. Daily FX Analysis - GBP/USD plunges, EUR/USD in jeopardy, AUD/USD faces challenges

Daily FX Analysis – GBP/USD plunges, EUR/USD in jeopardy, AUD/USD faces challenges

Daily FX Analysis – GBP/USD plunges, EUR/USD in jeopardy, AUD/USD faces challenges

21 Sep 2023

Introduction:

Amidst market uncertainty driven by key central bank decisions and economic indicators, the GBP/USD, EUR/USD, AUD/USD, and USD/JPY currency pairs face dynamic shifts and pivotal moments. The GBP/USD grapples with multiple factors ahead of the BoE’s interest rate decision, while the EUR/USD reacts to the Fed’s stance. Meanwhile, the AUD/USD is challenged by a resurgent US Dollar, and the USD/JPY hovers near its yearly peak, navigating central bank policies and market sentiment.

GBP/USD:

The GBP/USD fluctuated before the BoE interest rate decision.

In Thursday’s European trading, the GBP/USD currency pair is battling 1.2300 and regaining a five-month low. The Fed’s aggressive approach, greater prospects of a BoE rate hike halt, surprise decline in UK inflation, and unexpected rates-on-hold decision by the SNB all weigh on the pair. In the early hours of the European morning, GBP/USD experienced intense bearish pressure and fell below 1.2333, its lowest point in nearly four months, before bouncing up above 1.2350.

According to the UK’s Office for National Statistics, inflation in the country decreased slightly in August from 6.8% in July to 6.7% annually, as measured by the change in the Consumer Price Index (CPI).

Investors might decide against betting on a sustained rebound before the BoE’s policy statements on Thursday, even if GBP/USD gains momentum after the Fed event.

Technical Overview :

Moving Averages:

Exponential:

  • MA 5: 1.2335 | Negative Crossover | Bearish
  • MA 20: 1.2396| Negative Crossover | Bearish
  • MA 50: 1.2481 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2343 | Negative Crossover | Bearish
  • MA 20: 1.2402 | Negative Crossover | Bearish
  • MA 50: 1.2504 | Negative Crossover | Bearish

RSI (Relative Strength Index): 26.01 | Sell Zone | Negative

Stochastic Oscillator: 0| Sell Zone | Negative

Resistance And Support Levels: 

  • R1: 1.2376 | R2: 1.2501
  • S1: 1.2291 | S2: 1.2152

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2246 | Take Profit: 1.2152 | Stop Loss: 1.2326

EUR/USD:

As the US Dollar strengthens, the EUR/USD maintains losses below 1.0650.

Early on Thursday morning in Europe, EUR/USD is trading near weekly lows below 1.0650.  As was to be expected, the Fed held interest rates steady while suggesting that one more rate increase before the year’s conclusion would be appropriate. The US Dollar rises as US rates rocket to multi-year highs.

Following the FOMC meeting, the EUR/USD fell precipitously from weekly highs above 1.0730, falling below 1.0650 as a result of a stronger US Dollar. The market is still processing Powell’s remarks and the result.

On Thursday, Eurostat will issue its preliminary Consumer Confidence figures. The decisions made by the Bank of England and the Swiss National Bank will also be important for the Euro.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0666| Negative Crossover | Bearish
  • MA 20: 1.0682 | Negative Crossover | Bearish
  • MA 50: 1.0731 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.0665 | Negative Crossover | Bearish
  • MA 20: 1.0682 | Negative Crossover | Bearish
  • MA 50: 1.0737 | Negative Crossover | Bearish

RSI (Relative Strength Index): 42.52| Neutral Zone | Neutral

Stochastic Oscillator: 47.78 | Buy Zone | Negative

Resistance And Support Levels: 

  • R1: 1.0702| R2: 1.0782
  • S1: 1.0642 | S2: 1.0547

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 1.0608| Take Profit: 1.0547 | Stop Loss: 1.0657

AUD/USD:

On aggressive Fed-led US Dollar surge, AUD/USD attacks 0.6400.

