Forex Today: Dollar finally corrects lower


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 During the Asian session, Japan will release critical economic reports including the September Tokyo Consumer Price Index, the August Unemployment Rate, Industrial Production, Retail Sales, and Housing Starts. In Australia, Private Sector Credit data is due. Later in the day, a new estimate of UK Q2 GDP and Consumer Credit will be reported, while Germany will release Retail Sales and the Unemployment Rate. The key report to watch will be the Eurozone CPI. The focus will then shift to the US Core Personal Consumption Expenditures and Canada’s monthly GDP.

Here is what you need to know on Friday, September 29:

It is the last day of September and the end of the third quarter, which could contribute to increased volatility on Friday due to end-of-month flows. The key economic report will be the US Core Personal Consumption Expenditure Price Index, the Federal Reserve’s preferred inflation gauge. It is expected to show a decline from 4.25% to 3.9%. A higher-than-expected number could potentially trigger further gains for the US Dollar. The report also includes personal income and personal spending data. Later, the University of Michigan’s final reading of Consumer Sentiment for September is due.

US Core PCE Preview: Forecasts from seven major banks, losing speed

The US Dollar index (DXY) experienced a correction lower on Thursday, declining by 0.50%. After rallying for five consecutive days and reaching a monthly high, the index pulled back toward the 106.00 area.

The Greenback weakened amid improved risk sentiment and lower US Treasury yields. Second-quarter US GDP growth data aligned with expectations, while Initial Jobless Claims rose less than expected. The US 10-year Treasury yield fell from 4.69% (the highest since 2007) to 4.57%.

A US government shutdown is looming as bills to fund the government have yet to become law in both the House and Senate. A government shutdown could have a negative impact on economic growth and delay the publication of key economic reports.

EUR/USD rebounded from below 1.0500 toward 1.0600. The overall trend is still down, but the short-term outlook has improved for the Euro. A break above 1.0580 would strengthen the common currency. The Eurozone Harmonized Index of Consumer Prices is due on Friday, although its impact may be limited considering that Germany has already released its inflation numbers. Additionally, German Retail Sales and the Unemployment Rate are also due on Friday.

Analysts at Commerzbank on German inflation: 

German inflation fell from 6.1% to 4.5% in September. This is partly due to the fact that the 9-euro ticket and the tax cuts on fuel (“petrol rebate”) expired a year ago. But even without this base effect, headline inflation and the core rate excluding energy and food would have fallen significantly. This trend is likely to continue in the months ahead. Next year, underlying inflation is expected to stabilize well above the ECB’s target of 2%, as wage growth picks up noticeably.

GBP/USD had its best day in over a month, benefiting from a weaker US Dollar, hovering around the 1.2200 area. The correction could continue in the next sessions, but the outlook is bearish as long as it stays below 1.2460. The UK is set to release a new estimate of Q2 GDP growth and later Consumer Credit data.

USD/JPY experienced a modest drop despite the reversal in US yields. The pair is still holding above 149.00. Japan has several economic data releases scheduled for Friday, including the Tokyo Consumer Price Index for September, Unemployment Rate, Industrial Production, and Retail Sales for August.

AUD/USD gained nearly 80 pips on Thursday, recovering from monthly lows and moving back above the 20-day Simple Moving Average (SMA). It consolidated around 0.6420. Australia will release Private Sector Credit data.

The Canadian Dollar (CAD) lagged behind on Thursday because of the correction in crude oil prices. USD/CAD essentially remained unchanged near 1.3500 despite the weaker US Dollar. Canada will report July GDP data on Friday.

Analysts at TD Securities on Canada’s GDP

We look for GDP to rise by 0.1% in July, unwinding half of June’s pullback, with the goods sector leading the rebound. Manufacturing/mining will provide a source of strength, while services should underperform with a muted performance for retail/wholesale trade. New flash estimates should point to another soft (+0.1%) print in August, providing more evidence that higher rates are working to slow demand. We would need a sizeable miss to shake the additional hike priced in for the BoC out of the market.

Gold extended its decline, printing fresh monthly lows at $1,857 before rebounding to the $1,866 area. The recovery can be attributed to the reversal in US yields. Although the yellow metal remains under pressure, the potential for a weaker Dollar and lower yields could support a stabilization.

