Introduction:

In the dynamic world of currency markets, GBP/USD is on the rise, approaching the 1.2250 mark as the US dollar’s downward trend persists. The British pound capitalized on Thursday’s gains, fuelled by the UK’s 0.2% quarterly GDP growth in Q2. Meanwhile, the US awaits the August PCE inflation report, a crucial indicator for the greenback’s trajectory. Despite a recent dip below 1.2200, GBP/USD remains oversold in the short term, offering potential opportunities for traders in a volatile landscape.

GBP/USD:

GBP/USD increases toward 1.2250 as the USD continues to decline.

In order to progress toward 1.2250 on Friday, GBP/USD was able to build on its recovery gains from Thursday. The UK’s data showed that real GDP increased by 0.2% on a quarterly basis in Q2. The US economic docket will include the August PCE inflation report later in the day.

On Tuesday, the GBP/USD pair crossed below 1.2200 and continued to decline, reaching a new six-month low below 1.2150. The pair is still oversold, according to the short-term technical outlook.

The US Census Bureau will publish data on August’s durable goods orders later in the day. Markets anticipate a 0.5% drop after the 5.2% decline seen in July. The initial response could damage the USD if there is another significant decrease in these figures.

Technical Overview :

Moving Averages:

Exponential:

• MA 5: 1.2204 | Positive Crossover | Bullish

• MA 20: 1.2227 Positive Crossover | Bullish

• MA 50: 1.2335 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2194 | Positive Crossover | Bullish

• MA 20: 1.2212 | Positive Crossover | Bullish

• MA 50: 1.2351 | Negative Crossover | Bearish

RSI (Relative Strength Index): 46.41 | Buy Zone | Bullish

Stochastic Oscillator: 100.00| Buy Zone | Positive

Resistance And Support Levels:

• R1: 1.2272 | R2: 1.2444
• S1: 1.2178| S2: 1.2024

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2318 | Take Profit: 1.2444 | Stop Loss: 1.2230

EUR/USD:

Ahead of inflation statistics, the EUR/USD continues to recover toward 1.0600.

In the early hours of Friday AM Europe, the EUR/USD maintained its recovery momentum and advanced toward 1.0600. On the final trading day of the third quarter, the HICP inflation figures for the Eurozone for September and the US PCE Price Index for August will be extensively scrutinized.

The EUR/USD had a significant increase on Thursday, rising from monthly lows and moving toward the 1.0600 mark. The US Dollar experienced a correction during this move, pausing after a protracted run of rises.

While US economic data continued to show a healthy economy, market sentiment put pressure on the US dollar. According to figures on second-quarter GDP growth, the economy grew at a 2.1% annualized rate, while initial claims for unemployment insurance came in at 204,000, which was fewer than anticipated.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0577| Positive Crossover | Bullish
• MA 20: 1.0591 | Positive Crossover | Bullish
• MA 50: 1.0654 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0554 | Positive Crossover | Bullish
• MA 20: 1.0594 | Positive Crossover | Bullish
• MA 50: 1.0657 | Negative Crossover | Bearish
  
  

RSI (Relative Strength Index): 49.38| Buy Zone | Bullish

Stochastic Oscillator: 96.94 | Buy Zone | Positive

Resistance And Support Levels:

• R1: 1.0618| R2: 1.0788
• S1: 1.0505| S2: 1.0383

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy 1.0670| Take Profit: 1.0788 | Stop Loss: 1.0594

AUD/USD:

AUD/USD maintains advances on positive Private Sector Credit.

On Friday, the Australian Dollar (AUD) extended its advances for the second straight day. The US Dollar (USD) has corrected as a result of a decline in US Treasury yields, helping the AUD/USD pair regain some of its recent losses.

The AUD/USD currency pair had a significant increase on Thursday, recovering from monthly lows and moving above 0.6400. The US Dollar’s decline was the main factor behind the movement. The speech of Federal Reserve (Fed) Chair Powell and the publication of the US Core Personal Consumption Expenditure (PCE) Price Index are the two main topics of interest for market participants.

