Introduction:

In the world of forex trading, GBP/USD teeters near multi-month lows below 1.2400 amidst a stable US Dollar and cautious market sentiment. As traders await key events like the UK CPI data and the Federal Reserve decision, the pair seeks to regain ground lost to the resurgent USD. Meanwhile, EUR/USD grapples with similar headwinds below 1.0700, finding some respite from ECB rate decisions. AUD/USD, on the other hand, treads cautiously amid RBA’s recent stance and impending Fed actions. Finally, USD/JPY retraces losses as central bank policies take the spotlight, with eyes on key economic data shaping market expectations.

GBP/USD:

GBP/USD is susceptible below 1.2400 as it hovers near a multi-month low.

In early Europe on Tuesday, the GBP/USD exchange rate is hovering around five-month lows and trading below 1.2400. The pair is under pressure ahead of Wednesday’s UK CPI data and the Fed decision due to a stable US Dollar and a cautious market environment. Last week’s persistent US Dollar (USD) rise compelled GBP/USD to continue experiencing bearish pressure. US stock index futures are trading slightly higher early on Monday, suggesting a tiny uptick in risk sentiment. If risk flows pick up steam in the afternoon, GBP/USD may recover some of the losses from the previous week.

Prior to the Bank of England’s (BoE) comments about monetary policy on Thursday, the UK’s Office for National Statistics will issue Consumer Price Index (CPI) data on Wednesday.

Technical Overview :

Moving Averages:

Exponential:

• MA 5: 1.2384 | Negative Crossover | Bearish
• MA 20: 1.2436| Negative Crossover | Bearish
• MA 50: 1.2516 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2382 | Negative Crossover | Bearish
• MA 20: 1.2446 | Negative Crossover | Bearish
• MA 50: 1.2534 | Negative Crossover | Bearish

RSI (Relative Strength Index): 33.09 | Sell Zone | Negative

Stochastic Oscillator: 16.51| Sell Zone | Negative

Resistance And Support Levels: 

• R1: 1.2459 | R2: 1.2564
• S1: 1.2363 | S2: 1.2267

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2323 | Take Profit: 1.2267 | Stop Loss: 1.2360

EUR/USD:

With a cautious risk tone, EUR/USD is still under pressure below 1.0700.

The EUR/USD is currently under pressure below 1.0700 on Tuesday’s cautious European stock markets. The pair may find support from bets that the ECB has stopped raising interest rates, which operate as a headwind for the common currency. On Monday, the EUR/USD climbed and got close to the 1.0700 mark before losing steam. During a rather quiet day, a pullback in the US dollar was what propelled this upward rise.

The European Central Bank (ECB) increased interest rates by 25 basis points on Thursday as anticipated, but the Euro fell following. The pair has been gaining ground and correcting higher ever since the EUR/USD fall hit support at 1.0630.

The final reading of the August Eurozone Consumer Price Index, which Eurostat will publish on Tuesday, is anticipated to show no change from the preliminary annual rate of 5.3%. Building permits and housing starts are due in the US.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0679| Positive Crossover | Bullish
• MA 20: 1.0696 | Negative Crossover | Bearish
• MA 50: 1.0748 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0676 | Positive Crossover | Bullish
• MA 20: 1.0702 | Negative Crossover | Bearish
• MA 50: 1.0756 | Negative Crossover | Bearish

RSI (Relative Strength Index): 44.78| Neutral Zone | Neutral

Stochastic Oscillator: 73.18 | Buy Zone | Positive

Resistance And Support Levels: 

• R1: 1.0751| R2: 1.0841
• S1: 1.0673 | S2: 1.0576

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 1.0639| Take Profit: 1.0576 | Stop Loss: 1.0688

AUD/USD:

AUD/USD trades at roughly 0.6430 but lacks direction due to market caution.

Prior to the Fed’s policy announcement, investors were cautious as the AUD/USD traded sideways. On the likelihood that the Fed will raise rates again in its meetings in November or December, the US dollar (USD) may increase. According to meeting minutes, the RBA made its decision to maintain the present interest rates based on recent economic statistics.

The minutes from the Reserve Bank of Australia’s (RBA) September monetary policy meeting were made public. The RBA did consider raising the interest rate by 25 basis points but eventually opted against it. Recent economic statistics did not materially alter the economic outlook, which was the primary factor in this decision.

Ahead of the US Federal Reserve’s (Fed) policy decision, investors are becoming more cautious, and the AUD/USD pair is still trading sideways. During Tuesday’s Asian session, the spot price fluctuated about 0.6430.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 0.6441 | Positive Crossover | Bearish
• MA 20: 0.6432 | Positive Crossover | Bullish
• MA 50: 0.6436 | Positive Crossover | Bullish

Simple:

• MA 5: 0.6438 | Positive Crossover | Bullish
• MA 20: 0.6432 | Positive Crossover | Bullish
• MA 50: 0.6431 | Positive Crossover | Bullish

RSI (Relative Strength Index): 55.49 | Buying Zone | Bullish

Stochastic Oscillator: 37.75| Sell Zone | Negative

Resistance And Support Levels: 

• R1: 0.6454 | R2: 0.6522
• S1: 0.6395 | S2: 0.6323

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6473 | Take Profit: 0.6522 | Stop Loss: 0.6442

USD/JPY:

Focus on central banks’ policy decisions as USD/JPY retraces recent losses to around 147.70.

During Tuesday’s Asian session, USD/JPY recovered from the losses it had sustained the day before, trading higher at 147.70. Before the US Federal Reserve (Fed) and the Bank of Japan (BoE) announce their interest rate decisions, the pair is receiving upward support.

In regard to the Japanese Yen, a policymaker for the Bank of Japan (BoJ) warned that the JPY will remain sensitive to its competitors as long as wage and inflation indicators do not match expectations.

The US Empire State Manufacturing Index, Industrial Production, and the University of Michigan Consumer Confidence survey will all be released, and market participants will be watching these numbers closely. In advance of the Fed meeting next week, these numbers may provide clues regarding the Federal Reserve’s (Fed) peak interest rate for the remainder of the year.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 147.67 | Positive Crossover | Bullish
• MA 20: 147.41 | Positive Crossover | Bullish
• MA 50: 146.83 | Positive Crossover | Bullish

Simple:

• MA 5: 147.67 | Positive Crossover | Bullish
• MA 20: 147.28 | Positive Crossover | Bullish
• MA 50: 146.87 | Positive Crossover | Bullish

RSI (Relative Strength Index): 57.11 | Buy Zone | Bullish

Stochastic Oscillator: 44.54| Neutral | Negative

Resistance And Support Levels: 

• R1: 147.97 | R2: 150.47
• S1: 146.50 | S2: 145.04

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 148.64 | Take Profit: 150.48 | Stop Loss: 147.55

Elsewhere in the Forex Market

NZD/USD up 0.15% to 0.5925. The EUR/JPY up 0.05% to 157.86. The USDCHF is up 0.05% at 0.8974. USD/CAD down 0.14% at 1.3466, EUR/GBP down 0.04% at 0.8629. The USD/CNY is up 0.09% at 7.2983, AUD/SEK is down 0.05% at 7.1697, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) RBA Meeting Minutes at 07:00.

(EUR) CPI (YoY) (Aug) Forecast 5.3%, Previous 5.3% at 14:30.

(USD) Building Permits (Aug) Forecast 1.440M, Previous 1.443M at 18:00.

(CAD) Core CPI (MoM) (Aug) Previous 0.5% at 18:00.