 

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Asia Day Ahead: Nikkei at Near-Term Support, Brent Crude Eyeing September High

Market Recap




of clients are net long.




of clients are net short.

Change in

Longs

Shorts

OI

Daily
0%
-5%
-2%

Weekly
39%
-21%
5%

Wall Street managed to stabilise overnight from its recent sell-off, despite another climb in Treasury yields and a pull-ahead in the US dollar (+0.4%). The US 10-year yields were up another 5 basis-point (bp) to reach above 4.60%, with the yield curve presenting a prolonged bear steepening trade as market participants buy into the narrative that high interest rates will linger for longer. Perhaps one to watch over the medium term is an eventual un-inversion of the 10 year/2 year Treasury yield spread, which tends to precede a recession on the past four occasions.

Ahead, the final reading for US 2Q GDP will be on watch. Given that the data may be backward looking, reaction to the data may be short-lived, barring any significant deviation from the initial read. Current expectations are looking for a slight uptick in the GDP growth rate to 2.1% from previous 2%.

The key focus may instead revolve around any clues on US monetary policy outlook from Fed Chair Jerome Powell’s speech. Given the lack of key economic data from the recent Federal Open Market Committee (FOMC) meeting till now, he may likely stick to his original Federal Reserve (Fed) meeting script and leave the door open for additional hike, albeit still very much dependent on upcoming data.

The S&P 500 is currently back to retest the lower trendline of an ascending channel pattern in place since October 2022, providing a moment of reckoning for buyers. Its weekly Relative Strength Index (RSI) is also back at the key 50 level – a midline that may determine the broader trend ahead. Any failure to defend the lower channel trendline support may pave the way to retest the 4,150 level next.

Source: IG charts

Asia Open

Asian stocks look set for a mixed open, with Nikkei -0.70% and ASX +0.24% at the time of writing. Korean markets are closed for Mid-Autumn Festival today and tomorrow. The relatively quiet economic calendar today may lead sentiments on a more subdued tone, while reservations on risk-taking may continue to revolve around developments on China’s property sector. Suspension of trading in China Evergrande’s shares and its chairman placed under police surveillance further reinforces the odds of liquidation, while a bailout from authorities remains unlikely, given their series of more indirect measures to support the property sector.

Perhaps one to watch may be the Nikkei 225 index, which is struggling to defend the lower edge of its Ichimoku cloud on the daily chart at the 32,000 level. This level also coincides with a 23.6% Fibonacci level of retracement, with any failure to hold potentially paving the way to retest the 30,800 level next, where the lower channel trendline support resides. Near-term upward momentum still remains weak for now, with its daily Moving Average Convergence/Divergence (MACD) looking to cross below the zero line.

Recommended by Jun Rong Yeap

How to Trade FX with Your Stock Trading Strategy

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Source: IG charts

On the watchlist: Brent crude prices eyeing for a retest of its recent high

Recent retracement in Brent crude prices has proved to be short-lived as prices were up more than 3% over the past two trading days, seemingly eyeing for a retest of its recent September high at the US$95.00 level. Another week of significant drawdown in US crude oil inventories overnight continues to reinforce the trend of tighter supplies (-2.17 million vs -0.32 million expected) since August this year, which far overrides worries about China’s growth conditions and a stronger US dollar.

Ahead, one to watch if the September top may be overcome to form a new higher high and reinforce the prevailing upward trend since June this year. Its weekly MACD has crossed above the zero line as an indication of positive momentum in place, while its RSI above 50 also leaves buyers in control for now. Further upside may leave the US$98.00 level on watch as the next point of resistance to overcome.

Recommended by Jun Rong Yeap

How to Trade Oil

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Source: IG charts

Wednesday: DJIA -0.20%; S&P 500 +0.02%; Nasdaq +0.22%, DAX -0.25%, FTSE -0.43%

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Pound: the worst to come. Forecast as of 27.09.2023

2023.09.27 2023.09.27
Pound: the worst to come. Forecast as of 27.09.2023logo

Within a year, the GBPUSD price almost reached parity, soared to a 16-month high, and then collapsed to a six-month low. What’s next? Let us discuss the Forex outlook and make up a trading plan.

