. Daily FX Analysis - Stable USD/JPY, AUD/USD, EUR/USD, GBP/USD Slides

Daily FX Analysis – Stable USD/JPY, AUD/USD, EUR/USD, GBP/USD Slides

Daily FX Analysis – Stable USD/JPY, AUD/USD, EUR/USD, GBP/USD Slides

20 Oct 2023

Introduction:

In the dynamic world of currency markets, significant developments are impacting key currency pairs. The GBP/USD pair is heading south towards the 1.2100 level, driven by disappointing UK Retail Sales data and heightened tensions in the Middle East, bolstering the US Dollar. Meanwhile, EUR/USD is trading cautiously below 1.0600, influenced by ongoing geopolitical tensions and fluctuating US bond yields. AUD/USD is maintaining its position at 0.6300 despite selling pressure due to a risk-off mood and Middle East tensions. Finally, USD/JPY is making slight upward movements but remains below the 150.00 intervention level, with the Japanese Yen weakened by the Bank of Japan’s monetary policy stance.

GBP/USD:

GBP/USD extends losses towards 1.2100 after UK retail sales.

The GBP/USD pair is sliding down, approaching the 1.2100 level as the UK Retail Sales data for September disappointed with a -0.9% month-on-month decrease. Rising tensions in the Middle East are still bolstering the US Dollar, exerting downward pressure on the currency pair.

During the early European trading session, GBP/USD headed in a southerly direction, slipping below the 1.2100 mark. This came after the currency pair had remained in a narrow range near 1.2150 throughout the Asian trading hours.

The 10-year US Treasury bond yield, considered a benchmark, continued its weekly surge and reached its highest level since 2007, hovering around 5% on Thursday. Later in the day, Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech at the Economic Club of New York.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2133 | Negative Crossover | Bearish
  • MA 20: 1.2165 | Negative Crossover | Bearish
  • MA 50: 1.2203 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2133 | Negative Crossover | Bearish
  • MA 20: 1.2173 | Negative Crossover | Bearish
  • MA 50: 1.2179| Negative Crossover | Bearish

RSI (Relative Strength Index): 41.07| Neutral Zone | Neutral

Stochastic Oscillator: 18.11| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 1.2220| R2: 1.2337
  • S1: 1.2113| S2: 1.1912

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2075 | Take Profit: 1.1945 | Stop Loss: 1.2183

EUR/USD:

EUR/USD remain depressed below 1.0600 as risk-off flows dominate.

In the European morning of Friday, EUR/USD is trading with a cautious tone, staying below the 1.0600 mark. The currency pair is facing pressure due to ongoing geopolitical tensions, which are bolstering the demand for the safe-haven US Dollar. Nevertheless, the downward movement is limited as US bond yields are on the decline.

On Thursday, EUR/USD experienced an upward trajectory, approaching its highest daily closing level in more than a week. This occurred despite a risk-averse market sentiment, with support coming from a weakened US dollar.

Economic data released from the United States on Thursday presented a mixed picture. While Initial Jobless Claims fell below the 200,000-mark, Continuing Claims increased to 1.734 million, marking their highest level since July.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0575| Positive Crossover | Bullish
  • MA 20: 1.0562 | Positive Crossover | Bullish
  • MA 50: 1.0571 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0577 | Positive Crossover | Bullish
  • MA 20: 1.0557 | Positive Crossover | Bullish
  • MA 50: 1.0547 | Positive Crossover | Bullish

RSI (Relative Strength Index): 56.42| Buy Zone | Bullish

Stochastic Oscillator: 96.49| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.0601| R2: 1.0764
  • S1: 1.0485| S2: 1.0328

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0642| Take Profit: 1.0763 | Stop Loss: 1.0573

AUD/USD:

AUD/USD defends 0.6300 after PBOC`s status-quo, risk-off mood weighs.

AUD/USD is holding steady at 0.6300 following the People’s Bank of China’s decision to keep its Loan Prime Rate unchanged for the foreseeable future. However, the currency pair continues to experience significant selling pressure as risk aversion persists into the Asian session on Friday, driven by escalating tensions in the Middle East.

In the American trading session, AUD/USD experienced an increase, buoyed by a weakened US dollar and a recovery in commodity prices. These upward movements offset the earlier decrease driven by Australian data and market apprehensions.

US bond yields experienced a slight retreat, although they are still close to multi-year highs. Investor confidence seems to be unsettled by factors such as geopolitical tensions, expectations of prolonged higher interest rates, and the surge in crude oil prices. These elements contribute to a challenging outlook for a stable recovery in AUD/USD.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6319 | Negative Crossover | Bearish
  • MA 20: 0.6339| Negative Crossover | Bearish
  • MA 50: 0.6361 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.6314 | Negative Crossover | Bullish
  • MA 20: 0.6337 | Negative Crossover | Bearish
  • MA 50: 0.6362| Negative Crossover | Bearish

RSI (Relative Strength Index): 42.54| Neutral Zone| Neutral

Stochastic Oscillator: 35.8| Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 0.6378| R2: 0.6471
  • S1: 0.6302 | S2: 0.6206

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6282 | Take Profit: 0.6206 | Stop Loss: 0.6340

USD/JPY:

USD/JPY holds steady after Japan`s National CPI, remains below 150.00 intervention level.

In the Asian session on Friday, the USD/JPY pair is making slight upward movements, partially reversing the minor pullback observed from the area near the psychological level of 150.00, which had reached a two-week high.

In the context of the Japanese Yen, investors are monitoring the potential actions of the Bank of Japan (BoJ) in the foreign exchange market, given that the Japanese Yen has depreciated to nearly 150.00 against the US Dollar.

However, it is uncertain whether intervention by the BoJ or any relevant authorities can effectively alter the current trend, which is unfavourable for the Japanese Yen. This trend is supported by an accommodative monetary policy stance that contributes to the Yen’s weakness.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 149.83 | Positive Crossover | Bullish
  • MA 20: 149.61| Positive Crossover | Bullish
  • MA 50: 149.22| Positive Crossover | Bullish

Simple:

  • MA 5: 149.82 | Positive Crossover | Bullish
  • MA 20: 149.63| Positive Crossover | Bullish
  • MA 50: 149.34| Positive Crossover | Bullish

RSI (Relative Strength Index): 61.46| Buy Zone | Bullish

Stochastic Oscillator: 67.38| Buy | Positive

Resistance And Support Levels:

  • R1: 149.95| R2: 152.11
  • S1: 148.49| S2: 147.28

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 150.38| Take Profit: 152.11 | Stop Loss: 149.43

Elsewhere in the Forex Market

NZD/USD down 0.4% to 0.5825. The USD/CAD up 0.02% to 1.3722. The USD/CHF up 0.18% at 0.8926. USD/JPY up 0.07% at 149.88, EUR/JPY up 0.02% at 158.47., The USD/CNY up 0.08% at 7.3181, AUD/SEK up 0.10% at 6.9430, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) PBoC Loan Prime Rate Actual 3.45%, Forecast 3.45%, Previous 4.20% at 06:45.

(JPY) National CPI (MoM) Actual 0.3%, Previous 0.2% at 05:00.

(GBP) Retail Sales (MoM) (Sep) Actual –0.9%, Forecast –0.2%, Previous 0.4% at 11:30

(CAD) Core Retail Sales (MoM) (Aug) Forecast 0.0%, Previous 1.0% at 18:00.

(USD) FOMC Member Mesters Speaks at 21:45.