Daily Market Analysis By FXOpen

Commercial Content Analysts
681

Consolidation of Major Currency Pairs Continues

The US dollar has resumed growth in almost all directions, but key levels have not yet been broken. Thus, the AUD/USD currency pair is approaching October lows just below 0.6300, the pound/US dollar has retested 1.2100, and the US dollar/yen is consolidating near 150.00.

USD/JPY

A possible Fed rate hike due to rising inflation, as well as good data on the core retail sales index and industrial production in the US, published at the beginning of the week, keep the pair from developing a full-fledged downward correction. At the same time, as we see, incoming data is not yet enough to consolidate above 150.00. Most likely, buyers need an additional news background to resume impulse growth. If the foundation of the next trading sessions is positive for the American currency, a renewal of the recent high at 150.20 and a resumption of growth in the direction of last year’s extremes at 151.80m may occur. We could consider cancelling the upward scenario if the pair falls below 147.80.

Today’s speech by Fed Chairman Jerome Powell will be important for the pair’s pricing. Tomorrow morning, you should pay attention to the publication of data on the national core consumer price index (CPI) in Japan.

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682

AUD/USD and NZD/USD Signal More Downsides

AUD/USD declined below the 0.6355 and 0.6330 support levels. NZD/USD is also moving lower and might trade below the 0.5800 zone.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

  • The Aussie Dollar started a fresh decline from well above the 0.6355 level against the US Dollar.
  • There is a key bearish trend line forming with resistance near 0.6330 on the hourly chart of AUD/USD at FXOpen.
  • NZD/USD declined steadily from the 0.5930 resistance zone.
  • There is a connecting bearish trend line forming with resistance near 0.5840 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair struggled to clear the 0.6400 zone. The Aussie Dollar started a fresh decline below the 0.6355 support against the US Dollar.

The pair even settled below 0.6330 and the 50-hour simple moving average. A low was formed near 0.6295 before there was an upside correction. The pair climbed above the 50% Fib retracement level of the downward move from the 0.6393 swing high to the 0.6295 low.

However, the bears were active near the 0.6355 resistance zone. It failed to clear the 61.8% Fib retracement level of the downward move from the 0.6393 swing high to the 0.6295 low.

There is also a key bearish trend line forming with resistance near 0.6330. On the downside, initial support is near the 0.6295 low. The next support sits at 0.6285. If there is a downside break below 0.6285, the pair could extend its decline.

The next support could be 0.6250. Any more losses might send the pair toward the 0.6220 support. On the upside, an immediate resistance is near the trend line at 0.6330.

The next major resistance is near 0.6355, above which the price could rise toward 0.6400. Any more gains might send the pair toward 0.6420. A close above the 0.6420 level could start another steady increase in the near term. The next major resistance on the AUD/USD chart could be 0.6500.

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683

S&P 500 Analysis: Threat of an Important Support Breakdown is Growing

On September 19, we analysed the S&P 500 index, indicating that the market is under pressure. This was an important long term analysis, and let’s see what has changed in a month with the news that happened yesterday.

A month ago we marked turning points A, B, C, D on the chart.

Since then, new turning points have appeared: E, F, G, H.

As we indicated, in the pulse sequence A→B, B→C, C→D, D→E, each subsequent pulse was 50% shorter than the previous one. The same observation is true for the E→F movement, which is the last in a series of contracting impulses. That is, the market either compressed into a spring or formed an important balance of supply and demand.

However, the F→G impulse violated this trend. This means that the market has left the state of balance in a bearish direction. At the same time, the channel expanded by 2 times (according to the principle of a parallel channel), and the market found new support G at its lower border. Further, it is important that the movement G→H amounted to 50% of the decline, which corresponds to a bullish corrective movement within the framework of the dominant downward trend (as you understand, the trend began when the market came out of balance).

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684

GBP/JPY Analysis: a Deceptive Calm

From early January to today, the GBP/JPY rate has risen by approximately 17%, driven by the Bank of Japan’s ultra-loose policy of keeping rates below zero.