Weekly Pound fundamental forecast

No matter how hard the Bank of England tried its best, trying to ape the Fed’s hawkish pause and prove that the monetary tightening cycle has not been completed yet, investors were not convinced. The halt after 14 consecutive rate hikes looks like the end of monetary restriction, and Andrew Bailey’s statements about its possible continuation are perceived as a bluff. As a result, the GBPUSD price collapsed to a 6-month low, and the situation looks similar to the events of a year ago.

At the end of September 2022, the pound almost descended to parity with the US dollar amid the presentation of a mini-budget by the Liz Truss government. Large-scale fiscal stimulus was in no way combined with the tightening of monetary policy by the Bank of England, which undermined confidence in the Cabinet and ultimately forced the prime minister to resign. Next, the GBPUSD started recovering. In July, the pair reached its peak as fears of a recession in the UK economy did not materialize, and the derivatives market expected the BoE rate to rise to 6.4%.

Dynamics of UK inflation and BoE rate

Source: Reuters.

The interest rate ceiling looked significantly higher than in other advanced economies, making the sterling one of the G10 best performers. However, the situation radically changed in mid-summer. The UK economy began to falter and plunged into stagflation; the estimated BoE rate ceiling dropped to 5.5%, while the US economy, on the contrary, showed surprising resistance to the Fed’s aggressive monetary tightening. The divergence in GDP growth pressed down the GBPUSD. Moreover, the UK Purchasing Managers’ Index recorded its worst drop since January 2021, increasing the risks of recession.

Dynamics of UK PMI

Source: Bloomberg.

Following the BoE September meeting, the derivatives market reduced the chances of continuing the rate-hiking cycle to 50%. Investors realized that the federal funds rate was more likely to rise than the BoE rate. As a result, divergence in monetary policy was added to the divergence in economic growth. The pound has dropped to its lowest level since mid-March, and it could well continue rolling down. BofA, HSBC, Nomura, and Goldman Sachs believe that GBPUSD will go down to 1.18. The pair may not reach parity, but sterling’s best days are over.

The GBPUSD losing streak should continue as the US dollar has other benefits. For example, its safe-haven status supports the American currency, as it usually strengthens when the global risk appetite declines along with the stock indexes. Even the risks of the US government shutdown increase the uncertainty, encouraging investors to buy safe havens, including the greenback.

Weekly GBPUSD trading plan

The BoE failed to reassure investors, and the GBPUSD bears easily broke out the support at 1.2265. The shorts entered 1.2535 look promising. I suggest holding sell trades down to the targets at 1.208 и 1.195.

Price chart of GBPUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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Australian Dollar Holds Gains After CPI Accelerates; What’s Next for AUD/USD, AUD/NZD?

Australian Dollar Vs US Dollar, Australia Monthly CPI – Talking Points:

AUD held early gains after Australia monthly CPI rose last month.AUD/USD faces still resistance ahead; AUD/NZD is testing key support.What are the key levels to watch in AUD/USD and AUD/NZD?

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How to Trade AUD/USD

The Australian dollar held early gains after consumer price inflation accelerated last month, reinforcing the growing view that interest rates will remain higher for longer.

Australia’s CPI accelerated to 5.2% on-year in August, in line with expectations Vs. 4.9% in July, and 5.4% in June. While the monthly CPI figures tend to be volatile and not necessarily a good predictor of the quarterly CPI, which holds more relevance from the Reserve Bank of Australia’s (RBA) perspective, stubbornly high inflation raises the risk that the RBA remains hawkish for the foreseeable future.

AUD/USD 5-minute Chart

Chart Created by Manish Jaradi Using TradingView

Former chief of RBA Philip Lowe said earlier this month that there is a risk that wages and profits could run ahead of levels that are consistent with inflation returning to target in late 2025. RBA held the benchmark rate steady at 4.1% at its meeting earlier this month saying recent data is consistent with inflation returning to the 2-3% target range by late 2025. Markets are pricing in one more RBA rate hike early next year and have priced out any chance of a cut in 2024.

Meanwhile, risk appetite has taken a back seat, thanks to surging US yields amid the growing conviction of higher-for-longer US rates. Chicago Fed president Austan Goolsbee highlighted the central bank’s priority, saying the risk of inflation staying higher than the Fed’s 2% target remains a greater risk than higher rates slowing the economy more than needed.

