. Daily FX Analysis - GBP/USD, EUR/USD Surge; AUD/USD Hits 2-Month High

Daily FX Analysis – GBP/USD, EUR/USD Surge; AUD/USD Hits 2-Month High

Daily FX Analysis – GBP/USD, EUR/USD Surge; AUD/USD Hits 2-Month High

04 Nov 2023

Introduction:

In the world of currency markets, here’s a snapshot of recent developments for some key currency pairs. GBP/USD is on the rise, buoyed by a weak US Dollar, EUR/USD has had its best week since June as the USD weakens, AUD/USD is capitalizing on post-NFP Dollar weakness, and the Japanese Yen is rebounding amid potential shifts in monetary policies. These dynamics paint a dynamic picture in the forex market.

GBP/USD:

GBP/USD climbs above 1.2300 as USD selloff continues.

During the early American session on Thursday, the GBP/USD continued its upward momentum, surpassing the 1.2300 level. The US Dollar is facing challenges in attracting buyers due to the discouraging October employment report, which is enabling the currency pair to maintain its bullish trend.

On Thursday, the GBP/USD gained bullish momentum, reaching a new 10-day high above 1.2220. However, early on Friday, the pair lost its upward momentum and entered a consolidation phase near the 1.2200 mark as investors turned their focus to upcoming US data releases.

In the latter part of the day, Jonathan Haskel, a member of the Bank of England’s Monetary Policy Committee (MPC), is scheduled to give a speech. Haskel previously supported a 25-basis points rate hike, and any hawkish remarks he makes could provide a boost to the value of the British Pound.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2237 | Positive Crossover | Bullish
  • MA 20: 1.2201 | Positive Crossover | Bullish
  • MA 50: 1.2301 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2209 | Negative Crossover | Bullish
  • MA 20: 2.2188 | Positive Crossover | Bullish
  • MA 50: 1.2303 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.29 | Buy Zone | Bullish

Stochastic Oscillator: 87.15 | Buying Zone | Positive

Resistance And Support Levels:

  • R1: 1.2398 | R2: 1.2678
  • S1: 1.2178 | S2: 1.1907

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2486 | Take Profit: 1.2678 | Stop Loss: 1.2374

EUR/USD:

EUR/USD closes its best-performing week since June amid weak USD.

On Friday, the EUR/USD saw an increase of over 1%, approaching the 1.0730 level. The US Dollar, as indicated by the DXY index, is set to conclude the week with a 1.40% decline. The Federal Reserve’s dovish position and the disappointing October Non-Farm Payrolls (NFPs) report were key factors contributing to the depreciation of the US Dollar.

During Friday’s trading session, the EUR/USD surged to 1.0730, capping off a week with a 1.50% gain, marking its strongest performance since mid-June.

The market’s attention will now turn towards upcoming data releases because, despite altering its stance, the Fed has maintained the possibility of further tightening. Between now and December, the central bank will receive two more inflation reports and an additional employment report to inform its decisions.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0638 | Positive Crossover | Bullish
  • MA 20: 1.0600 | Positive Crossover | Bullish
  • MA 50: 1.0651 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0621 | Positive Crossover | Bullish
  • MA 20: 1.0586 | Positive Crossover | Bullish
  • MA 50: 1.0636 | Positive Crossover | Bullish

RSI (Relative Strength Index): 61.7| Buy Zone | Bullish

Stochastic Oscillator: 74.45 | Buy Zone | Positive

Resistance And Support Levels:

  • R1: 1.0746 | R2: 1.0945
  • S1: 1.0552 | S2: 1.0369

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0794 | Take Profit: 1.0945 | Stop Loss: 1.0693

AUD/USD:

AUD/USD backs over 0.6500 in post-NFP Dollar rout.

The AUD/USD has reached a two-month peak, with the US Dollar weakening after the Non-Farm Payrolls (NFP) release.

Investor sentiment has decisively shifted to a risk-on mode as concerns about further Fed rate increases have diminished. The Reserve Bank of Australia (RBA) is scheduled for its next meeting next week, and market expectations are leaning towards an additional 25 basis points rate increase.

The AUD/USD is surging to its highest level in nine weeks, trading above the 0.6500 mark. This is happening as the Australian Dollar (AUD) takes advantage of the weakness in the US Dollar (USD) after a disappointing Nonfarm Payrolls report. Additionally, the prevailing risk-on market sentiment has resulted in the Aussie seeing its sixth day of gains in the past seven consecutive trading days.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6425| Positive Crossover | Bullish
  • MA 20: 0.6376 | Positive Crossover | Bullish
  • MA 50: 0.6407 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6409 | Positive Crossover | Bullish
  • MA 20: 0.6361 | Positive Crossover | Bullish
  • MA 50: 0.6392 | Positive Crossover | Bullish

RSI (Relative Strength Index): 64.5| Neutral zone| Neutral

Stochastic Oscillator: 100 | Buy Zone | Positive

Resistance And Support Levels:

  • R1: 0.6519 | R2: 0.6691
  • S1: 0.6340 | S2: 0.6189

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6564 | Take Profit: 0.6691 | Stop Loss: 0.6481

USD/JPY:

The Japanese yen closes the week strong against US Dollar.

The Japanese Yen is extending its rebound heading into the weekend due to the potential for differing monetary policy directions.

The Bank of Japan (BoJ) has begun the process of normalizing its policy, in contrast to other central banks that are nearing the end of their tightening phases.

The USD/JPY is sharply retreating following a disappointing Nonfarm Payrolls report, which has raised questions about the likelihood of further interest rate hikes by the Federal Reserve.

Towards the end of the week, the yen showed strength in most currency pairs, rebounding from oversold levels following the significant sell-off that occurred after the Bank of Japan (BoJ) meeting on Tuesday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 150.11 | Negative Crossover | Bearish
  • MA 20: 149.78 | Negative Crossover | Bearish
  • MA 50: 148.37 | Positive Crossover | Bullish

Simple:

  • MA 5: 150.30 | Negative Crossover | Bearish
  • MA 20: 149.78 | Negative Crossover | Bearish
  • MA 50: 148.61 | Positive Crossover | Bullish

RSI (Relative Strength Index): 49.00| Buying Zone | Bullish

Stochastic Oscillator: 34.27| Sell zone | Negative

Resistance And Support Levels:

  • R1: 150.48 | R2: 151.69
  • S1: 149.12 | S2: 146.49

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 148.41| Take Profit: 146.49 | Stop Loss: 149.82

Elsewhere in the Forex Market

NZD/USD up 1.67% to 0.5996. The EUR/JPY up 0.23% to 160.15. The USDCHF down 0.85% at 0.8981. USD/CAD down 0.59% at 1.3656, EUR/GBP down 0.51% at 0.8659. The USD/CNY down 0.20% at 7.3012, AUD/SEK down 0.91% at 7.0897, CHF/SGD up 0.01% at 1.5066 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(CAD) Ivey PMI (Oct) (Monday).

(AUD) RBA Interest Rate (Nov) (Monday).

(EUR) German Industrial Production (Mom) (Sep) (Tuesday)

(EUR) German CPI (Mom) (Oct) (Wednesday).

(EUR) German GDP (QoQ) (Q3) (Wednesday).

(USD) Fed Chair Powell Speaks (Wednesday).

(USD) Crude Oil Inventories (Wednesday)

(USD) Initial Jobless Claims (Thursday).