. Daily FX Analysis - Geopolitical tensions fuel currency market turbulence.

Daily FX Analysis – Geopolitical tensions fuel currency market turbulence.

Daily FX Analysis – Geopolitical tensions fuel currency market turbulence.

15 Apr 2024

Introduction

EUR/USD stages a rebound amidst heightened geopolitical tensions, hovering around 1.0650. The pair seeks recovery from five-month lows amid escalated Middle-East turmoil, triggered by Iran’s retaliatory actions against Israel. Diverging policy outlooks for the ECB and Fed also exert pressure. Meanwhile, GBP/USD edges higher above 1.2450 on hawkish Fed sentiment, while the Australian Dollar shows mild positivity amid a stronger US Dollar. The Japanese Yen continues to decline, dropping to the 154.00 neighborhood against the USD, driven by the BoJ’s uncertain stance and reduced Fed rate cut expectations.

Markets In Focus Today – EUR/USD

EUR/USD rebounds amid escalated geopolitical turmoil, hovers around 1.0650.

EUR/USD attempts to recover from five-month lows amid escalated Middle-East tension.Iran launched explosive drones and missiles at Israel late Saturday.The pair received downward pressure by diverging policy scenarios for the ECB and Fed.EUR/USD edges up to near 1.0650 during the Asian session on Monday, recovering from a five-month low of 1.0622 reached last Friday. The US Dollar (USD) gained ground due to increased dollar-buying due to geopolitical turmoil, which contributed to downward pressure on the EUR/USD pair. Over the weekend, Iran retaliated against a suspected Israeli attack on its consulate in Syria by launching explosive drones and missiles at Israel. Despite this escalation, the markets remained relatively calm, possibly due to Iran’s advance notice of the attack, which helped mitigate the risk of further escalation.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0750 | Negative Crossover | Bearish
  • MA 20 : 1.0787 | Negative Crossover | Bearish
  • MA 50 : 1.0821 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.0776 | Negative Crossover | Bearish
  • MA 20 : 1.0801 | Negative Crossover | Bearish
  • MA 50 : 1.0820 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 32.2929 | Sell Zone | Bearish

Stochastic   Oscillator : 10.9470 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0928 R2 : 1.0978
  • S1 : 1.0765 S2 : 1.0715

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.0673 | Take Profit : 1.0628 | Stop Loss : 1.0698

GBP/USD

GBP/USD edges higher to above 1.2450 amid hawkish sentiment surrounding Fed.

GBP/USD rebounds from lows since November amid expectations of the Fed delaying rate cuts.The escalated Middle-East tension could bolster the demand for the US Dollar.BoE could reduce policy rates to around 4.75% by 2024, down from the current rate of 5.25%.GBP/USD gains ground amid a stable US Dollar (USD), trading around 1.2460 during Asian hours on Monday. The US Dollar (USD) maintains its position below its peak since November 2023, potentially restricting the upward momentum of the GBP/USD pair.Investors will likely observe Federal Reserve Bank of Kansas President Lorie Logan while participating in a panel discussion at the BoJ-IMF conference on Monday. Furthermore, US Retail Sales figures will be eyed later in the North American session.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2561 | Negative Crossover | Bearish
  • MA 20 : 1.2604 | Negative Crossover | Bearish
  • MA 50 : 1.2638 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2584 | Negative Crossover | Bearish
  • MA 20 : 1.2615 | Negative Crossover | Bearish
  • MA 50 : 1.2652 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 34.6360 | Sell Zone | Bearish

Stochastic   Oscillator : 14.2811 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.2819 R2 : 1.2894
  • S1 : 1.2576 S2 : 1.2501

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 1.2511 | Take Profit : 1.2438 | Stop Loss : 1.2570

AUD/USD

Australian Dollar trades with a mild positive amid a firmer US Dollar, Retail Sales eyed.

Australian Dollar gains ground amid an escalated geopolitical tension in the Middle East.Australian currency could face challenges following the lower ASX 200 Index.US Dollar receives support as traders express concerns about a potential reaction from Israel following Iran’s attack.The Australian Dollar (AUD) rebounds on Monday from the eight-week low of 0.6456 reached last Friday. However, the AUD/USD pair encountered obstacles as traders sought refuge in the US Dollar (USD) amidst heightened tensions in the Middle East. The Australian Dollar may encounter further challenges as the ASX 200 Index declined, reflecting investor concerns about a possible retaliatory response from Israel to Iran’s attack on Saturday. Iran deployed explosive drones and missiles targeting military sites in Israel, with Israel reportedly intercepting nearly all of the incoming projectiles, as per Reuters’ report.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6530 | Negative Crossover | Bearish
  • MA 20 : 0.6540 | Negative Crossover | Bearish
  • MA 50 : 0.6552 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.6548 | Negative Crossover | Bearish
  • MA 20 : 0.6539 | Negative Crossover | Bearish
  • MA 50 : 0.6541 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 43.7783 | Neutral Zone | Neutral

Stochastic   Oscillator : 18.6956 | Sell Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6628 R2 : 0.6673
  • S1 : 0.6483 S2 : 0.6438

Overall Sentiment : Bearish Market Direction : Sell

Trade Suggestion : Limit Sell : 0.6489 | Take Profit : 0.6438 | Stop Loss : 0.6731

USD/JPY

Japanese Yen continues losing ground and drops to 154.00 neighborhood against USD.

The Japanese Yen continues to be undermined by the BoJ’s uncertain outlook about future rate hikes. Reduced Fed rate cut bets underpin the USD and lift the USD/JPY pair to a fresh multi-decade peak. Intervention fears and persistent geopolitical tensions do little to limit losses for the safe-haven JPY. The Japanese Yen (JPY) comes under some renewed selling pressure on the first day of a new week and drops to a fresh multi-decade low against its American counterpart during the Asian session. The Bank of Japan (BoJ) offered few cues on when it will increase interest rates further. In contrast, the Federal Reserve (Fed) is now expected to begin its rate-cutting cycle in September amid still-sticky inflation. This, in turn, suggests that the large difference in rates between the US and Japan will stay for some time, which, in turn, continues to undermine the safe-haven JPY.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 152.5152 | Positive Crossover | Bullish
  • MA 20 : 151.7576 | Positive Crossover | Bullish
  • MA 50 : 150.3545 | Positive Crossover | Bullish

Simple :

  • MA 10 : 152.2910 | Positive Crossover | Bullish
  • MA 20 : 151.8186 | Positive Crossover | Bullish
  • MA 50 : 150.3698 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 76.3828 | Neutral Zone | Neutral

Stochastic   Oscillator : 96.0900 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 152.0153 R2 : 153.3100
  • S1 : 147.8240 S2 : 146.5293

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 153.60 | Take Profit : 153.95 | Stop Loss : 153.45

Elsewhere In The Forex Market

NZD/USD up 0.23% to 0.5950, The USD/CAD down 0.17% to 1.3749. The EUR/GBP up 0.01% at 0.8547. AUD/USD up 0.48% at 0.6490. AUD/NZD up 0.25% at 1.0907, The USD/CNY up 0.02% at 7.2381, AUD/SEK up 0.11% at 7.0421, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) Industrial Production (MoM) (Feb) Forecast –0.8%, Previous –3.2% at 14:30. (CHF) PPI (MoM) (Mar) Forecast 0.2%, Previous 0.1% at 12:00 (USD) Core Retail Sales (MoM) (Mar) Forecast 0.5%, Previous 0.3% at 18:00. (USD) Retail Sales (MoM) (Mar) Forecast 0.4%, Previous 0.6% at 18:00.