AUD/USD Daily Chart

image2.png

Chart Created by Manish Jaradi Using TradingView

Furthermore, worries regarding the Chinese economy and geopolitical tensions continue to weigh on sentiment. While authorities have responded in recent months with several support measures, those measures have yet to trigger a meaningful turnaround in sentiment.

AUD/USD: Holds below crucial resistance

On technical charts, AUD/USD’s rebound has run out of steam at vital resistance at the late-August high of 0.6525. The possibility of a minor rebound was highlighted in the previous updates – see “US Dollar Flirts with Resistance After Powell; EUR/USD, GBP/USD, AUD/USD Price Action,” published August 28, and “Australian Dollar Looks to Recoup Losses Ahead of CPI; AUD/USD, AUD/NZD, AUD/JPY,” August 29.

AUD/USD Weekly Chart

image3.png

Chart Created by Manish Jaradi Using TradingView

Given the failure so far to clear 0.6525, the path of least resistance for AUD/USD remains sideways to down, given the lack of upward momentum on higher timeframe charts (see the weekly chart). Any break below the early-September low of 0.6350 would trigger a minor double top (the August and the September highs), opening the gates toward the October 2022 low of 0.6170.

AUD/NZD Daily Chart

image4.png

Chart Created by Manish Jaradi Using TradingView

AUD/NZD: At the lower end of the range

AUD/NZD is testing the lower end of the range at the July low of 1.0720. Any break below could clear the path initially toward the May low of 1.0550. However, broadly the cross remains in the well-established range 1.05-1.11 so a break below 1.0550 wouldn’t necessarily shift the bias to unambiguously bearish.

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— Written by Manish Jaradi, Strategist for DailyFX.com

— Contact and follow Jaradi on Twitter: @JaradiManish

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DAX, EU Stocks Update: ECB Officials Have Their Say as Equities Turn Lower

DAX, EU Stocks 50 News and Analysis

ECB officials have their say, Villeroy, Schnabel, LagardeGerman Bund yields reach yearly high, Euro fallsEU Stoxx 50 breaches crucial support, focusing onThe analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

ECB Officials Have Their Say: Villeroy, Schnabel and Lagarde

First up this morning was the Governor of the Bank of France, Francois Villeroy de Galhau whose words jolted European markets early in the session. Villeroy, who is thought to be slightly on the hawkish side of central, reiterated that the risks of doing too much or too little are more symmetrical. However, he did state that more can still be done if needed.

Soon after, the DAX followed the bulk of Asian indices lower, trading below 15,456. The Ifo business climate report did little to arrest the slide, printing a fourth straight decline as European fundamentals sour further. Isabel Schnabel outlined that the inflation problem remains and Christine Lagarde confirmed as much while stating the job market has also seen some easing.

The DAX now has 15,270 as the next level of support, followed by the longer-term 15,070. German and EU inflation data are due on Thursday and Friday this week respectively. The ECB will be desperate for the disinflationary trend to show more progress after hinting last week that the committee may have already reached peak rates.

DAX Daily Chart

Source: TradingView, prepared by Richard Snow




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Change in

Longs

Shorts

OI

Daily
11%
15%
13%

Weekly
21%
-5%
6%

In addition, German Bund yields hit a new yearly high of 2.811% as the bond markets envision a scenario where rates remain higher for longer, even in Europe. However, this did little for the Euro which has broadly declined at the start of the week.

German 10-Year Bund Yield Source: TradingView, prepared by Richard Snow

image2.png

EU Stoxx 50 Breaches Crucial Support

EU Stoxx 50 traded lower at the start of the week, breaching 4,172 – a level of support that had prevented further selling in August and September. The level also came into play in February this year, highlighting its importance as a pivot point.

The decline places 4,092 in sight if the bearish selloff is likely to continue – another notable level of support. In the event of the breakdown, it’s not unusual to see a retest of the 4,172 level of support before a potential bearish continuation.

EU Stoxx 50 Daily Chart

image3.png

Source: TradingView, prepared by Richard Snow

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— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

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WTI retraces recent gains near $89.70 on Fed officials' hawkish remarks, US data eyed


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Crude prices ease from the recent gains ahead of US data releases.
The hawkish remarks made by Fed officials could dampen the demand for the black gold.
Russia implemented a temporary ban on gasoline and diesel fuel exports in an effort to stabilize its domestic market.

