Daily Market Analysis By FXOpen

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#605

EUR/USD Analysis: Key Support Zone Resists Selling Pressure

Today, fresh monthly values of the PMI index, which is considered a leading indicator of the state of the economy, have become known:

  • France: actual 43.6, expected 46.2. This is the worst economic contraction since the coronavirus.
  • Germany: actual 39.8, expected 39.5.

As a reminder, values below 50 indicate a slowing economy.

Thus, the PMI witnessed the worsening economic problems in the European Union. And not only. The PMI indicator for the UK also published today was 44.2, which, although higher than the previous value 42.5, is still below 50.

The euro immediately reacted to the disappointing news. The exchange rate against the dollar fell to its lowest level in six months. However, then an encouraging recovery followed — apparently, the proximity of the rate to the key support zone had an effect.

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#606

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Weekly Market Wrap With Gary Thomson: UK STOCK MARKET RISES, S&P 500 FALLS, OIL ANALYSIS, EUR/GBP

Get the latest scoop on the week’s hottest headlines, all in one convenient video. Join Gary Thomson, the COO of FXOpen UK, as he breaks down the most significant news reports and shares his expert insights.

  • UK stock market rises amid inflation news #UKStockMarket #UKinflation
  • S&P 500 falls amid news from the Fed S&P500 #Fed
  • Oil analysis: Finally, a bearish reversal? #Oil
  • Will stagflation persist in the UK? EUR/GBP volatility may be an indicator #EURGBP #stagflation

Stay in the know and empower yourself with our short, yet power-packed video. Watch it now and stay updated with FXOpen.

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#fxopen #fxopenyoutube #fxopenuk #fxopenint #weeklyvideo

#607

GBP/USD Nosedives While USD/CAD Aims Higher

GBP/USD is gaining pace below 1.2300. USD/CAD is rising and might aim for a move above the 1.3520 resistance zone.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

  • The British Pound started a fresh decline below the 1.2500 support zone.
  • There is a key bearish trend line forming with resistance near 1.2260 on the hourly chart of GBP/USD at FXOpen.
  • USD/CAD is showing positive signs above the 1.3400 support zone.
  • There is a major bullish trend line forming with support near 1.3450 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2500 zone. The British Pound traded below the 1.2325 support to move into further a bearish zone against the US Dollar, as mentioned in the previous analysis.

The pair even traded below 1.2275 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2230 level. A low was formed near 1.2230 and the pair is now consolidating losses with bearish signs.

Immediate resistance on the upside is near a key bearish trend line at 1.2260. The first major resistance on the GBP/USD chart is near the 23.6% Fib retracement level of the downward move from the 1.2421 swing high to the 1.2230 low at 1.2275 and the 50-hour simple moving average.

A close above the 1.2275 resistance might spark a decent recovery wave. The next major resistance is near the 50% Fib retracement level of the downward move from the 1.2421 swing high to the 1.2230 low at 1.2325. Any more gains could lead the pair toward the 1.2375 resistance in the near term.

Initial support sits near 1.2230. The next major support sits at 1.2200, below which there is a risk of another sharp decline. In the stated case, the pair could drop toward 1.2120.

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#608

Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar

The US, Japan and the UK may have kept interest rates on hold last week, but with the Federal Reserve indicating that rates will stay higher for longer, there is turmoil in the equity markets. The NASDAQ 100 fell 500 points last week, and with weakness continuing into this morning’s trading session, the volatility looks like it will continue throughout the week.

US durable goods orders (15:30 Wednesday) is the first meaningful economic release of the week. After a terrible -5.2% in July, analysts are expecting a modest decline of -0.4% for August. The final reading of US Q2 GDP is expected to show an increase to 2.2% when it is released on Thursday (15:30), as the US economy continues to tick over at a steady rate. This could give the US dollar a further boost.

