. Daily FX Analysis - Super Thursday, Forex Moves at a Glance

Daily FX Analysis – Super Thursday, Forex Moves at a Glance

Daily FX Analysis – Super Thursday, Forex Moves at a Glance

02 Nov 2023

Introduction:

In the dynamic world of currency markets, GBP/USD is consolidating below 1.2200 ahead of the Bank of England’s ‘Super Thursday.’ In contrast, USD/CAD is declining due to rising oil prices and a weaker USD. On the other hand, EUR/USD is benefiting from post-Fed USD weakness, while USD/JPY is sliding toward 150.00 amid ongoing USD selling, influenced by the Federal Reserve’s rate policy and bond yield trends. This article covers the latest developments in these currency pairs.

GBP/USD:

GBP/USD consolidates gains below 1.2200 on BOE’s ‘Super Thursday’

The GBP/USD pair is currently in a consolidation phase, having encountered resistance at the 1.2200 level. Those supporting the British Pound are taking a break and preparing for the Bank of England’s (BoE) policy announcements set for ‘Super Thursday’.

Conversely, the US dollar might face selling pressure, potentially leading to an upward move in the GBP/USD pair, if the Federal Reserve contradicts the dot plot and suggests that elevated bond yields could obviate the necessity for an additional interest rate hike.

Before the Federal Reserve’s policy announcements, the economic calendar will highlight the ISM Manufacturing PMI and ADP Employment Change data for October.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2158 | Positive Crossover | Bullish
  • MA 20: 1.2148 | Positive Crossover | Bullish
  • MA 50: 1.2167 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2150 | Positive Crossover | Bullish
  • MA 20: 1.2136 | Positive Crossover | Bullish
  • MA 50: 1.2169| Positive Crossover | Bullish

RSI (Relative Strength Index): 52.89| Buy Zone | Bullish

Stochastic Oscillator: 85.76| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 1.2178| R2: 1.2335
  • S1: 1.2061| S2: 1.1904

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2215 | Take Profit: 1.2335 | Stop Loss: 1.2131

EUR/USD:

EUR/USD retakes 1.0600 amid post-Fed USD weakness.

During the European session on Thursday, EUR/USD is hovering at approximately 1.0600. The US Dollar is experiencing prolonged weakness due to the Federal Reserve’s decision to pause, as well as the non-committal stance of Fed Chair Powell. This has boosted risk sentiment and exerted downward pressure on the US Dollar, in conjunction with the performance of US Treasury bond yields.

Conversely, the European Central Bank (ECB) opted to keep interest rates stable last week, but market expectations indicate that the ECB will commence reducing interest rates in the second quarter of the upcoming year.

Investors and market observers will keep a close watch on Thursday for updates on the German unemployment rate, as well as the Manufacturing PMI for Spain and Italy’s HCOB.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0586| Positive Crossover | Bullish
  • MA 20: 1.0581| Positive Crossover | Bullish
  • MA 50: 1.0580 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0574 | Positive Crossover | Bullish
  • MA 20: 1.0576| Positive Crossover | Bullish
  • MA 50: 1.0576 | Positive Crossover | Bullish

RSI (Relative Strength Index): 54.11| Buy Zone | Bullish

Stochastic Oscillator: 50.4| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.0613| R2: 1.0712
  • S1: 1.0544| S2: 1.0467

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0635| Take Profit: 1.0712 | Stop Loss: 1.0573

USD/CAD:

USD/CAD declines further below mid-13800s on rebounding Oil prices and a weaker USD.

Several factors are causing USD/CAD to move away from the year-to-date high it reached on Wednesday. A slight increase in oil prices is supporting the Canadian dollar and adding downward pressure on the USD.

For the second consecutive day on Thursday, the USD/CAD pair is facing selling pressure, further extending the decline that began from the 1.3900 level, its highest point since October 2022. This downward movement has pushed the spot prices down to the 1.3825 region during the Asian session, and it is influenced by a mix of factors.

Now, traders are turning their attention to US macroeconomic data, specifically the Weekly Initial Jobless Claims and Factory Orders, in search of potential short-term trading catalysts.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3845 | Negative Crossover | Bearish
  • MA 20: 1.3822| Positive Crossover | Bullish
  • MA 50: 1.3755 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.3854 | Negative Crossover | Bearish
  • MA 20: 1.3831 | Negative Crossover | Bearish
  • MA 50: 1.3733| Positive Crossover | Bullish

RSI (Relative Strength Index): 55/52| Buy Zone| Bullish

Stochastic Oscillator: 43.74 |Neutral Zone | Negative

Resistance And Support Levels:

  • R1: 1.3893| R2: 1.3973
  • S1: 1.3826 | S2: 1.3726

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.3801 | Take Profit: 1.3726 | Stop Loss: 1.3862

USD/JPY:

USD/JPY experienced a continued correction from the YTD top, slides to 150.00 range due to a prevailing trend of USD selling.

USD/JPY is facing selling pressure for the second consecutive day due to a weaker US dollar. The expectation that the Federal Reserve has stopped raising rates and declining US bond yields are placing downward pressure on the US dollar.

The divergence in policy between the Federal Reserve and the Bank of Japan is expected to constrain the Japanese yen’s gains and limit the downside for this major currency pair.

The USD/JPY pair continues to move lower for the second day in a row, extending the retracement from the 151.70 level, which marked its highest point since October 2022. However, a significant corrective decline still appears to be elusive at this point.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 150.64 | Negative Crossover | Bearish
  • MA 20: 150.36| Negative Crossover | Bearish
  • MA 50: 149.91| Positive Crossover | Bullish

Simple:

  • MA 5: 150.83 | Negative Crossover | Bearish
  • MA 20: 150.28| Positive Crossover | Bullish
  • MA 50: 149.87| Positive Crossover | Bullish

RSI (Relative Strength Index): 51.79| Buy Zone | Bullish

Stochastic Oscillator: 51.78| Buy Zone | Negative

Resistance And Support Levels:

  • R1: 150.90| R2: 151.94
  • S1: 150.17| S2: 148.77

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 149.66| Take Profit: 148.77 | Stop Loss: 150.40.

Elsewhere in the Forex Market

NZD/USD up 0.52% to 0.5876. The USD/CHF down 0.3% to 0.9050. The EUR/GBP up 0.15% at 0.8712. AUD/USD up 0.45% at 0.6421, EUR/JPY down 0.4% at 159.45, The USD/CNY up 0.02% at 7.3191, AUD/SEK up 0.13% at 7.1568, at the time of writing.

Key Economic Events & Data Release Today:

(USD) FOMC Press Conference at 00:00.

(EUR) German Manufacturing PMI (Oct) Forecast 40.7, Previous 39.6 at 14:10

(GBP) BOE MPC Meeting Minutes at 17:30.

(GBP) BOE Interest Rate Decision (Nov) Forecast 5.25%, Previous 5.25% at 17:30.

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

(GBP) BOE Gov Bailey Speaks at 19:45.