But since August, the upward trend began to weaken — perhaps faith in the pound was undermined by high inflation (the highest among the G7). This week:
→ data published on Wednesday showed that inflation in the UK has stabilized at 6.7%. In an interview with the Belfast Telegraph published on Friday, Andrew Bailey appeared calm when he said the Bank of England did not expect big changes in the data anyway;
→ retail sales data for September in the UK published on Friday turned out to be worse than expected: actual = -0.9%, expected = -0.3%, a month ago = +0.4%

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685

Dollar Falls Amid Powell’s Dovish Comments

Federal Reserve Chairman Jerome Powell’s comments at the economic forum were seen as generally dovish. The strength of the US economy and ongoing tight labour markets could justify further rate hikes, Powell said. But he also noted that the recent market rise in bond yields has helped tighten overall financial conditions significantly.

The official’s speech turned out to be quite cautious, and, in general, signalled more in favour of maintaining monetary policy without changes. However, answering questions, the chairman did not rule out the possibility of an additional increase in the interest rate, emphasising that the current value is not the maximum.

In addition, the day before the market paid attention to a block of macroeconomic statistics from the United States. Thus, the number of initial applications for unemployment benefits for the week of October 13 decreased from 211.0k to 198.0k, while analysts expected 212.0k, and the number of repeated applications for the week of October 6 rose from 1.705 million to 1.734 million, which turned out to be significantly higher than forecasts of 1.710 million.
Investors were also somewhat disappointed by sales in the secondary housing market: in September the figure decreased by 2.0% after -0.7% in the previous month, and in absolute terms the dynamics slowed down from 4.04 million to 3.96 million, while experts expected 3.89 million. The dollar index was last down 0.27% on the day at 106.24.

EUR/USD

The EUR/USD pair is declining slightly, consolidating near the 1.0575 mark. The day before, the pair showed active growth, having managed to update local highs from October 12, which was associated with the speech of the head of the US Federal Reserve, Jerome Powell. The euro added 0.42% to $1.0581. The immediate resistance can be seen at 1.0591, a breakout to the upside could trigger a rise towards 1.0601. On the downside, immediate support is seen at 1.0525, a break below could take the pair towards 1.0442.

The focus of investors today will be on September statistics on the dynamics of manufacturing inflation in Germany: in monthly terms the index is expected to slightly accelerate from 0.3% to 0.4%, and in annual terms — a decrease of 14.2% after -12.6% in the previous month.

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686

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687

GBP/USD Attempts Recovery, USD/CAD Grinds Higher

GBP/USD is attempting a recovery wave from 1.2090. USD/CAD is rising and might aim for a move above the 1.3720 resistance zone.

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

  • The British Pound is struggling to gain pace for a move above the 1.2200 region.
  • There is a key bearish trend line forming with resistance near 1.2170 on the hourly chart of GBP/USD at FXOpen.
  • USD/CAD is showing positive signs above the 1.3670 support zone.
  • There is a bullish flag pattern forming with resistance near 1.3720 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 1.2200 zone. The British Pound traded below the 1.2140 support to move into further a bearish zone against the US Dollar, as mentioned in the previous analysis.

The pair even traded below 1.2115 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2090 level. A low was formed near 1.2093 and the pair is now attempting a short-term recovery wave.

There was a fresh upside above the 50-hour simple moving average. The pair climbed above the 50% Fib retracement level of the downward move from the 1.2191 swing high to the 1.2093 low.

Immediate resistance on the upside is near a key bearish trend line at 1.2170. It is close to the 76.4% Fib retracement level of the downward move from the 1.2191 swing high to the 1.2093 low. The first major resistance on the GBP/USD chart is near the 1.2190 level.

A close above the 1.2190 resistance might spark a decent recovery wave. The next major resistance is near the 1.2220 level. Any more gains could lead the pair toward the 1.2300 resistance in the near term.

Initial support sits near 1.2140. The next major support sits at 1.2115, below which there is a risk of another sharp decline. In the stated case, the pair could drop toward 1.2020.

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688

Bitcoin Breaks Psychological Level of $30k

On Friday-Sunday, the price of BTC/USD several times exceeded the round level of 30,000, but the excess was short-lived; soon, the price rolled back down. But the pressure of the bulls did not weaken, and since the beginning of Monday, the price of bitcoin rose above 37,000.

