After dominating the FX space throughout 2022, the dollar’s reign could be coming to an end.
Since the start of Q4, dollar bulls have been missing in action as investors bet the Federal Reserve will slow the pace of rate hikes in the face of slowing economic growth.
This has pushed the Dollar Index (DXY) to its lowest level in five weeks, injecting bears with enough confidence to attack 110.00. Given how the dollar may weaken further on Fed pivot hopes, this could drag the DXY towards 109.00 in the near term.
We can see a similar theme in the equally-weighted USD index. Prices are under pressure on the weekly charts. Sustained weakness below 1.2500 could open the doors towards 1.2184.
EURUSD back above parity
As the dollar struggles across the board, this has offered an opportunity for currencies to fight back. Euro bulls wasted no time in pushing the EURUSD back above parity for the first time in five weeks. With dollar bulls missing in action amid Fed pivot hopes, and the ECB expected to raise rates by 75 basis points on Thursday, this has propelled the EURUSD towards 1.0030. A daily close above parity could encourage a move towards 1.0100 in the short term. If parity proves to be unreliable support, we could see a decline back toward 0.9900.
GBPUSD breaks above 1.1490
Pound bulls blasted above the 1.1490 resistance level this morning thanks to a weaker dollar. Prices have turned bullish on the daily timeframe and could hit the 100 SMA in the short term. A strong break above this level may see prices test the daily bullish channel around 1.1850. Should the upside lose momentum, a move back toward 1140 could be on the cards.
AUDUSD eyes 0.6550
It looks like AUDUSD bulls are back in town. The sharp rebound witnessed today could signal the return of bulls with 0.6550 acting as a key point of interest. A strong break above this level could see the currency pair target the 50-day SMA and higher. Should 0.6550 prove to be a tough resistance to crack, the AUDUSD could return towards 0.6340 and 0.6200, respectively.
USDJPY capped below 149.00?
After creating consistently higher highs and higher lows, USDJPY bulls could be taking a break. Prices are trading back below 149.00 thanks to fundamental forces and may sink lower due to a weaker dollar. Bears may target 145.00 and 143.50 which is where the 50-day SMA resides.
Watch out for the NZDUSD
It looks like the NZDUSD could be gearing for a major breakout above 0.5800. Such a move could open a path toward the 50 day SMA at 0.5880 and 0.5900. A scenario where 0.5800 holds the forte may send prices back towards 0.5720 and 0.5560.
At the support level, gold has formed a Hammer reversal pattern. Going by the signal, the pair is forming a correctional wave. The goal of growth will be 1675.50. After a test of the resistance level, the pair might bounce off it and continue the downtrend. However, the quotes may fall to 1640.50 without a pullback to the resistance level.
NZDUSD, “New Zealand Dollar vs US Dollar”
On H4, at the support level, the pair has formed a Hammer reversal pattern. The pair is now going by the signal in an ascending wave. The goal of growth will be 0.5825. After a breakaway of the resistance level, the quotes will get a chance to continue the uptrend. However, the price may correct to 0.5735 before growing.
GBPUSD, “Great Britain Pound vs US Dollar”
On H4, at the support level, the pair has formed a Hammer reversal pattern. The pair is now going by the signal in an ascending wave. The goal of growth is the resistance level of 1.1650. If it is broken away, the price will have a chance to continue the downtrend. However, it might drop to 1.1390 before growing.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
In Germany, the IFO Business Activity Index declined for the fifth month in a row to 84.3 points from a revised 84.4 points in September. But despite the decline, there are signs of stabilization. Although investor expectations have slightly improved for Germany and Europe as a whole, the current component of the assessment is still weak. Germany’s Q3 GDP data will be released later in the week. Analysts expect the economy to contract as companies and households are increasingly affected by higher energy bills and continued high inflation, adjusting consumption and investment.
