. Daily FX Analysis - Major Pairs Soar, NFP and BOE Awaited.

Daily FX Analysis – Major Pairs Soar, NFP and BOE Awaited.

Daily FX Analysis – Major Pairs Soar, NFP and BOE Awaited.

03 Nov 2023

Introduction:

EUR/USD maintains its gains above 1.0600 as the market awaits the release of the US Nonfarm Payrolls (NFP) data, while a weaker US Dollar and declining US Treasury bond yields provide support. On the other hand, USD/CAD sees a minor rebound with a cautious eye on US and Canadian employment data. AUD/USD edges higher, driven by a weaker USD and a growing risk appetite, while GBP/USD remains under 1.2200, with focus on the US NFP report for a potential boost. Ahead of the Bank of England event, expectations are for a slight adjustment in forward guidance due to a less optimistic economic outlook.

EUR/USD:

EUR/USD trades with modest gains above 1.0600, US NFP in focus.

In European trading on Friday, EUR/USD is maintaining its weekly gains above the 1.0600 level. The recent decline in the US Dollar’s strength and US Treasury bond yields has provided some backing to the pair.

Market attention is primarily focused on the upcoming US Nonfarm Payrolls (NFP) data for potential new market direction. On Thursday, EUR/USD sustained its upward momentum, concluding with gains above 1.0600.

In the short term, the technical analysis suggests that the bullish sentiment remains intact as the market anticipates the release of the US October jobs report.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0617 | Positive Crossover | Bullish
  • MA 20: 1.0596 | Positive Crossover | Bullish
  • MA 50: 1.0587 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0625 | Negative Crossover | Bearish
  • MA 20: 1.0586 | Positive Crossover | Bullish
  • MA 50: 1.0578| Positive Crossover | Bullish

RSI (Relative Strength Index): 54.67| Buy Zone | Bullish

Stochastic Oscillator: 67.47| Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 1.0626| R2: 1.0703
  • S1: 1.0546| S2: 1.0469

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0638 | Take Profit: 1.0703 | Stop Loss: 1.0592

USD/CAD:

USD/CAD sticks to modest gains around mid-1.3740s, and the focus remains on US/Canadian jobs data.

The USD/CAD pair initiates a minor rebound after reaching a low point that persisted for over a week on the preceding day.

A certain degree of repositioning trading activity takes place in anticipation of forthcoming employment data from the United States and Canada, providing some backing to this major currency pair. It’s essential to exercise caution when determining whether the pair has reached its peak due to the underlying fundamental factors.

The USD/CAD pair registered a modest increase in the Asian trading session on Friday, recovering some of the significant losses it experienced the previous day, as it climbed back to the 1.3735 area, which represents a level not seen in over a week.  Nevertheless, the potential for further upside appears constrained in anticipation of the release of monthly employment data from both the US and Canada.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3766| Positive Crossover | Bearish
  • MA 20: 1.3797| Positive Crossover | Bearish
  • MA 50: 1.3751 | Positive Crossover | Bearish

Simple:

  • MA 5: 1.3768 | Positive Crossover | Bearish
  • MA 20: 1.3825| Positive Crossover | Bearish
  • MA 50: 1.3741 | Positive Crossover | Bearish

RSI (Relative Strength Index): 39.89| Sell Zone | Bearish

Stochastic Oscillator: 3.55| Sell zone | Negative

Resistance And Support Levels:

  • R1: 1.3834| R2: 1.3962
  • S1: 1.3731| S2: 1.3584

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.3687| Take Profit: 1.3584 | Stop Loss: 1.3756

AUD/USD:

AUD/USD extends its upside below the mid-6400s ahead of the US NFP data.

AUD/USD sees a slight uptick to reach 0.6435, driven by a weaker US dollar and increased risk appetite in the market.

The Reserve Bank of Australia (RBA) is expected to announce a 25 basis points (bps) interest rate hike in the upcoming week. Investors will closely monitor the US employment figures, particularly the Nonfarm Payrolls data.

In the early hours of European trading on Friday, the AUD/USD pair continued its upward momentum. Both the US dollar’s weakness and an increased risk appetite contribute to the pair’s positive sentiment in anticipation of the US Nonfarm Payrolls data release on Friday. At the time of this update, the pair is trading at approximately 0.6435, marking a 0.03% gain for the day.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6425 | Positive Crossover | Bullish
  • MA 20: 0.6382| Positive Crossover | Bullish
  • MA 50: 0.6365 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6435 | Positive Crossover | Bullish
  • MA 20: 0.6366 | Positive Crossover | Bullish
  • MA 50: 0.6348| Positive Crossover | Bullish

RSI (Relative Strength Index): 63.68| Buy Zone| Bullish

Stochastic Oscillator: 84.85 |Buy Zone | Negative

Resistance And Support Levels:

  • R1: 0.6441| R2: 0.6577
  • S1: 0.6328 | S2: 0.6236

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6482 | Take Profit: 0.6577 | Stop Loss: 0.6413

GBP/USD:

GBP/USD remains on the defensive below 1.2200, looks to US NFP report for fresh impetus.

On Thursday, GBP/USD concluded the trading session at 1.2200, reaching its highest point in a week. This rise was attributed to the Bank of England’s decision to maintain interest rates at their current levels, coupled with a decline in the strength of the US Dollar.

GBP/USD gained upward momentum on Wednesday after briefly falling below the 1.2100 level earlier in the day. The pair maintained its ascent toward 1.2200 on Thursday but encountered a loss of momentum as investors exercised caution, refraining from making significant moves in anticipation of the Bank of England’s (BoE) upcoming monetary policy announcements.

Looking ahead to the Bank of England (BoE) event, it is expected that the forward guidance will be adjusted somewhat to account for the less robust economic outlook.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2189 | Negative Crossover | Bearish
  • MA 20: 1.2166| Positive Crossover | Bullish
  • MA 50: 1.2173| Positive Crossover | Bullish

Simple:

  • MA 5: 1.2197 | Negative Crossover | Bearish
  • MA 20: 1.2149| Positive Crossover | Bullish
  • MA 50: 1.2166| Positive Crossover | Bullish

RSI (Relative Strength Index): 55.3| Buy Zone | Bullish

Stochastic Oscillator: 80.25| Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 1.2200| R2: 1.2320
  • S1: 1.2098| S2: 1.1996

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2223| Take Profit: 1.2320 | Stop Loss: 1.2158.

Elsewhere in the Forex Market

EUR/USD up 0.07% to 1.0628. The USD/JPY down 0.7% to 150.29. The NZD/USD up 0.17% at 0.5908. USD/CHF down 0.03% at 0.9057, EUR/JPY down 0.05% at 159.71, The USD/CNY up 0.00% at 7.3162, AUD/SEK down 0.07% at 7.1497, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) Retail Sales (MoM) Actual 0.9%, Forecast –0.3%, Previous 0.3% at 06:00.

(GBP) Service PMI (Oct) Forecast 49.2, Previous 49.2 at 15:00.

(CAD) Employment Change (Oct) Forecast 22.5K, Previous 63.8K at 18:00.

(USD) Unemployment Rate (Oct) Forecast 3.8%, Previous 3.8% at 18:00.

(USD) Nonfarm Payrolls (Oct) Forecast 180K, Previous 336K at 18:00.

(USD) ISM Non-Manufacturing PMI (Oct) Forecast 53.0, Previous 53.6 at 19:30.