. Weekly FX Analysis - GBP/USD Surges, EUR/USD Declines, Analyzing Market Forces

Weekly FX Analysis – GBP/USD Surges, EUR/USD Declines, Analyzing Market Forces

Weekly FX Analysis – GBP/USD Surges, EUR/USD Declines, Analyzing Market Forces

28 Oct 2023

Introduction:

In the world of forex trading, several major currency pairs are showing intriguing movements. GBP/USD has rebounded to the 1.2150 range, while EUR/USD is sliding towards 1.0550 amid Wall Street’s negative turn. Meanwhile, AUD/USD retraces gains as it awaits the US PCE price index. Lastly, USD/JPY has dipped below 150.00, influenced by rising Tokyo inflation and steady US core PCE figures. These currency pairs are reacting to a mix of economic and geopolitical factors, shaping their direction as the week unfolds.

GBP/USD:

GBP/USD rebounds to 1.2150 area ahead of the weekend.

Following a day of predominantly trading within a narrow band around the 1.2100 mark, the GBP/USD currency pair advanced towards 1.2150 during the American trading session. This upward movement appears to be driven by an improvement in risk sentiment and weekend transaction activity, which is placing downward pressure on the US Dollar and aiding the pair in its ascent.

GBP/USD lacked a clear directional shift and concluded Thursday with minimal change. On Friday morning, the pair maintained its position just above 1.2100; however, it remains situated beneath significant technical thresholds that may cap any potential upward movement.

With no major data releases on the horizon, the risk perception may steer the movement of GBP/USD leading up to the weekend.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2136 | Negative Crossover | Bearish
  • MA 20: 1.2189 | Negative Crossover | Bearish
  • MA 50: 1.2321 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2136 | Negative Crossover | Bearish
  • MA 20: 2.2189 | Negative Crossover | Bearish
  • MA 50: 1.2321 | Negative Crossover | Bearish

RSI (Relative Strength Index): 40.76 | Neutral Zone | Neutral

Stochastic Oscillator: 31.16 | Selling Zone | Negative

Resistance And Support Levels:

  • R1: 1.2246 | R2: 1.2406
  • S1: 1.2082 | S2: 1.1892

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2017 | Take Profit: 1.1892 | Stop Loss: 1.2107

EUR/USD:

EUR/USD slides towards 1.0550 as Wall Street turns negative.

Late on Friday, the US Dollar picked up momentum due to reports of Israel expanding its ground operations in Gaza. This development led to a decline in stock markets and a surge in Gold and crude oil prices. Consequently, the EUR/USD pair retraced towards 1.0550, eliminating its daily gains.

Previously, the EUR/USD had dipped to around 1.0500 as an immediate response to the European Central Bank’s (ECB) monetary policy announcements on Thursday.

Looking ahead, the US economic calendar will feature the release of the Personal Consumption Expenditures (PCE) Price Index data for September. However, it’s unlikely to provoke a significant market response, as quarterly figures were already unveiled on Thursday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0574 | Negative Crossover | Bearish
  • MA 20: 1.0583 | Negative Crossover | Bearish
  • MA 50: 1.0657 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.0590 | Negative Crossover | Bearish
  • MA 20: 1.0559 | Positive Crossover | Bullish
  • MA 50: 1.0658 | Negative Crossover | Bearish

RSI (Relative Strength Index): 46.47| Buy Zone | Bullish

Stochastic Oscillator: 44.39 | Neutral Zone | Negative

Resistance And Support Levels:

  • R1: 1.0698 | R2: 1.0867
  • S1: 1.0546 | S2: 1.0328

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0485 | Take Profit: 1.0328 | Stop Loss: 1.0613

AUD/USD:

AUD/USD retraces gains ahead of US PCE price index.

The Australian Dollar is making a comeback from its lowest point of the year, benefiting from a correction in the US Dollar. The Aussie Dollar is also finding support due to the anticipation of a rise in interest rates by the Reserve Bank of Australia (RBA).

