. Daily FX Analysis - Global Currencies React to US Data, Geopolitics, Central Banks

Daily FX Analysis – Global Currencies React to US Data, Geopolitics, Central Banks

Daily FX Analysis – Global Currencies React to US Data, Geopolitics, Central Banks

24 Oct 2023

Introduction:

In the forex market, several major currency pairs are experiencing notable movements. The NZD/USD is showing signs of recovery, the USD/CAD is extending its losses, and the USD/CHF is aiming to break a key level. Additionally, the EUR/GBP is under pressure following UK employment data, with traders eagerly awaiting data releases from both the Eurozone and the UK in anticipation of the European Central Bank’s rate decision.

NZD/USD:

NZD/USD recovers into 0.5850 as risk aversion recedes, for now.

The NZD/USD is experiencing a welcomed upward momentum as we enter the Tuesday trading session. With a limited presence of economic events in New Zealand today, the Kiwi is vulnerable to the influence of USD movements. Furthermore, later on Tuesday, there is another set of US PMI data for October scheduled for release.

The NZD/USD is seeing increased buying interest around the 0.5850 level as overall market risk sentiment steadies in anticipation of a week filled with significant US economic data releases.

Notably, the economic calendar lacks significant data related to the New Zealand dollar for NZD traders to analyse, resulting in the NZD/USD being influenced by market responses to US growth and inflation statistics.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.5844 | Positive Crossover | Bullish
  • MA 20: 0.5865 | Negative Crossover | Bearish
  • MA 50: 0.5902 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.5839 | Positive Crossover | Bullish
  • MA 20: 0.5863 | Negative Crossover | Bearish
  • MA 50: 0.5922| Negative Crossover | Bearish

RSI (Relative Strength Index): 43.63| Neutral Zone | Neutral

Stochastic Oscillator: 39.6| Sell Zone | Positive

Resistance And Support Levels:

  • R1: 0.5908| R2: 0.6000
  • S1: 0.5851| S2: 0.5759

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.5826 | Take Profit: 0.5759 | Stop Loss: 0.5880

USD/CAD:

USD/CAD extends losses below 1.3700 ahead of the US PMI data.

For the third day in a row, USD/CAD is trading in the red, hovering at approximately 1.3674.

The Chicago Fed National Activity Index increased to +0.02 in September, compared to the previous figure of -0.22.

Traders are keeping an eye on the upcoming release of the US S&P Global PMI data, with the Bank of Canada (BoC) Rate decision scheduled for Wednesday.

During Tuesday’s Asian trading session, the USD/CAD pair continues to decline. This downward movement is primarily attributed to the US Dollar (USD) correcting to a one-month low. Nevertheless, an increase in US Treasury bond yields and growing geopolitical tensions in the Middle East could restrict the extent of the USD’s decline. At present, the pair is trading near 1.3674, marking a 0.12% decrease for the day.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3699| Positive Crossover | Bullish
  • MA 20: 1.3683| Negative Crossover | Bearish
  • MA 50: 1.3655 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.3695 | Positive Crossover | Bullish
  • MA 20: 1.3688 | Negative Crossover | Bearish
  • MA 50: 1.3667 | Negative Crossover | Bearish

RSI (Relative Strength Index): 51.58| Buy Zone | Bullish

Stochastic Oscillator: 52.81| Buy zone | Negative

Resistance And Support Levels:

  • R1: 1.0360| R2: 1.3783
  • S1: 1.3629| S2: 1.3567

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3726| Take Profit: 1.3783 | Stop Loss: 1.3693

USD/CHF:

USD/CHF aims to break the 0.8900 major level, focus on US PMI data.

The USD/CHF is experiencing further declines as it anticipates the release of US economic data.

The Swiss Franc has gained strength due to increased geopolitical tensions in the Middle East.

The US Dollar is facing downward pressure, primarily because of the Federal Reserve’s dovish stance.

For the second consecutive day, the USD/CHF is on a downward trajectory, with trading levels around 0.8900 in the Asian session on Tuesday. The pair encounters difficulties as a result of the weakening US Dollar (USD), which may be linked to the less hawkish comments from officials at the US Federal Reserve (Fed).

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8922 | Positive Crossover | Bullish
  • MA 20: 0.8961| Negative Crossover | Bearish
  • MA 50: 0.9008 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.8924 | Positive Crossover | Bullish
  • MA 20: 0.8964 | Negative Crossover | Bearish
  • MA 50: 0.9055| Negative Crossover | Bearish

RSI (Relative Strength Index): 37.68| Selling Zone| Bearish

Stochastic Oscillator: 16.01| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 0.8954| R2: 0.9078
  • S1: 0.8884 | S2: 0.8787

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8863 | Take Profit: 0.8787 | Stop Loss: 0.8913

EUR/GBP:

EUR/GBP attracts some sellers near the 0.8700 mark after the UK employment data, Eurozone, UK PMI data eyed.

The EUR/GBP pairing remains around the 0.8700 level after the release of UK employment data.

Traders are in anticipation of the European Central Bank’s rate decision scheduled for Wednesday, with the consensus being that there will be no changes in interest rates.

The EUR/GBP pairing is currently facing downward pressure near the psychological level of 0.8700 in the early European session on Tuesday. The most recent UK employment data presented a mixed picture. Traders will closely watch economic data releases from both the Eurozone and the UK to seek new catalysts before the European Central Bank (ECB) announces its rate decision on Wednesday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8705 | Negative Crossover | Bearish
  • MA 20: 0.8692| Positive Crossover | Bullish
  • MA 50: 0.8671| Positive Crossover | Bullish

Simple:

  • MA 5: 0.8708 | Negative Crossover | Bearish
  • MA 20: 0.8689| Positive Crossover | Bullish
  • MA 50: 0.8666| Positive Crossover | Bullish

RSI (Relative Strength Index): 53.21| Buy Zone | Bullish

Stochastic Oscillator: 56.07| Buy | Negative

Resistance And Support Levels:

  • R1: 0.8695| R2: 0.8738
  • S1: 0.8662| S2: 0.8629

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.8707| Take Profit: 0.8738 | Stop Loss: 0.8684

Elsewhere in the Forex Market

EUR/USD down 0.21% to 1.0646. The GBP/USD up 0.06% to 1.2256. The AUD/USD up 0.47% at 0.6364. USD/JPY down 0.12% at 149.52, EUR/JPY down 0.35% at 159.16., The USD/CNY down 0.09% at 7.3095, AUD/SEK up 0.67% at 7.0002, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) Claimant Count Change (Sep) Actual 20.4K, Forecast 2.3K, Previous 0.9K at 11:30.

(EUR) German Manufacturing PMI (Oct) Actual 40.7, Forecast 40.0, Previous 39.6 at 13:00.

(EUR) ECB President Lagarde Speaks at 18:00.

(CAD) New Housing Price Index (MoM) (Sep) Forecast 0.1%, Previous 0.1% at 18:00.

(USD) Service PMI (Oct) Forecast 49.8, Previous 50.1 at 19:15.