Trading recommendations
Support levels: 0.9897, 0.9873, 0.9835, 0.9755, 0.9601
From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades should be considered from the support level of 0.9897 or 0.9873, but with additional confirmation in the form of reverse initiative. Sells deals may be considered from the resistance level of 0.9961 or 1.0058, but also with confirmation.
Alternative scenario: if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.
News feed for 2022.10.26:
– German Ifo Business Climate (m/m) at 11:00 (GMT+3);
– US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
– FOMC Member Waller Speaks at 20:55 (GMT+3).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.1275
Prev Close: 1.1465
% chg. over the last day: +1.69 %
In his first speech as British Prime Minister, Rishi Sunak promised to right the wrongs of the outgoing administration but hinted that “difficult decisions” lie ahead. This is not surprising since Britain is facing serious fundamental problems: inflation is at a 40-year high, the economy is falling, and there are an energy crisis and rising heating and energy bills. Investors are now turning their attention to the budget proposal due later this month and the upcoming Bank of England meeting on November 3.
Trading recommendations
Support levels: 1.1382, 1.1338, 1.1172, 1.1093, 1.0915, 1.0817
Resistance levels: 1.1478, 1.1693, 1.1816, 1.1901
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the levels of the moving averages. The MACD indicator has become positive, and there is still buying pressure. Under such market conditions, buy trades can be considered from the support level of 1.1382 or 1.1337, but better after confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1478, but it is also better with confirmation since the level has already been tested.
Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.
There is no news feed for today.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 148.88
Prev Close: 147.94
% chg. over the last day: -0.63 %
According to estimates by broker Central Tanshi Co. the Japanese authorities have spent as much as 5.5 trillion yen (almost $37 billion) to support the yen. Analysts are sure that if the yield of inflation-adjusted government bonds does not improve, this step will only have a temporary effect, as the divergent policies of the Bank of Japan and the US Federal Reserve lead to an increase in the interest rate differential, which is very negative for the Japanese currency. However, BoJ governor Kuroda said last week that the central bank would keep monetary policy soft for at least the rest of the year.
Trading recommendations
Support levels: 146.63, 145.88, 144.91, 144.16, 143.00
Resistance levels: 148.64, 150.00, 151.05
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the currency intervention. The price is trading below the levels of the moving averages. The MACD indicator has become negative, and there is slight sellers’ pressure. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 146.63, but with confirmation. Sell deals can be searched from a resistance level of 148.64, but only with additional confirmation in the form of a reverse initiative.
Alternative scenario: If the price fixes below 145.88, the downtrend will likely resume.
There is no news feed for today.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3705
Prev Close: 1.3606
% chg. over the last day: -0.72 %
The central Bank of Canada will hold a monetary policy and interest rate meeting today. Analysts expect the Bank of Canada to raise the rate by 0.75%, although some experts think the Bank of Canada might raise the rate by 0.5% as the core inflation is growing, the overall consumer inflation has been falling for three months in a row. As a result, the Bank of Canada might need to take a smaller step to avoid “plunging” the economy into a recession.
Trading recommendations
Support levels: 1.3583, 1.3535, 1.3454
Resistance levels: 1.3678, 1.3795, 1.3855, 1.3968
From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish. The price has consolidated below the priority level and traded below the moving averages. The MACD indicator has become negative, but there is a divergence, indicating the sellers’ weakness. The best way to sell is to consider the resistance level of 1.3678, but only after additional confirmation in the form of reverse initiative. Buy trades should be considered on the lower time frames from the support level of 1.3583, but it is also better after confirmation.
Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3855, the uptrend will likely resume.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
On H4, the quotes are under the 200-day Moving Average, indicating the prevalence of a downtrend. The RSI has broken through the support level. A test of 3/8 (0.6225) should be expected, followed by a breakaway and falling to the support level of 2/8 (0.6103). The scenario can be cancelled by the price rising over the resistance level of 4/8 (0.6347). After this, the pair may rise to 5/8 (0.6469).