A combination of bullish factors contributed to the rise in bitcoin prices:
→ the threat of a financial crisis in the USA. Congress without a speaker, the budget has not been approved, the S&P-500 is near its 5-month low. Legendary investor Peter Schiff expresses the opinion that a crisis is inevitable due to the actions of the Fed.
→ Expectations that the SEC will approve a bitcoin ETF in the near future, and this will open bitcoin to institutional investors. According to JPMorgan, this will happen within a few months. Positive signals will come from BlackRock and VanEck, which have filed bids.
→ Refusal by the SEC to claim against Ripple Labs.
→ Geopolitical tensions in the Middle East. Bitcoin is gaining relevance as an asset that can become a safe haven for capital.

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689

Cryptocurrency Market Capitalization Sets Year’s High

Amid the frenzy over expectations that the SEC will approve applications for spot bitcoin ETFs, the cryptocurrency market capitalization reached USD 1.25 trillion this morning, for the first time in 2023. Expectations have increased following reports that the US Securities and Exchange Commission will not appeal a court ruling that the rejection of Grayscale Investments’ ETF application was improper.

It is important to understand that an ETF is a financial instrument that will allow a wide range of people to easily officially invest in bitcoin without opening an account on a crypto exchange, which can be associated with difficulties and dangers.

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690

Eurostoxx 50 at Important Support. Production in Europe is Declining

As data released this morning showed:
→ Purchasing Managers’ Index (PMI) in France: actual = 42.6, expected = 44.4, a month ago = 43.6. Thus, the index dropped to its lowest level since the panic associated with the spread of coronavirus.
→ PMI in Germany: actual = 40.7, expected = 40.1, a month ago = 39.8.

Since the values of the PMI index (considered a leading indicator of the state of the economy, calculated by S&P Global) are significantly below 50, this indicates a contraction of the economy in the 2 most important countries of Europe in the context of high interest rates.

It is not surprising that the European stock index Eurostoxx 50 shows bearish dynamics: the price is below the SMA (100), which is directed downwards. The publication of PMI values added negativity. Will the bearish trend continue?

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691

FTSE 100 Opens Lower as Barclays’ Mixed Results Weigh on Banking Sector

London’s FTSE 100 index commenced the trading day on a weaker note, driven by a downturn in the banking sector following Barclays’ release of mixed financial results.

At 8:15 AM, the FTSE 100 dipped by 3.78 points to 7,371.05, while its counterpart, the FTSE 250, displayed resilience with a gain of 28.03 points, equivalent to a 0.2% increase, closing the session at 17,087.02. The days of the FTSE 100 surpassing the 8,000-point threshold, which had until a few months ago never been reached, seem to be receding into the past.

Barclays, a high street lender, posted third-quarter profits that surpassed expectations. However, the bank simultaneously announced a downward revision of its UK net interest margin guidance and signalled an anticipated charge in the fourth quarter related to restructuring efforts.

Analysts have characterised this earnings period as less robust, primarily due to an impairment charge that exceeded forecasts. The downgrade in net interest margin guidance, attributed to shifts in deposit pricing and composition, raises concerns about potential negative ramifications in other sectors.

Despite these challenges, the persistently high interest rates continue to provide a favourable tailwind, effectively offsetting the adverse impact of a subdued mortgage market and changes in deposit levels.

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692

EUR/USD Struggles While USD/CHF Turns Red

EUR/USD started a fresh decline below the 1.0625 support. USD/CHF is also declining and struggling below the 0.9000 region.

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

  • The Euro struggled to clear the 1.0685 resistance and declined against the US Dollar.
  • There is a key bullish trend line forming with support near 1.0585 on the hourly chart of EUR/USD at FXOpen.
  • USD/CHF is gaining pace below the 0.8975 support zone.
  • There is a major bearish trend line forming with resistance near 0.8940 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair attempted a recovery wave above the 1.0640 zone, as mentioned in the previous analysis. The Euro climbed above 1.0660 but struggled near 1.0685 against the US Dollar.

The pair started a fresh decline below the 50-hour simple moving average and 1.0625. The bears were able to push the pair toward the 1.0585 pivot level. The pair traded as low as 1.0583 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 1.0687 swing high to the 1.0583 low.

The first major resistance is near the 50-hour simple moving average at 1.0625. An upside break above the 1.0625 level might send the pair toward the 76.4% Fib retracement level of the downward move from the 1.0687 swing high to the 1.0583 low at 1.0660.