Western Texas Intermediate (WTI), the US crude oil benchmark eases from the recent gains, trading lower around $89.70 per barrel during the Asian session on Monday.

Investors are anticipated to provide upward support to Crude oil prices due to their focus on a tighter supply outlook. This is exacerbated by Moscow’s temporary ban on fuel exports. However, there is also caution regarding the potential impact of further rate hikes on demand.

The prices of black gold had risen more than 10% in the last three weeks due to a constrained production outlook from Saudi Arabia and Russia.

The combined supply cuts of 1.3 million barrels per day from Saudi Arabia and Russia have been extended until the end of 2023. Market analysts believe that this extension will exacerbate an anticipated 2 million barrels per day deficit in global oil supplies.

However, the US Federal Reserve’s (Fed) hawkish stance on the interest rates trajectory snapped a winning streak in oil prices during the previous week.

Furthermore, Moscow imposed a temporary ban on gasoline and diesel exports last week with the aim of stabilizing the domestic market. This move has raised concerns about a potential shortage of petroleum products as the northern hemisphere enters the winter season.

US Dollar Index (DXY), measuring the Greenback’s value against six major currencies, is struggling to gain momentum, hovering around 105.60 at the time of writing. However, the yield on the 10-year US Treasury note appreciated to 4.45%, a 0.50% increase by the press time, which could provide support in underpinning the US Dollar (USD).

Moreover, Boston Fed President Susan Collins has stated that further tightening is possible but emphasized the need for patience. While US Federal Reserve (Fed) Governor Michelle W. Bowman expressed a similar opinion, adding that more rate hikes are necessary to curb inflation. Rising interest rates could dampen the demand for the Crude oil.

The Federal Reserve has stressed the significance of keeping interest rates elevated for an extended duration to steer inflation back to its 2% target. This stance has heightened market anticipations for at least one additional 25-basis-point rate hike by year-end. Moreover, the Fed’s “dot plot” now suggests only two rate hikes in 2024, a reduction from the prior forecast of four rate hikes.

Investors will likely watch the US economic calendar, which includes key data releases such as Consumer Confidence, Durable Goods Orders, Initial Jobless Claims, and the Core PCE, the Fed’s preferred measure of inflation.

The annual figure for Core PCE is expected to drop from 4.2% to 3.9%. These figures could provide cues on the economic situation in the US, which helps the traders of the WTI Crude oil in placing their fresh bets.

 

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Asia Day Ahead: Risk mood remains cautious, USD/SGD at nine-month high

Major US indices attempted to bounce off their respective near-term support last Friday, but gains failed to sustain into the latter half of the session as selling pressures dominate. This came as the Federal Reserve’s (Fed) recent hawkish hold remains the overarching theme for the risk environment, which was further followed up by hawkish Fed officials’ comments to end the week. More notably, Governor Michelle Bowman, a Fed’s voting member, downplayed recent inflation progress and called for the need for additional rate hikes.

US Treasury yields remain elevated near their 16-year high, despite some cooling on Friday. That kept a lid on gold prices, which have been struggling to overcome a key resistance confluence at the US$1,945 level, where its 100-day moving average (MA) stands alongside its Ichimoku cloud on the daily chart. The formation of a near-term ascending triangle may still reflect buyers attempting to take back some control lately, but the US$1,900 level may have to see some defending ahead. Failure to do so may potentially open the door to retest the US$1,850 level next.

Source: IG charts

Asia Open

Asian stocks look set for a subdued open, with Nikkei +0.13%, ASX -0.54% and KOSPI +0.02% at the time of writing. Despite the downbeat showing in Wall Street, Chinese equities have been resilient, with some dip-buying near key technical support. The Hang Seng Index was up 2.6% last Friday, after retesting its August 2023 low, while the Nasdaq Golden Dragon China Index was also up 2.9% – a divergence in performance from the US session. Profit-taking in outperforming markets, such as in US equities, may drive some potential rotation of capital into Chinese equities for now, where conditions have been far more undervalued while hopes are in place that recent positive economic surprise are reflecting early signs of policy success.