The Australian Retail Sales figures for August showed an increase of 0.2%, which was somewhat less than the 0.3% market expected. August saw the lowest annual rate since August 2021, slowing from 2.1% in July to 1.5% in August. At the next Reserve Bank of Australia (RBA) Governor Bullock’s first meeting next week, the market does not anticipate a rate increase. Additionally, Australia is scheduled to announce Private Credit data on Friday.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6438 | Positive Crossover | Bullish
• MA 20: 0.6419| Positive Crossover | Bullish
• MA 50: 0.6426 | Positive Crossover | Bullish

Simple:

• MA 5: 0.6425 | Positive Crossover | Bullish
• MA 20: 0.6414 | Positive Crossover | Bullish
• MA 50: 0.6421| Positive Crossover | Bullish
  
  

RSI (Relative Strength Index): 62.95 | Buy Zone | Bullish

Stochastic Oscillator: 97.91| Buy Zone| Positive

Resistance And Support Levels:

• R1: 0.6485 | R2: 0.6610
• S1: 0.6382 | S2: 0.6282

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6522 | Take Profit: 0.6609 | Stop Loss: 0.6468

USD/JPY:

USD/JPY retraces recent losses and is still below 149.50.

With Friday’s Asian session trading higher around 149.40, USD/JPY regains some of its recent losses. Following the negative Japanese data that was released on Friday, the pair finds support on the ascent.

Because of the US economy’s resilience as a result of lowering inflation, steady labour growth, and strong consumer spending, the US dollar continues to enjoy broad support. Unlike other G7 economies that are finding it difficult to stabilize as a result of their inability to deal with the effects of central bankers raising interest rates.

On the prospect of a Bank of Japan (BOJ) intervention, the Japanese Yen might increase. Shunichi Suzuki, the finance minister of Japan, reaffirmed on Thursday that he wouldn’t rule out taking any action in the event of extreme FX volatility. He continued by saying that the authority is urgently monitoring FX developments.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 149.21 | Negative Crossover | Bearish
• MA 20: 148.81 | Positive Crossover | Bullish
• MA 50: 148.02 | Positive Crossover | Bullish

Simple:

• MA 5: 149.28 | Negative Crossover | Bearish
• MA 20: 148.75| Positive Crossover | Bullish
• MA 50: 147.94| Positive Crossover | Bullish
  
  

RSI (Relative Strength Index): 58.36| Buy Zone | Bullish

Stochastic Oscillator: 20.41| Sell | Negative

Resistance And Support Levels:

• R1: 149.61 | R2: 151.85
• S1: 148.06 | S2: 146.50

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 150.04 | Take Profit: 151.85 | Stop Loss: 148.92

Elsewhere in the Forex Market

EUR/GBP up 0.11% to 0.8667. The NZD/USD up 1.18% to 0.6031. The USD/CAD down 0.3% at 1.3446. EUR/JPY up 0.14% at 157.90, CAD/JPY up 0.05% at 110.75 The USD/CNY down 0.01% at 7.3015, AUD/SEK up 0.14% at 7.0268, at the time of writing.

Key Economic Events & Data Release Today:

(USD) Fed Chair Powell Speaks at 01:30.

(JPY) Retail Sales (YoY) (Aug) Actual 7.0%, Forecast 6.6%, Previous 6.8% at 05:20.

(GBP) GDP (QQQ) (Q2) Actual 0.2%, Forecast 0.2%, Previous 0.1% at 11:30.

(EUR) ECB President Lagarde Speaks at 13:10.

(EUR) German Unemployment Change (Sep) Actual 10K, Forecast 15K, Previous 18K at 13:25.

(USD) Core PCE Price Index (MOM) (Aug) Forecast 0.2%, Previous 0.2% at 18:00.

(CAD) GDP (MOM) (Jul) Forecast 0.1, Previous –0.2% at 18:00.