Any more gains might open the doors for a move toward the 1.0685 level. On the downside, immediate support on the EUR/USD chart is seen near a key bullish trend line at 1.0585. The next major support is near the 1.0530 level. A downside break below the 1.0530 support could send the pair toward the 1.0500 level.

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693

AUD/USD Analysis: The Rate Reacts Sharply to News About Inflation

Today in Australia, data from the CPI indicator was published, which came as an unpleasant surprise, indicating that inflation in Australia does not want to decline:
Core Price Index was: actual = 5.6%, expected = 5.3%, a month earlier = 5.2%, two months earlier = 4.9%.

Perhaps the reason that inflation is raising its head again is high prices on the world oil market.

One way or another, the AUD/USD chart shows a surge in volatility and a sharp downward reversal from the level of 0.63900. The multidirectionality of impulses may indicate that the news was indeed unexpected.

According to Reuters, two of Australia’s four largest banks — the Commonwealth Bank of Australia and ANZ — now expect a quarter-point rate hike in November. “While the current level of 4.35% could mark the peak of the cash rate, there is a risk that policy could tighten further. Any easing is still a long way off,” bank analysts say.

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694

Federal Reserve Signals Prolonged Restrictive Monetary Policy, Impacting Markets

Federal Reserve Chairman Jerome Powell’s recent announcement underscores the central bank’s unwavering commitment to an extended period of restrictive monetary policy, sparking fluctuations in the stock market, surges in the US 10-year Treasury yield, and an appreciation of the US dollar against the Japanese yen.

This resolute stance is designed to persist until there is a high degree of confidence that inflation has sustainably dropped to the targeted 2% over an extended period.

Despite recent US inflation rates aligning with the Federal Reserve’s 2% target, Chairman Powell refrained from suggesting that the mission to rein in inflation has been successfully accomplished.

He notably indicated that significant inflation metrics are anticipated to recede in the near future. Powell’s stricter warning surpasses investor expectations and runs counter to the backdrop of recent increases in long-term US interest rates and tighter financial conditions, which have evolved since the last Federal Reserve rate hike.

The Federal Reserve’s hawkish stance is deeply rooted in its keen focus on future economic forecasts and the associated risks.

This position demonstrates the Federal Reserve’s heightened willingness to accept the possibility of a recession rather than a resurgence of inflation. Moreover, the Federal Reserve relies on economic models, including the Phillips curve, which posits an inverse relationship between inflation and unemployment.

The Japanese yen has experienced considerable volatility over the past week, oscillating between gains and losses against the US dollar on multiple occasions.

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695

Google Report Crashes Stock Price

Shares of GOOG and GOOGL fell about 9.5% on Wednesday, wiping Google’s parent company’s market value by USD 166.64 billion, the fifth-largest decline in capitalization history, according to Dow Jones Market Data.

It is noteworthy that the drop occurred as a result of the publication of a report that turned out to be better than expected:
→ earnings per share: actual = USD 1.55, forecast = USD 1.45;
→ gross income: actual = USD 76.69 billion; forecast = USD 75.95.

Why did Google’s stock price collapse? Among the reasons may be the fact that revenue from cloud-based services has shown a decline. It amounted to USD 8.41 billion, which is about 2% below expectations of USD 8.6 billion, although in the same quarter last year it was equal to USD 6.87 billion, that is, an increase of 22% over the year.

However, Dan Ives of Wedbush Securities said the stock’s negative reaction was “overblown.” And according to analysts at Mizuho Americas, the decline in cloud revenue will be “temporary,” based on what they’ve seen in rival Amazon’s cloud business.

If the price decline continues, how deep can it be?

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696

Despite Strong Report, META Shares Fall 3%

Like Google, META demonstrated that the price can fall if the quarterly report is better than expected:
→ Earnings per share: actual = USD 4.39, expectation = USD 3.63.
→ Revenue: actual = USD 34.15 billion, expectations = USD 33.56 billion
→ Number of daily active users: fact = 2.09 billion, expectation = 2.07 billion according to StreetAccount.

META’s share price initially rose in post-market trading but then reversed course and fell more than 3% following cautionary comments from CFO Susan Lee about the impact of military conflict in the Middle East on the advertising market.

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697

The NASDAQ Index Officially Enters Correction

The decline to current levels from the peak of the top of the year, set on July 19, exceeded 10%, which is generally considered to be the trigger for the start of the correction. According to statistics, this is the 70th official correction since the index was created in February 1971.