On M15, a breakaway of the lower border of VoltyChannel will increase the probability of a decline to 5/8 (0.6469) on H4.
NZDUSD, “New Zealand Dollar vs US Dollar”
On H4, the quotes are also under the 200-day Moving Average, indicating a downtrend, and on the RSI, the support level has been broken. A test of 2/8 (0.5615) is expected, followed by a breakaway and falling to the support level of 1/8 (0.5493). The scenario can be cancelled by coming over the resistance level of 3/8 (0.5737). This can provoke growth of the pair to 4/8 (0.5859).
On M15, the decline can be additionally supporter by a breakaway of the lower border of the VoltyChannel.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On H4, at the resistance level, the pair has formed a Harami reversal pattern. If the pair now goes by the signal, it will end up in a descending wave. The goal of the decline is 0.9795. However, the pair may still rise to 0.9925, bounce off it, and continue the downtrend after the correction.
USDJPY, “US Dollar vs Japanese Yen”
On H4, at the support level the pair has formed a Harami reversal pattern. Currently the pair may go by the signal in an ascending wave. The goal of the growth is 150.90. However, the price may still pull back to 148.00, so that the uptrend continues upon correcting to the support level.
EURGBP, “Euro vs Great Britain Pound”
On H4, a Hammer reversal pattern has formed. Currently, the pair may go by the signal in an ascending wave. The goal of growth might be the resistance level of 0.8870. Upon testing and breaking through it, the pair will have the chance to continue the uptrend. However, the quotes may still pull back to 0.8695 before growing to the resistance level.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The EU manufacturing activity index indicates a further slowdown. In Germany and the Eurozone as a whole, indicators have reached new lows. Moreover, the slowdown can be seen in both the industrial and service sectors. And in the near term, forecasts are also pointing to a decline as the ECB is planning aggressive rate hikes in the next two meetings, which will undoubtedly have a negative impact on economic growth. On the other hand, if the difference between the interest rates of the ECB and the US Fed starts to narrow, the European currency will rise above parity.
From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there is a divergence, indicating the buyers’ weakness. Under such market conditions, buy trades should be considered from the support level 0.9817 or 0.9755, but with additional confirmation in the form of reverse initiative. Sell deals can be considered from the resistance level of 0.9961, but also with confirmation.
Alternative scenario: if the price breaks down through the support level of 0.9700 and fixes below it, the downtrend will likely resume.
News feed for 2022.10.25:
– German Ifo Business Climate (m/m) at 11:00 (GMT+3);
– US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
– FOMC Member Waller Speaks at 20:55 (GMT+3).
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.1319
Prev Close: 1.1277
% chg. over the last day: -0.37 %
The former finance minister, Rishi Sunak, is the new Prime Minister of Great Britain. The new government now faces the daunting task of providing stability after a period of political and financial chaos in the market. Another equally important task is to lead the country through a recession. S&P Global analysts tracking business activity data indicated yesterday that economic activity in the country had fallen to a 21-month low. Other data show that, in fact, the UK is already in recession. Investors were wary of the news about the new Prime Minister, and the British pound barely moved yesterday, indicating that traders are not yet ready to trade the British currency.
From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, buy trades can be considered from the support level of 1.1172, but better after confirmation. Sell deals are best to look for on intraday time frames, the nearest resistance level is 1.1380, but it is also better with confirmation, as the level has already been tested.
Alternative scenario: if the price breaks down of the 1.1093 support level and fixes below it, the downtrend will likely resume.
There is no news feed for today.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 147.63
Prev Close: 149.00
% chg. over the last day: -0.93 %
After the second currency intervention, the USD/JPY exchange rate stabilized slightly, but the price is still pulling higher like a magnet. Historically, central bank interventions don’t work in the long run and have only a temporary effect. However, they significantly impact market volatility and can seriously hurt traders and investors. Despite the interventions, the fundamental picture is still in favor of USD/JPY quotes growth since the Bank of Japan does not intend to abandon its soft monetary policy, while the US Fed is raising the rates and the gap between the rates is widening every month.
