. Daily FX Analysis - Global Tensions Boost GBP/USD, EUR/USD, AUD/USD Rises, USD/JPY Falls

Daily FX Analysis – Global Tensions Boost GBP/USD, EUR/USD, AUD/USD Rises, USD/JPY Falls

Daily FX Analysis – Global Tensions Boost GBP/USD, EUR/USD, AUD/USD Rises, USD/JPY Falls

16 Oct 2023

Introduction:

The GBP/USD pair gains strength above 1.2150 as the US Dollar weakens amid geopolitical concerns. Key events, including US retail sales and UK pay inflation data, are on the horizon. Meanwhile, EUR/USD remains cautious but aims for 1.0550, influenced by global events and central bank actions. AUD/USD bounces back, driven by anticipation of RBA meeting minutes. On the other hand, USD/JPY faces uncertainty due to Fed’s interest rate directions and Middle East tensions, with the Bank of Japan poised to intervene. Market participants keep a close eye on economic releases in the coming days.

GBP/USD:

GBP/USD trades firmer above 1.2150 amid softer US Dollar.

The GBP/USD pair is strengthening during Monday’s European morning above the mid-1.2100s. In light of geopolitical concerns and a cautious risk tone, the weaker US dollar provides some support for the pair. All eyes are still on Tuesday’s important US retail sales and UK pay inflation statistics.

It’s challenging for the USD to extend its current gains as the 10-year US T-bond yield corrects lower early on Friday after increasing by more than 3% on Thursday. US market index futures are trading slightly higher in the meanwhile.

The USD may remain weak and allow GBP/USD to strengthen ahead of the day if US yields continue to decline in the second half of the day. Conversely, a cautious start on Wall Street along with rising US yields may put pressure on the pair.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2175 | Negative Crossover | Bearish
  • MA 20: 1.2204 | Negative Crossover | Bearish
  • MA 50: 1.2233 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2169 | Positive Crossover | Bullish
  • MA 20: 1.2221 | Negative Crossover | Bearish
  • MA 50: 1.2189| Negative Crossover | Bearish

RSI (Relative Strength Index): 45.27| Buy Zone | Neutral

Stochastic Oscillator: 11.75| Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 1.2313| R2: 1.2537
  • S1: 1.2119| S2: 1.1837

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2031 | Take Profit: 1.1837 | Stop Loss: 1.2187

EUR/USD:

Despite a cautious mood, EUR/USD continues to rise towards 1. 0550.

Against a generally weaker US dollar early on Monday, EUR/USD is continuing to rise, heading above 1.0550. However, given the growing geopolitical threats between Israel and Hamas, further upside in the pair seems unlikely. Attention turns to Fed and ECB jargon in search of new momentum.

After registering significant losses on Thursday, the EUR/USD pair steadied at roughly 1.0550 early on Friday. The technical picture indicates a slowdown in the bullish momentum, but if the pair can turn 1.0570 into support, buyers might become interested.

A bullish opening in Wall Street could make it difficult for the USD to find demand. On the other hand, EUR/USD could turn south in case investors continue to price in a stronger probability of one more 25 basis point Federal Reserve rate hike before the end of the year.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0533| Negative Crossover | Bearish
  • MA 20: 1.0553 | Negative Crossover | Bearish
  • MA 50: 1.0576 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.0530 | Negative Crossover | Bearish
  • MA 20: 1.0562 | Negative Crossover | Bearish
  • MA 50: 1.0556 | Negative Crossover | Bearish

RSI (Relative Strength Index): 46.05| Buy Zone | Bullish

Stochastic Oscillator: 12.74 | Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 1.0613| R2: 1.0758
  • S1: 1.0504| S2: 1.0322

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0443| Take Profit: 1.0322 | Stop Loss: 1.0528

AUD/USD:

AUD/USD trades higher post snapping a losing streak, awaits RBA minutes.

The Australian dollar reverses its recent declines ahead of Tuesday’s release of the RBA meeting minutes.

To save billions of dollars, the Reserve Bank of Australia is looking into the idea of adopting a digital currency.

After a string of strong US data points, investors appear to have priced in the prospect of another rate hike from the Fed.

Monday saw the Australian Dollar (AUD) trade higher versus the US Dollar as it recovered from a three-day losing run to start the week. The two encountered difficulties, most likely as a result of the change in the conversation on the direction of US Federal Reserve (Fed) monetary policy. The Reserve Bank of Australia (RBA) Meeting Minutes on Tuesday and the jobs report later in the week are anticipated to draw the attention of investors.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6325 | Positive Crossover | Bullish
  • MA 20: 0.6357| Negative Crossover | Bearish
  • MA 50: 0.6378 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.6316 | Positive Crossover | Bullish
  • MA 20: 0.6369 | Negative Crossover | Bearish
  • MA 50: 0.6388| Negative Crossover | Bearish

RSI (Relative Strength Index): 43.71 | Neutral Zone| Neutral

Stochastic Oscillator: 318.11| Sell Zone | Positive

Resistance And Support Levels:

  • R1: 0.6385 | R2: 0.6492
  • S1: 0.6302 | S2: 0.6199

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6282 | Take Profit: 0.6199 | Stop Loss: 0.6344

USD/JPY:

USD/JPY moves on a downward path near 149.40 on Fed’s interest rate uncertainty.

The USD/JPY keeps losing due to the Fed’s ambiguity over the direction of interest rates. Because of the risk aversion surrounding the Middle East war, the US dollar may strengthen. BoJ is anticipated to step in and stop the Japanese yen’s decline in value on the foreign exchange market.

To stop the Japanese Yen (JPY) from losing value, the Bank of Japan (BoJ) is anticipated to step in and intervene in the spot market. The JPY’s appeal as a safe haven has been undermined by the central bank’s more dovish posture, which has supported the USD/JPY pair.

US Retail Sales (MoM) is due to release on Tuesday, with expectations for a 0.2% rise in September compared to the previous reading of 0.6%. Investors will likely pay attention to Japan’s Merchandise Trade Balance Total for September.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 149.49 | Positive Crossover | Bullish
  • MA 20: 149.25| Positive Crossover | Bullish
  • MA 50: 148.89| Positive Crossover | Bullish

Simple:

  • MA 5: 149.52 | Positive Crossover | Bullish
  • MA 20: 149.16| Positive Crossover | Bullish
  • MA 50: 149.10| Positive Crossover | Bullish

RSI (Relative Strength Index): 56.66| Buy Zone | Bullish

Stochastic Oscillator: 67.42| Buy | Neutral

Resistance And Support Levels:

  • R1: 149.81| R2: 152.05
  • S1: 148.13 | S2: 146.45

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 150.13 | Take Profit: 152.05 | Stop Loss: 148.85

Elsewhere in the Forex Market

NZD/USD up 0.68% to 0.5923. The USD/CAD down 0.09% to 1.3644. The USD/CHF up 0.05% at 0.9027. EUR/GBP up 0.05% at 0.8649, CAD/JPY up 0.15% at 109.62, The USD/CNY up 0.09% at 7.3118, AUD/SEK down 0.04% at 6.9225, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) Industrial Production (MoM) (Aug) Actual –0.7%, Forecast 0.0%, Previous –1.8% at 10:00.

(GBP) BoE MPC Member Pill Speaks at 14:00.

(CAD) Wholesale Sales (MoM) (Aug) Forecast 2.6%, Previous 0.2% at 18:00.

(CAD) Manufacturing Sales (MoM) (Aug) Forecast 1.0%, Previous 1.6% at 18:00.

(USD) FOMC Member Harker Speaks at 20:00.