Despite the positive report from Microsoft, the bearish dynamics of the NASDAQ index were determined by the decline in shares of Tesla and Google, as well as the rise in the yield of long-term treasury bonds, which increased the cost of borrowing.

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698

The US Dollar Resumes Growth

Towards the end of the week, the American currency managed to resume medium-term growth. Reversal combinations among commodity currencies were broken, and the pound, yen and euro went to test new lows. The sharp strengthening of the US dollar is most likely caused by the worsening geopolitical situation in the Middle East, rising oil prices and good fundamental data from overseas published this week. Thus, the business activity index (PMI) in the US services sector for October, published on Tuesday, showed growth: 50.9 versus 49.8. New home sales also increased in September: 759K versus 680K.

USD/JPY

The data published above contributed to the exit of the USD/JPY pair from the phase of long-term consolidation at 149.80-148.70. On the weekly USD/JPY chart, greenback buyers easily broke through the upper limit and are currently firmly entrenched above 150.00. If the corresponding foundation is released, the pair may rise to last year’s highs at 151.90. A corrective rollback is possible to 149.50-149.20.

Today at 15:30 GMT+3, we are waiting for the publication of data on basic orders for durable goods in the United States for September. Also at this time, the GDP figure for the third quarter will be released, and weekly data on the number of applications for unemployment benefits will be published.

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699

Gold Price Rallies Toward $2K While Crude Oil Price Takes Hit

Gold price surged above the $1,960 resistance during the Israel-Hamas war escalated. Crude oil price struggled and declined below the $85.75 support.

Important Takeaways for Gold and Oil Prices Analysis Today

  • Gold price started a steady increase from the $1,974 zone against the US Dollar.
  • A key bullish trend line is forming with support near $1,982 on the hourly chart of gold at FXOpen.
  • Crude oil prices failed to clear the $89.50 region and started a fresh decline.
  • There is a connecting bearish trend line forming with resistance near $83.70 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price found support near the $1,940 zone. The price remained in bullish zone and started a strong increase above $1,960 during the Israel-Hamas war.

There was a decent move above the 50-hour simple moving average. The bulls pushed the price above the $1,974 and $1,982 resistance levels. Finally, the price tested the $1,995 zone before the bears appeared.

There was a minor downside correction below $1,980 and the RSI dipped below 50. There was a move below the 23.6% Fib retracement level of the upward move from the $1,953 swing low to the $1,993 high.

The price remained strong above the 50-hour simple moving average and the 50% Fib retracement level of the upward move from the $1,953 swing low to the $1,993 high.

There is also a key bullish trend line forming with support near $1,982. Initial support on the downside is near $1,982 and the 50-hour simple moving average. The first major support is near the $1,974 zone. If there is a downside break below the $1,974 support, the price might decline further. In the stated case, the price might drop toward the $1,960 support.

Immediate resistance is near the $1,995 level. The next major resistance is near the $2,000 level. An upside break above the $2,000 resistance could send Gold price toward $2,020. Any more gains may perhaps set the pace for an increase toward the $2,050 level.

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700

USD/JPY Analysis: New High of the Year

Yesterday, for the first time in 2023, the yen weakened to 150.7 per US dollar.

Thus, since the beginning of autumn, the yen has weakened by 3.5%, continuing the trend of 2023, which is due to the difference in the monetary policies of the two countries.

The Fed is pursuing a high rate policy. Yesterday’s news testified to the stability of the economy, as US GDP is growing: fact = 4.9% in annual terms; expected = 4.5%; quarter ago = 2.4%. This provides a cushion for the Fed to continue keeping rates high to combat inflation.

At the same time, the Bank of Japan continues its ultra-loose policy, keeping the rate below zero. Today’s news showed that Japan’s CPI was: actual = 2.7%, expected = 2.5%, a month ago = 2.5%. That is, inflation in Tokyo is raising its head, which increases pressure on the Bank of Japan.

The Bank of Japan meeting will be held next week; on Tuesday, market participants may receive important news about the authorities’ response to the weak yen and rising inflation. The chart shows that traders are afraid that the USD/JPY rate could drop sharply because progress in the development of the current trend is slowing down.

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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.