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#609

Financial Markets Waking Up after a Turbulent Week: Important News

The main event of last week was information from the Fed. Jerome Powell once again demonstrated his determination to maintain a tough political stance, which caused:

→ increase in bond yields. Yields on 10-year securities reached their highest since 2009;
→ the dollar index jumped to its highs of the year;
→ stock markets fell — especially NASDAQ. This increases the belief that the AI boom has run its course. The resilience of the Dow Jones index indicates that investors are preferring more defensive assets;
→ fall of cryptocurrencies. At the same time, the price of bitcoin returned to the flat range in which it was at the end of August. Thus, the wave of positivity associated, among other things, with rumours that the head of the SEC wants to approve applications from funds to launch a crypto ETF, has exhausted itself.

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#610

US Dollar On the Rise Despite Weak PMI Data

EUR/USD

The euro fell against the US dollar on Friday as economic data showed a contraction in economic activity, which could prompt European Central Bank hawks to soften their policy stance. Preliminary data indicates a contraction in economic activity in the eurozone’s two largest economies, France and Germany. France’s HCOB purchasing managers’ index (PMI) for the services sector fell to a 34-month low in September, well below forecast, while Germany’s PMI rose to 46.2 but below economists’ forecast of 47.2. With inflation still high in the eurozone and at risk of rising, the ECB’s next move could be to raise rates before rate cuts are on the agenda, several policymakers said on Thursday. The immediate resistance can be seen at 1.0663, a breakout to the upside could trigger a rise towards 1.0702. Immediate support is seen at 1.0623, a break below could take the pair towards 1.0579.

The previous ascending channel remains. Now, the price is in the middle of the channel and can continue its horizontal movement.

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#611

Rising Bond Yields Are Driving Down Price of Gold

The yield on 10-year bonds exceeded 4.5% per annum – a 16-year high. The demand for them was promoted by:
→ tough statements from the Fed last week that the high base interest rate will remain as long as necessary. Moreover, Minneapolis Fed President Neel Kashkari said he expects another increase;
→ concerns related to the likelihood of a US government shutdown on October 1. At the same time, Moody’s issued a stern warning, jeopardizing the country’s triple-A rating.

It can be assumed that investors choose bonds when forming a portfolio of protective assets. This puts pressure on the gold, which “loses its shine” in their eyes.

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#612

USD/JPY Analysis: For the First Time This Year, the Rate Exceeds 149 Yen Per Dollar

The reason for the stable trend, as we have repeatedly pointed out, is the difference in the monetary policy of the USA and Japan. Inflation in Japan has been above 2% for more than a year, and the media are increasingly publishing expert opinions that the Bank of Japan will raise short-term interest rates from the current -0.1% at the end of this year. However, today Reuters published the opinion of Mr. Makoto Sakurai, the former head of the Bank of Japan. According to him:

→ the Bank of Japan may delay ending negative interest rates until around April next year;
→ the abolition of negative rates, which have been in place since 2016, will not harm the economy;
→ uncertainty about the economic prospects of the United States and China also gives the Bank of Japan a reason to delay raising rates, Sakurai added.

That is, the existing gap in monetary policy may continue for another six months, which will push the USD/JPY rate higher and higher. And it is not surprising that, as the chart shows, today the rate exceeded 149 yen per US dollar for the first time in a year, further increasing the likelihood of reaching the psychological level of 150 yen.

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#613

US Federal Reserve Contemplates Future Interest Rate Hikes Amid Economic Resilience

In an intriguing turn of events, the US Federal Reserve has hinted at the possibility of yet another interest rate hike in the near future, keeping financial markets on their toes.

During its September 2023 meeting, the Federal Reserve chose to maintain the target range for the federal funds rate at an impressive 5.25%-5.5%, a level not seen in 22 years. This decision was in line with market expectations and followed a 25 basis-point hike in July. What piqued the interest of investors and economists alike, however, was the central bank’s signal that another rate increase might be in the cards before the year’s end.

