. Daily FX Analysis - NZD/USD, USD/CAD, USD/CHF, EUR/GBP Challenges & Opportunities

Daily FX Analysis – NZD/USD, USD/CAD, USD/CHF, EUR/GBP Challenges & Opportunities

Daily FX Analysis – NZD/USD, USD/CAD, USD/CHF, EUR/GBP Challenges & Opportunities

12 Oct 2023

Introduction:

In the ever-fluctuating world of currency exchange, the NZD/USD pair extends its decline near 0.6020, following a shift in focus towards the upcoming US Consumer Price Index (CPI). Despite robust US wholesale inflation data, the New Zealand dollar faces ongoing challenges. Meanwhile, the USD/CAD pair grapples with the 1.3600 psychological threshold ahead of the same US CPI release, while the USD/CHF pair hovers above 0.9000 amidst a downward trend. On a different note, the EUR/GBP pair refreshes a three-week low at 0.8620, as the European Central Bank’s restrictive policy stance meets economic headwinds in the Eurozone. These forex dynamics reflect a complex interplay of economic data and central bank policies, influencing currency values on the global stage.

NZD/USD:

NZD/USD extends losses near 0.6020 after US wholesale inflation, focus shift to CPI.

NZD/USD is still declining despite positive US statistics. The annual rate of the US CPI is predicted to decline in September. Despite higher-than-expected US wholesale inflation, the US dollar is facing difficulties.

NZD/USD retreats from the two-month high and continues to lose after ending the five-day winning run. Around 0.6020 is the lower end of the spot trading on Thursday during the Early Asian session. Following the release of the FOMC minutes and the US wholesale inflation data that was higher than anticipated, the pair is having difficulties.

In its most recent policy meeting, the Reserve Bank of New Zealand (RBNZ) decided to keep the Official Cash Rate (OCR) at 5.5%. As noted in the RBNZ statement, the central bank acknowledged that interest rates might need to be kept at a restrictive level for a prolonged amount of time.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6013 | Negative Crossover | Bearish
  • MA 20: 0.5991 | Positive Crossover | Bullish
  • MA 50: 0.5969 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6017 | Negative Crossover | Bearish
  • MA 20: 0.5988 | Positive Crossover | Bullish
  • MA 50: 0.5961| Positive Crossover | Bullish

RSI (Relative Strength Index): 53.38| Buy Zone | Bullish

Stochastic Oscillator: 52.25| Buy Zone | Negative

Resistance And Support Levels:

  • R1: 0.6038| R2: 0.6110
  • S1: 0.5996 | S2: 0.5913

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6051 | Take Profit: 0.6110 | Stop Loss: 0.6014

USD/CAD:

USD/CAD grapples to surpass the 1.3600 psychological level ahead of US CPI.

Following strong news on US wholesale inflation, USD/CAD is still rising. The US CPI indicates that September’s annual rate will drop. The Canadian dollar is under pressure due to low crude oil prices.

The USD/CAD pair continues to rise on the second day, closing Thursday’s Asian session in positive territory at 1.3600. The release of the Federal Open Market Committee (FOMC) meeting minutes and strong economic statistics from the United States (US) have helped to strengthen the pair.

The US Producer Price Index (PPI) increased in September, rising beyond the predicted 1.6% to 2.2% from 2.0%. The announcement of the Consumer Price Index (CPI) on Thursday became the focus of the market. Predictions indicate that in September, the yearly rate will decrease from 3.7% to 3.6%. Also, keep an eye out for the weekly report on jobless claims that will be sent to you.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3592| Positive Crossover | Bullish
  • MA 20: 1.3616 | Positive Crossover | Bullish
  • MA 50: 1.3595 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.3599 | Positive Crossover | Bullish
  • MA 20: 1.3651 | Negative Crossover | Bearish
  • MA 50: 1.3573 | Positive Crossover | Bullish

RSI (Relative Strength Index): 46.34| Buy Zone | Bullish

Stochastic Oscillator: 7.93 | Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 1.3599| R2: 1.3692
  • S1: 1.3537| S2: 1.3463

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy 1.3618| Take Profit: 1.3692 | Stop Loss: 1.3565

USD/CHF:

USD/CHF hovers above 0.9000, focus on US CPI, Swiss Producer Import prices.