Trading recommendations
Support levels: 146.63, 145.88, 144.91, 144.16, 143.00
Resistance levels: 150.00, 151.05
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the currency intervention. The price is trading at the level of the moving averages. The MACD indicator has become inactive, indicating that traders are not yet ready to trade the Japanese currency. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 146.63, but with confirmation. Sell deals can be sought from the resistance level of 150.00 or 151.05, but only with additional confirmation in the form of a reverse initiative.
Alternative scenario: If the price fixes below 145.88, the downtrend will likely resume.
There is no news feed for today.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.3631
Prev Close: 1.3705
% chg. over the last day: +0.54 %
The Canadian dollar is a commodity currency and depends not only on the monetary policy of the Bank of Canada but also on the USD index and oil dynamics. The oil quotes are now inclined to grow on the OPEC+ country’s production reduction background. That’s why the Canadian dollar may strengthen considerably in the nearest future, as the US Fed officials already hint at the less aggressive policy. Meanwhile, the Bank of Canada keeps the same interest rate as the US Fed.
Trading recommendations
Support levels: 1.3639, 1.3619, 1.3583, 1.3535, 1.3454
Resistance levels: 1.3795, 1.3855, 1.3968
From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3639 but better after confirmation. For sell deals, it is best to consider the resistance level of 1.3795, but only after additional confirmation in the form of a reverse initiative.
Alternative scenario: if the price breaks down and consolidates below the support level of 1.3619, the downtrend will likely resume.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
On Monday, GBPUSD is rising, chiefly fluctuating near 1.1380.
The pound quite fast recovered from the stress provoked by Liz Truss leaving her post. This reshuffling of the government might have been inevitable because Truss’s economic policy was unpopular and could have some consequences.
Now London needs to be patient and wait for the election of a new Prime Minister. The most probable candidate is the former minister of finance Rishi Sunak.
The new Prime Minister will face a most complicated task to reassemble the British economy after the Brexit trauma, with all the supply issues and foreign trade trouble.
On H4, the currency pair completed a wave of correction to 1.1060. At a certain point, the market demonstrated an impulse of growth to 1.1300 and is today consolidating around this level. With an escape upwards, the wave of growth may continue to 1.1560; the goal is local. After the goal is reached, a correction to 1.1300 is possible (with a test from above), followed by growth to 1.1677. Then the trend may continue to 1.0200. Technically, this scenario is confirmed by the MACD oscillator. Its signal line is above zero and continues developing a structure of growth to new highs.
On H1, GBP/USD performed an impulse of growth to 1.1300. Today the market opened with a gap upwards and continues forming a consolidation range around the level. With an escape upwards, the impulse may continue to 1.1560. With an escape downwards, the wave of decline may continue to 1.1010. Technically, the scenario is confirmed by the Stochastic oscillator. Its signal lines bounced off 20 and goes on growing to 50. With a breakaway upwards, growth will continue to 80. If the line bounces off 50 downwards, another link of decline to 20 is not excluded.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Euro bulls are desperate for any form of solace from the rampant US dollar.
The world’s most-popular FX pair, EURUSD, has endured 5 consecutive months of declines. In fact, EURUSD has only managed one monthly gain so far in 2022, which was back in May.
To be fair, at the time of writing, EURUSD is holding on to a 0.5% gain so far in October.
Whether EURUSD can officially claim a gain for the entirety of October and break this monthly losing streak could all boil down to the European Central Bank policy meeting this Thursday, October 27th.
What to look out for?
Size of the rate hike: Markets are forecasting a 89% chance that the ECB will hike its benchmark rates by yet another 75-basis points (bps), as they did back in September.
Lagarde’s press conference: Traders and investors worldwide will be closely monitoring the words used by ECB President Christine Lagarde during her press conference at 2:45PM GMT, just half an hour after the ECB’s Governing Council publishes its policy decision.
