. Weekly FX Analysis - Currency Pairs Defy Expectations Post-Powell's Speech.

Weekly FX Analysis – Currency Pairs Defy Expectations Post-Powell’s Speech.

Weekly FX Analysis – Currency Pairs Defy Expectations Post-Powell’s Speech.

02 Dec 2023

Introduction:

In the world of currency markets, GBP/USD experiences a significant uptick, climbing 0.70% above the 1.2700 mark. Despite Federal Reserve Chairman Jerome Powell’s comments on restrictive monetary policy and high core inflation failing to bolster the US Dollar, it slightly recovers from session lows. Meanwhile, the EUR/USD trims losses, the AUD/USD tallies modest gains, and USD/JPY slides below the Ichi Moku cloud on weak US PMI and Powell’s speech. Powell acknowledges easing inflation but emphasizes that monetary policy decisions depend on data.

GBP/USD:

GBP/USD rises beyond 1.2700, amidst predictions about the Fed’s easing cycle and a weakened US dollar.

GBP/USD witnesses a notable surge, advancing by 0.70% and surpassing the 1.2700 level. Despite Federal Reserve Chairman Jerome Powell’s remarks on a restrictive monetary policy and elevated core inflation, the US Dollar fails to gain support.

The primary factor driving the upward movement of GBP/USD is the weakened US dollar. Despite the resistance from Jerome Powell, the Chairman of the US Federal Reserve, against expectations of a rate cut.

Conversely, the US Dollar has slightly risen from its session lows, as the market anticipates a series of speeches from Federal Reserve members later today, particularly focusing on Fed Chairman Jerome Powell. This is putting pressure on GBP bulls.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2632 | Negative Crossover | Bearish
  • MA 20: 1.2496 | Positive Crossover | Bullish
  • MA 50: 1.2410 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2653 | Negative Crossover | Bearish
  • MA 20: 1.2468| Positive Crossover | Bullish
  • MA 50: 1.2295 | Positive Crossover | Bullish

RSI (Relative Strength Index): 64.71 | Buy Zone | Bullish

Stochastic Oscillator: 67.03 | Buying Zone | Negative

Resistance And Support Levels:

  • R1: 1.2658 | R2: 1.2987
  • S1: 1.2436 | S2: 1.2183

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2742 | Take Profit: 1.2987 | Stop Loss: 1.2596

EUR/USD:

The EUR/USD pair ends a dismal week by clearing daily losses and maintaining the 20-day SMA.

The EUR/USD reduced its decline, rebounding from a low of 1.0830 to reach 1.0885. Jerome Powell acknowledged the necessity for evidence before declaring victory over inflation.

In Friday’s trading session, the EUR/USD erased a significant portion of its daily losses, bouncing back to 1.0885 after finding support around the 1.0830 mark. The resurgence was prompted by a widespread weakness in the US dollar.

Despite Powell’s hawkish remarks during his address at Spelman College, the shared currency faces challenges in making upward progress. Moreover, the euro is set to conclude the week with a 0.60% loss after experiencing an increase of over 2% since mid-November.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0912 | Negative Crossover | Bearish
  • MA 20: 1.0848 | Positive Crossover | Bullish
  • MA 50: 1.0768 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0935 | Negative Crossover | Bearish
  • MA 20: 1.0845 | Positive Crossover | Bullish
  • MA 50: 1.0680 | Positive Crossover | Bullish

RSI (Relative Strength Index): 56.05| Buy Zone | Bullish

Stochastic Oscillator: 26.81 | Sell Zone | Negative

Resistance And Support Levels:

  • R1: 1.0902 | R2: 1.1142
  • S1: 1.0752 | S2: 1.0566

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0962 | Take Profit: 1.1142 | Stop Loss: 1.0866

AUD/USD:

Ahead of Powell’s speech, the AUD/USD rises following the US ISM PMIs..

The AUD/USD recorded slight gains, hovering around the 0.6650 mark. The US released mixed ISM PMIs, while China’s PMIs exceeded expectations, providing momentum for the Australian dollar.

During Friday’s trading, the Australian Dollar (AUD) experienced increased demand against the US dollar, resulting in the AUD/USD pair gaining ground and hovering around the 0.6650 level.

The positive Purchasing Managers’ Index (PMI) figures from China in November appear to be driving the pair’s upward momentum. Investors will seek insights from Jerome Powell’s address at Spelman College in Georgia.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6617| Positive Crossover | Bullish
  • MA 20: 0.6515 | Positive Crossover | Bullish
  • MA 50: 0.6426 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6606 | Positive Crossover | Bullish
  • MA 20: 0.6532 | Positive Crossover | Bullish
  • MA 50: 0.6476 | Positive Crossover | Bullish

RSI (Relative Strength Index): 63.94| Buying zone| Bullish

Stochastic Oscillator: 66.95 | Buy Zone | Negative

Resistance And Support Levels:

  • R1: 0.6618 | R2: 0.6785
  • S1: 0.6509 | S2: 0.6366

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6652 | Take Profit: 0.6785 | Stop Loss: 0.6587

USD/JPY:

USD/JPY slides below Ichi Moku cloud on weak US PMI, Powell speech.

In the North American session, USD/JPY undergoes a 0.52% decline as the lower-than-expected ISM manufacturing reading for November exerts pressure on the US Dollar.

On Friday, the USD/JPY pares back some of its Thursday advances, slipping below the Ichimoku cloud during the early North American session. Currently, the pair is trading at 147.35, indicating a decline of 0.58%.

Federal Reserve Chair Jerome Powell recognizes a slight alleviation in inflation but underscores that core inflation remains elevated, emphasizing that decisions regarding monetary policy will hinge on data outcomes.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 148.13 | Positive Crossover | Bullish
  • MA 20: 149.11 | Negative Crossover | Bearish
  • MA 50: 148.93 | Negative Crossover | Bearish

Simple:

  • MA 5: 147.92 | Positive Crossover | Bullish
  • MA 20: 149.64 | Negative Crossover | Bearish
  • MA 50: 149.60 | Negative Crossover | Bearish

RSI (Relative Strength Index): 42.78| Neutral Zone | Neutral

Stochastic Oscillator: 19.09| Sell zone | Positive

Resistance And Support Levels:

  • R1: 149.55 | R2: 151.85
  • S1: 147.95 | S2: 144.95

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 147.33| Take Profit: 144.95 | Stop Loss: 149.03

Elsewhere in the Forex Market

NZD/USD up 0.87% to 0.6206. The EUR/JPY down 1.01% to 159.70. The USDCHF down 0.71% at 0.8688. USD/CAD down 0.47% at 0.8688, EUR/GBP down 0.82% at 0.8522. The USD/CNY up 0.06% at 7.1497, AUD/SEK down 0.15% at 6.9267, CHF/SGD up 0.36% at 1.5336 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(CHF) CPI (MoM) (Nov) (Monday).

(EUR) ECB President Lagarde Speaks (Monday).

(AUD) RBA Interest Rate Decision (Tuesday)

(USD) JOLTs Job Openings (Oct) (Tuesday).

(USD) ISM Non-Manufacturing PMI (Nov) (Tuesday).

(AUD) GDP (QoQ) (Q3) (Wednesday).

(EUR) Retail Sales (MoM) (Oct) (Wednesday).

(GBP) BoE Gov Bailey Speaks at 16:30 (Wednesday).

(USD) ADP Nonfarm Employment Change (Nov) (Wednesday).

(CAD) BoC Interest Rate Decision (Wednesday).

(AUD) Building Approvals (Thursday).