In Thursday’s Asian trading, the AUD/USD currency pair is extending its losses to hit 0.6400. After the Federal Reserve kept rates unchanged but predicted one more rate hike by year’s end, the Aussie is suffering as a result of the unrelenting US Dollar demand.

Following the FOMC announcement, the AUD/USD made a sharp move to the downside. Due to a stronger US Dollar, the pair fell from levels over 0.6500 to levels below 0.6450. The results of the Federal Reserve’s September meeting are still being absorbed by the markets.

The markets will continue to evaluate the outcome of the meeting on Thursday in addition to receiving new US data, such as Jobless Claims, the Philly Fed, and Existing Home Sales. Economic statistics will be keenly scrutinized because the Fed hasn’t ruled out more tightening.

The probability of the AUD/USD falling further to the downside increases if market sentiment continues to worsen and US yields stay where they are now or rise.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6427 | Negative Crossover | Bearish
  • MA 20: 0.6435 | Negative Crossover | Bearish
  • MA 50: 0.6437 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.6438 | Negative Crossover | Bearish
  • MA 20: 0.6437 | Negative Crossover | Bearish
  • MA 50: 0.6433 | Negative Crossover | Bearish

RSI (Relative Strength Index): 43.84 | Neutral Zone | Neutral

Stochastic Oscillator: 4.92| Sell Zone | Negative

Resistance And Support Levels: 

  • R1: 0.6471 | R2: 0.6561
  • S1: 0.6392 | S2: 0.6289

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6361 | Take Profit: 0.6289 | Stop Loss: 0.6419

USD/JPY:

The USD/JPY remains stable above 148.00, bulls have the hand near the YTD peak.

The USD/JPY pair declined after reaching a new YTD peak in the 148.45 area on Thursday during the Asian session, but it failed to continue and held above the daily low. Spot prices are currently trading near 148.25, down less than 0.10% for the day, and appear ready to rise much more.

The US Dollar (USD) continues to benefit from the growing agreement that the Federal Reserve (Fed) will maintain its hawkish posture and leave the door open for at least one more rate hike before the end of this year. However, rumors of an impending shift in the Bank of Japan’s dovish posture, together with worries that the government may step in to support the Japanese Yen (JPY), prevent the USD/JPY pair from appreciating much further.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 148.11 | Positive Crossover | Bullish
  • MA 20: 147.72 | Positive Crossover | Bullish
  • MA 50: 147.10 | Positive Crossover | Bullish

Simple:

  • MA 5: 148.09 | Positive Crossover | Bullish
  • MA 20: 147.70 | Positive Crossover | Bullish
  • MA 50: 147.06 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.49 | Buy Zone | Bullish

Stochastic Oscillator: 86.09| Buy | Positive

Resistance And Support Levels: 

  • R1: 148.40 | R2: 151.93
  • S1: 146.68 | S2: 145.04

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 149.43 | Take Profit: 151.93 | Stop Loss: 147.97

Elsewhere in the Forex Market

NZD/USD down 0.18% to 0.5917. The EUR/JPY down 0.11% to 157.90. The USDCHF is up 0.74% at 0.9052. USD/CAD is up 0.22% at 1.3492, and EUR/GBP is up 0.25% at 0.8657. The USD/CNY is up 0.03% at 7.2990, and AUD/SEK is down 0.36% at 7.1594, at the time of writing.

Key Economic Events & Data Release Today:

(USD) FOMC Press Conference at 12:00.

(NZD) GDP (QoQ) (Q2) Actual 0.9%, Forecast 0.5%, Previous –0.1% at 04:15.

(CHF) SNB Press Conference at 13:30.

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

(USD) Initial Jobless Claims Forecast 225K, Previous 220K at 18:00.

(EUR) ECB President Lagarde Speaks at 19:30.