The Australian Dollar (AUD) is making a recovery from its annual lows, marking its second consecutive day of gains on Friday. This upward movement is attributed to the adjustment in the US Dollar (USD) and the prospect of another interest rate increase by the Reserve Bank of Australia (RBA) scheduled for November 7.

According to the current market consensus, the forthcoming Federal Open Market Committee (FOMC) meeting scheduled for next week is not expected to result in any alterations to interest rates.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6327| Positive Crossover | Bullish
  • MA 20: 0.6350 | Negative Crossover | Bearish
  • MA 50: 0.6406 | Negative Crossover | Bearish

Simple:

  • MA 5: 0.6329 | Positive Crossover | Bullish
  • MA 20: 0.6346 | Negative Crossover | Bearish
  • MA 50: 0.6394 | Negative Crossover | Bearish

RSI (Relative Strength Index): 45.65| Neutral zone| Neutral

Stochastic Oscillator: 41.32 | Neutral Zone | Negative

Resistance And Support Levels:

  • R1: 0.6454 | R2: 0.6592
  • S1: 0.6320 | S2: 0.6196

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6289 | Take Profit: 0.6196 | Stop Loss: 0.6358

USD/JPY:

USD/JPY dips below 150.00 amid rising Tokyo inflation, while US core PCE remains unchanged.

USD/JPY has retreated from its daily peak at 150.41 to the 149.70s, experiencing a 0.40% decline, primarily due to a stronger Yen. The US core PCE for September has registered at 3.7% year-on-year, with general inflation at 3.4%, aligning with expectations.

USD/JPY has pulled back from the daily peak of 150.41 achieved in the Asian session, and it has extended its declines below the 150.00 threshold as the Japanese Yen (JPY) strengthened due to an increase in Japan’s inflation. In the United States (US), economic data indicates that inflation is more persistent than anticipated.

Furthermore, Tokyo’s core inflation, often regarded as an early signal for inflation trends nationwide, unexpectedly gained momentum, leading to conjecture that the Bank of Japan (BoJ) might consider revising its inflation projections during the upcoming monetary policy meeting next week.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 149.90 | Negative Crossover | Bearish
  • MA 20: 149.45 | Negative Crossover | Bearish
  • MA 50: 147.95 | Positive Crossover | Bullish

Simple:

  • MA 5: 149.94 | Negative Crossover | Bearish
  • MA 20: 149.49 | Negative Crossover | Bearish
  • MA 50: 148.16 | Positive Crossover | Bullish

RSI (Relative Strength Index): 54.59| Buying Zone | Bullish

Stochastic Oscillator: 66.67| Buy zone | Negative

Resistance And Support Levels:

  • R1: 150.38 | R2: 152.02
  • S1: 149.26 | S2: 146.42

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 148.40| Take Profit: 146.42 | Stop Loss: 150.04

Elsewhere in the Forex Market

NZD/USD down 0.29% to 0.5803. The EUR/JPY down 0.48% to 158.05. The USDCHF up 0.41% at 0.9024. USD/CAD up 0.31% at 1.3874, EUR/GBP down 0.4% at 0.8704. The USD/CNY up 0.03% at 7.3173, AUD/SEK up 0.2% at 7.0603, CHF/SGD down 0.05% at 1.5175 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(EUR) German GDP (QoQ) (Q3) (Monday).

(CNY) Manufacturing PMI (Oct) (Tuesday).

(JPY) BOJ Outlook Report (YoY) (Tuesday)

(JPY) BOJ Monetary Policy Statement (Tuesday).

(EUR) German GDP (QoQ) (Q3) (Tuesday).

(CAD) GDP (MoM) (Aug) (Tuesday).

(USD) CB Consumer Confidence (Tuesday)

(NZD) Employment Change (QoQ) (Q3) (Wednesday).

(NZD) RBNZ Gov Orr Speaks (Wednesday)