The Federal Reserve’s projections, as revealed in the dot plot, suggest the likelihood of one more rate hike in the current year, followed by two rate cuts in 2024. This cautious approach is in response to recent economic indicators, which point to robust expansion in economic activity. While job gains have slowed in recent months, they continue to exhibit strength, and the unemployment rate remains impressively low. On the surface, this move may seem counterintuitive, especially when considering that inflation in the United States has been well-contained for over a year and stands at less than half the levels witnessed in certain parts of the European Union.

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#614

The Yen and European Currencies Headed to New Lows

The main currency pairs began the last five-day trading period of September with a new wave of growth for the American currency. Changes in the Fed’s point forecast for next year provided powerful support to the dollar, which, in turn, contributed to the search for the bottom in the euro, yen and pound.

The GBP/USD currency pair is testing support at a significant level of 1.2200, the EUR/USD pair is heading towards the January extremes of this year, and the USD/JPY pair has resumed growth in the direction of 150. Apparently, in the coming trading sessions, we can expect another upward impulse on the greenback. At the same time, we must take into account that these pairs are very close to important ranges, the test of which may end in a corrective rollback or reversal.

GBP/USD

The pound turned out to be quite susceptible to the outcome of the recent Bank of England meeting. The regulator left the rate at the same level, while analysts predicted a rate increase of another 0.25%. Add to this a number of weak macroeconomic indicators from the UK, published last week, and we get a stable downward trend for GBP. The price has already dropped below 1.2200, and since there are no reversal combinations, a test of 1.2100-1.2000 may happen.
From the fundamental analysis point of view, today, we are waiting for data on the number of building permits issued in the United States. The US Consumer Confidence Index for September will also be published (17:00 GMT+3).

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

#615

AMZN Stock Analysis: 4 Reasons to Doubt the Bullish Outlook

After the Fed signaled last week that rates may be higher for longer than expected, the US stock market has received a strong bearish boost. And among the most vulnerable assets were technology stocks (considered risky). The NASDAQ index has already fallen by about 6% since last Wednesday (when the FOMC meeting took place). And the negative backdrop from the Fed is one of the 4 issues that give reason to doubt the bullish outlook for AMZN stock.

The second reason is that AMZN has fallen 9% in value since last Wednesday. That is, AMZN is falling faster than the overall market. And this problem is not new. Compare the dynamics of the index and Amazon shares on a weekly timeframe and you will see that the shares have been performing weaker than the index since the summer of 2020. That is, the leadership status that was held for many years has been lost.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

#616

EUR/USD Takes Hit While USD/CHF Surges

EUR/USD started a fresh decline below the 1.0615 support. USD/CHF is rising and might aim a move toward the 0.9220 resistance.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

  • The Euro struggled to clear the 1.0670 resistance and declined against the US Dollar.
  • There is a major bearish trend line forming with resistance near 1.0585 on the hourly chart of EUR/USD at FXOpen.
  • USD/CHF is gaining pace above the 0.9135 resistance zone.
  • There is a key bullish trend line forming with support near 0.9150 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair failed to clear the 1.0670 resistance. The Euro started a fresh decline below the 1.0615 support against the US Dollar, as mentioned in the previous analysis.

There was a move below the 50-hour simple moving average and 1.0600. The bears were able to push the pair below the 1.0585 pivot level. The pair traded as low as 1.0556 and is currently showing a lot of bearish signs.

Immediate resistance on the upside is near the 23.6% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low. There is also a major bearish trend line forming with resistance near 1.0585 and the 50-hour simple moving average.

The first major resistance is near the 50% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low at 1.0615. An upside break above the 1.0615 level might send the pair toward the 1.0670 resistance. Any more gains might open the doors for a move toward the 1.0720 level.

On the downside, immediate support on the EUR/USD chart is seen near 1.0555. The next major support is near the 1.0540 level. A downside break below the 1.0540 support could send the pair toward the 1.0500 level.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

#617

Inflation Still Dogs the Economy: What Are the Central Banks Doing About It?