The USD/CHF exchange rate keeps falling in line with the Fed’s interest rate trend. The US dollar continues to decline even with strong wholesale inflation figures.

The US CPI indicates that September’s annual rate will drop. The Middle East conflict may provide buying support for the Swiss Franc.

The USD/CHF pair is still moving lower on the downward trend that started last week; on Thursday, it was trading lower at 0.9010. The three-week lows are where the pair trades. The US Dollar (USD) is having difficulties despite strong economic statistics from the US because of the potential for the Federal Reserve (Fed) to cease the cycle of rate hikes.

Furthermore, the Federal Open Market Committee (FOMC) minutes show the differences in viewpoints. The Fed minutes stressed how important data-driven decision-making is. It was suggested that reaching a significant level of inflation would be essential to gaining support for determining how monetary policy would be implemented.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.9019 | Negative Crossover | Bearish
  • MA 20: 0.9074| Negative Crossover | Bearish
  • MA 50: 0.9087 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.9019 | Negative Crossover | Bearish
  • MA 20: 0.9094 | Negative Crossover | Bearish
  • MA 50: 0.9107| Negative Crossover | Bearish

RSI (Relative Strength Index): 31.99 | Sell Zone | Bearish

Stochastic Oscillator: 0.17| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 0.9085 | R2: 0.9180
  • S1: 0.8999 | S2: 0.8870

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8966 | Take Profit: 0.8870 | Stop Loss: 0.9032

EUR/GBP:

EUR/GBP refreshes three-week low as ECB Villeroy see policy sufficiently restrictive.

At 0.8620, the EUR/GBP hits a new three-week low as the ECB is anticipated to maintain its current course of policy.

The Eurozone GDP for Q3 is expected to contract due to the consequences of higher interest rates. The UK industrial data will be the beat that the pound sterling will dance to.

Francois Villeroy de Galhau, President of the Bank of France and member of the European Central Bank’s (ECB) Governing Council, believes that monetary policy is adequately restrictive, which is why the EUR/GBP pair struck a new three-week low at 0.8620 on Wednesday.

The Eurozone economy is currently experiencing underperformance in terms of employment, output, and consumer expenditure. This can be attributed to the central bank’s decision to raise interest rates. In the third quarter of 2023, policymaker Pablo Hernandez de Cos of the European Central Bank anticipates a decline in the GDP.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8631 | Positive Crossover | Bullish
  • MA 20: 0.8642| Negative Crossover | Bearish
  • MA 50: 0.8643| Negative Crossover | Bearish

Simple:

  • MA 5: 0.8627 | Positive Crossover | Bullish
  • MA 20: 0.8645| Negative Crossover | Bearish
  • MA 50: 0.8659| Positive Crossover | Bearish

RSI (Relative Strength Index): 44.91| Neutral Zone | Neutral

Stochastic Oscillator: 38.89| Sell | Positive

Resistance And Support Levels:

  • R1: 0.8662| R2: 0.8693
  • S1: 0.8633 | S2: 0.8596

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8622 | Take Profit: 0.8596 | Stop Loss: 0.8643

Elsewhere in the Forex Market

EUR/USD up 0.06% to 1.0624. The AUD/USD up 0.03% to 0.6415. The USD/JPY down 0.04% at 149.08. GBP/USD down 0.03% at 1.2309, CAD/JPY down 0.01% at 109.72, The USD/CNY down 0.02% at 7.2978, AUD/SEK down 0.01% at 6.9934, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) Manufacturing Production (MoM) (Aug) Actual –0.8%, Forecast –0.4%, Previous –0.8% at 11:30.

(GBP) GDP (MoM) (Aug) Actual 0.2%, Forecast 0.2%, Previous –0.5% at 11:30.

(EUR) ECB Publish Account of Monetary Policy Meeting at 17:00.

(USD) Core CPI (MoM) (Sep) Forecast 0.3%, Previous 0.3% at 18:00.

(USD) Initial Jobless Claims Forecast 210K, Previous 207K at 18:00.

(USD) Crude Oil Inventories Forecast 0.492M, Previous –2224M at 20:30.