAD is down 0.13% at 1.3465, and EUR/GBP is up 0.19% at 0.8686. The USD/CNY is down 0.07% at 7.3016, and AUD/SEK is up 0.26% at 7.1869, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) BoJ Monetary Policy Statement at 08:30.

(GBP) Retail Sales (MoM) (Aug) Actual 0.4%, Forecast 0.5%, Previous –1.2% at 11:30.

(CAD) Core Retail Sales (MoM) (Jul) Forecast 0.5%, Previous –0.8% at 18:00.

(GBP) BoE Interest Rate Decision (Sep) Forecast 5.50%, Previous 5.25% at 16:30.

(USD) Service PMI (Sep) Forecast 50.6, Previous 50.5 at 19:15.

(EUR) German Manufacturing PMI (Sep) Actual 39.8, Forecast 39.5, Previous 39.1 at 13:00.