High inflation continues to grip European economies, putting central banks in a tight spot as they grapple with the triple dilemma of slowing growth, persistent inflation, and the impact of unprecedented rate hikes.

In September, we witnessed a shift in tone from central banks across the region, with some hitting the brakes on interest rate hikes after nearly two years of tightening, while others appeared to be approaching peak rates.

This shift has brought the spotlight to a critical question: how long will these rates remain steady in the face of economic challenges?

One common thread among these central banks is the proximity of their interest rates to their presumed peaks, adding complexity to the ongoing balancing act.

The recent surge in oil prices has further complicated the situation. While it has the potential to fuel inflation, it also exerts downward pressure on economic growth, making future interest rate decisions even more uncertain.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

#618

Oil Surges to a New High of the Year

As the chart shows, the day before yesterday, a barrel of WTI cost USD 87.87, but this morning, the price exceeded the level of USD 93. That is, the growth was more than 6% in just 2 days.

The main driver of such growth remains the voluntary reduction in oil production by OPEC+ countries. Added to this was the market’s reaction to yesterday’s news about the reduction in oil reserves in the United States (expected = -0.7 million barrels, actual = -2.2 million). Inventories are approaching historical lows, according to Reuters. Probably, the US authorities, by releasing oil from storage, are trying to reduce the impact of its high price on inflation, but the graph shows that these efforts are unlikely to give the desired result.

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#619

S&P 500 Analysis: Price Reaches The Edge of Abyss

Investors in the US stock market have serious reasons to worry:

→ The likelihood of a shutdown of government agencies is becoming more and more real. It could happen as early as next week if a budget agreement is not reached (A new fiscal year begins on October 1 in the United States).
→ The prospect of a high policy rate that could last longer than expected is weighing heavily, causing the S&P 500 to decline markedly since last Wednesday’s Fed meeting.
→ According to MarketWatch, the so-called “fear index” (using several input data, including the Cboe VIX volatility index) reached the “extreme fear” level for the first time since March 15, when a series of US bank failures occurred.

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#620

Bitcoin Cash Analysis: Promising Resistance Breakout

Yesterday, the head of the SEC regulator, Gary Gensler, answered questions for 4 hours before the Financial Services Committee of the US House of Representatives, which, among other things, related to cryptocurrencies.

What has become known:

→ on the eve of the hearing, Gary Gensler was sent a letter from four members of the US Congress demanding approval of applications for ETFs based on cryptocurrencies;
→ the head of the SEC avoided answering questions about the timing of decisions on these applications, although he noted that if the agency’s work was stopped on October 1 (like other government agencies), this would slow down the process;
→ for participants in the cryptocurrency market, the event could have given a positive impetus if Gensler’s words had contained hints of positivity, but he once again spoke out about the dangerous prohibited practices that crypto firms use.

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#621

US Currency Continues to Grow Ahead of GDP Data Release

Good data on core durable goods orders in the US for August and a general decrease in risk appetite in the market are helping to strengthen the US dollar. The American currency set new highs in such pairs as EUR/USD, GBP/USD, and USD/CHF. Commodity currencies, along with precious metals, continue to decline.

USD/CHF

The latest meeting of the Swiss National Bank (SNB) disappointed buyers of the Swiss franc. Contrary to analysts’ forecasts, officials refused to raise the rate by 0.25%. The change in the vector of the SNB monetary policy contributed to a sharp strengthening of USD/CHF. In just a few days, the price rose by 300 points and strengthened above the alligator lines on the weekly timeframe. If the current situation does not change and the US dollar continues to strengthen, the pair may continue to rise towards the nearest important resistance range of 0.9400-0.9450. We can consider a cancellation of the upward scenario only after the pair moves below the psychological level of 0.9000.