Given the forward-looking nature of markets, traders and investors worldwide will be ready to react to what ECB President Christine Lagarde’s latest clues on the central bank’s next policy moves.
How might EURUSD react?
If the ECB disappoints markets and triggers a smaller-than-75bps hike, that could see EURUSD faltering once more.
If the ECB shocks markets with a gargantuan 100-bps hike, that could see EURUSD breaking substantially above its 50-day SMA.
If a 75bps hike materialises, that may offer little reaction in the euro, given that such a move is already the primary outcome that markets are expecting.
If Lagarde suggests that we’ve not seen the last of these 75bps hikes, perhaps leaving the door open for another such supersized move at subsequent meetings, that may help the euro recover.
However, if Lagarde’s press conference or the ECB Governing Council’s policy statement unveils greater concern over incurring too much economic damage with the ongoing inflation-fighting rate hikes, that may unwind the euro’s month-to-date gains.
Expect a combination of the scenarios stated above.
Key levels to look out for:
RESISTANCE: 50-day simple moving average (SMA)
Since March, EURUSD has struggled to sustain consecutive daily closes above its 50-day SMA. This FX pair has been guided lower by this widely-known technical indicator, with this key resistance level yet again holding its ground so far today (Monday, Oct 24).
STRONGER RESISTANCE: 1.000 a.k.a. parity
If EURUSD has enough reason to see a substantial upside break, then stronger resistance is set to arrive at the parity mark, which had already repelled EURUSD bulls earlier this month.
SUPPORT: Recent cycle lows
0.97049
0.96313
0.95357
These support levels may be called into action once more this week, especially if the ECB fails to assure markets that the central bank’s fight against inflation will not cause too much damage to the Eurozone economy.
At the time of writing, markets are forecasting greater odds of 69.3% that EURUSD would touch the 0.990 mark over the next one week period, versus the less-than-even chance (45.5%) that EURUSD would touch 0.970.
Sustained EURUSD gains this week may require a hawkish ECB that can convince markets of its ability to keep hiking rates aggressively.
On H4, the quotes failed to rise over the 200-days Moving Average and for now remain under it. The RSI has bounced off the resistance level. A test of 0/8 (0.9765) is to be expected, followed by a breakaway and falling to the support level of -1/8 (0.9643). The scenario can be cancelled by rising above 1/8 (0.9887). This might lead to a trend reversal and growth to 2/8 (1.0009).
On M15, a breakaway of the lower border of VoltyChannel will increase the probability of the decline.
GBPUSD, “Great Britain Pound vs US Dollar”
On H4, the quotes have broken through the 200-days Moving Average and are now above it, inducating the possibility of an uptrend. The RSI have risen over the resistance level. We should expect a breakaway of 7/8 (1.1474) upwards and growth to the resistance level of 8/8 (1.1718). The scenario can be cancelled by a breakaway of the support level of 6/8 (1.1230) downwards. In this case, the decline will start again, and the quotes might drop to the support level of 5/8 (1.0986).
On M15, the upper border of the VoltyChannel is broken, which increases the probability of further growth
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
On Monday, the EURUSD major looks quite stable. The current quote is 0.9840 In the US Fed, they are discussing an increase in the interest rate by 75 base points again, as reported in a WSJ publication. Some members of the monetary committee do not exclude the chance for a slow-down in the tightening of the credit and monetary policy later. The Fed will hold a meeting at the beginning of November.
On Thursday this week, the European Central Bank will also have a meeting. As a result, the interest rate might grow by 50 or even 75 base points, or at least this is what the inflation situation requires. According to average market expectations, the ECB interest rate will have reached 3% by the end of Q1, 2023.
Increased price pressure on the economy might become the factor that will make the ECB act more decisively. It should also be remembered that the European regulator has already acknowledged the CPI as a serious trouble, though it refuse to move as fast as the Fed.
The chance for a higher than usual increase in the interest rate supports the EUR.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
Article by ForexTime