Today’s news on US GDP for the Q2 will be important for the pair’s pricing. The publication of the indicator is scheduled for 15:30 GMT+3. Also, at the same time, weekly data on the number of applications for unemployment benefits in the United States will be released.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

#622

US Government Shutdown: Assessing Economic Impact and Recession Risks

The recurring spectre of a government shutdown has once again loomed over the United States, prompting concerns about its potential economic consequences. The shutdown may occur this weekend unless lawmakers agree on spending levels and whether to give more aid to Ukraine. Economists and analysts are closely examining the situation, weighing the likelihood of a recession, and evaluating the resilience of the American economy in the face of this uncertainty.

The Longer the Shutdown, the Greater the Damage

A recurring theme has emerged from past government shutdowns: their duration directly correlates with the extent of economic damage.

A brief shutdown is unlikely to significantly impede economic growth or push the nation into a recession, as both Wall Street and the Biden administration economists contend. Historical evidence from previous government funding stoppages supports this assertion, revealing limited economic disruption during short-lived closures.

However, the narrative shifts when contemplating a protracted shutdown scenario. A sustained government shutdown has the potential to erode economic growth, potentially impacting President Biden’s re-election prospects. This challenge would compound other economic headwinds anticipated in the final months of the year, including elevated interest rates, the resumption of federal student loan payments, and a possible extended United Automobile Workers strike.

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#623

Gold Price Accelerates Lower, Crude Oil Price Dips

Gold price is moving lower below the $1,885 support. Crude oil price is now correcting gains and trading below the $92.00 support.

Important Takeaways for Gold and Oil Prices Analysis Today

  • Gold price failed to clear the 1,915 resistance and moved lower against the US Dollar.
  • A major bearish trend line is forming with resistance near $1,865 on the hourly chart of gold at FXOpen.
  • Crude oil prices are now correcting lower below the $92.00 zone.
  • There was a break below a key bullish trend line with support near $92.50 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price struggled to settle above the $1,915 resistance. The price started a fresh decline below the $1,900 pivot level.

The price traded below the $1,885 support and the 50-hour simple moving average. It tested the $1,858 zone. A low is formed near $1,857.71 and the price is now consolidating losses. It is now struggling below the 23.6% Fib retracement level of the downward move from the $1,915 swing high to the $1,857 low.

There is also a major bearish trend line forming with resistance near $1,865. The next major resistance is near $1,870, above which the price could test the 50-hour simple moving average at $1,880.

The next major resistance is near the 61.8% Fib retracement level of the downward move from the $1,915 swing high to the $1,857 low at $1,892. An upside break above the $1,892 resistance could send Gold price toward $1,915. Any more gains may perhaps set the pace for an increase toward the $1,930 level.

Initial support on the downside is near the $1,858 level. The first major support is near the $1,850 level. If there is a downside break below the $1,850 support, the price might decline further. In the stated case, the price might drop toward the $1,832 support.

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#624

US 30 Analysis: Dow Jones Finds Support

September is likely to be the second month in a row that the Dow Jones (US 30) stock market index declined. The last time this happened was… also in September, a year ago.

Important economic data was published yesterday:
→ According to a revised report released by the Bureau of Economic Analysis, US real GDP increased 2.1% year over year in the second quarter. This reduces the risk of recession.
→ The number of applications for unemployment benefits amounted to 204k for a week, which continues the downward trend that has emerged since June of this year.

Today, fresh data on the PCE inflation index will be published, it can provide evidence that inflation is slowly subsiding as long as the economy remains resilient.

More bullish arguments for displaying cautious optimism are provided by the Dow Jones index chart:

→ the price of US 30 has formed an inverted head-and-shoulders pattern (SHS);
→ this bullish pattern formed near the lower border of the descending channel — which indicates support from this line;
→ after Wednesday, when the bearish acceleration was noticeable, the price recovered — this is a sign that if there were panic sentiments, they have exhausted themselves.
→ On Thursday, the bears’ attempts to resume the decline failed, and Friday morning looks optimistic – during the Asian session the price exceeded Thursday’s high.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.