Singapore’s August inflation data will be on watch today. The core pricing pressures are expected to moderate for the fourth straight month to 3.5% from previous 3.8%, while headline inflation could soften to 4% from previous 4.1% as well. Alongside the recent decision from the Fed to keep rates on hold, these factors may allow the Monetary Authority of Singapore (MAS) to further extend its pause on monetary policy tightening at its October meeting, while keeping watch on ongoing economic risks. To recall, Singapore’s non-oil exports have fallen for an 11th straight month in August as a reflection of soft global demand.

The USD/SGD has delivered a new nine-month high lately on US dollar strength, with the pair overcoming a key resistance at the 1.360 level, which marked the upper edge of a long-ranging pattern since the start of the year. Near-term lower highs on its RSI on the daily chart may point to some exhaustion for now, but the broader upward trend may stay intact as long as the 1.360 level holds. Any success in overcoming its recent tops at the 1.367 level may pave the way for further upside to retest the 1.380 level next.

image2.png

Source: IG charts

On the watchlist: Dovish takeaway from Bank of Japan (BoJ) meeting keeps USD/JPY at its 10-month high

Comments from the BoJ Governor on Friday have served as a pushback to recent hawkish bets, with patience in policy normalisation being the key takeaway from the BoJ meeting. Uncertainty over the economic outlook and wanting to see more on the ‘sustainable 2% inflation’ condition for a policy pivot are factors highlighted for more wait-and-see, at least for now, although rate expectations continue to price for an end to its negative interest rates in 1Q 2024.

The USD/JPY has held firm at its 10-month high, as the Fed-BoJ policy divergence was reinforced. While the lower highs on the daily Relative Strength Index (RSI) may still point to some near-term exhaustion, the prevailing trend for USD/JPY remains upward-bias, with an ascending channel pattern in place since the start of the year. Further upside may leave the 150.00 level as a key resistance to overcome while on the downside, the 145.80 level will be an immediate support to defend for the bulls.

Friday: DJIA -0.31%; S&P 500 -0.23%; Nasdaq -0.09%, DAX -0.09%, FTSE +0.07%.

Article written by IG Strategist Jun Rong Yeap

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Japanese Yen Forecast: BoJ's Dovishness Puts USD/JPY Channel Breakout in Play

USD/JPY FORECAST:

Monetary policy divergences between the Federal Reserve and the Bank of Japan will continue to weigh on the outlook for the Japanese yenThe U.S. dollar retains a constructive profile for nowThis article looks at USD/JPY key levels to watch in the coming days

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Most Read: Euro Forecast: EUR/USD on Breakdown Watch, EUR/GBP Stuck in No Man’s Land For Now

Both the Federal Reserve and the Bank of Japan held their September monetary policy meetings this past week. For starters, the Fed maintained a hawkish bias, indicating that it may deliver additional tightening this year and forecasting that interest rates will remain high for longer. For its part, the BoJ adhered to its longstanding ultra-loose stance, refraining from signaling any imminent changes in its strategy.

This pronounced divergence in monetary policy between these two central banks has created a landscape that favors the US dollar’s strength for now. This means that the yen may find itself inclined towards further depreciation in the near term, albeit with some moderation, as on-and-off talk of FX intervention by the Japanese government may deter speculators from precipitating excessive weakness.

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From a technical standpoint, USD/JPY rallied on Friday on BoJ’s dovish position, pushing past the 148.00 handle but falling short of breaching the upper boundary of a rising channel in effect since December 2022, presently positioned at 148.50. While taking out this barrier could prove challenging for buyers, a successful breakout could spark a strong upward pressure, exposing 148.80, followed by 150.50.

In the event of an unexpected shift in market sentiment in favor of sellers and price rejection from current levels, the first line of support is observed at 147.30, succeeded by 145.90. Should bearish impetus persist, there is a possibility of a retracement towards 144.55, which currently sits slightly below the 50-day simple moving average.

Take your trading game to the next level with a copy of the yen’s outlook today! Seize the opportunity to access exclusive insights into potential market-moving factors for USD/JPY!

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USD/JPY TECHNICAL ANALYSIS

USD/JPY Chart Prepared Using TradingView

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XAUUSD: Elliott wave analysis and forecast for 22.09.23 – 29.09.23

2023.09.22 2023.09.22
XAUUSD: Elliott wave analysis and forecast for 22.09.23 – 29.09.23logo

Main scenario: consider short positions from corrections below the level of 1946.61 with a target of 1834.55 – 1781.66.

Alternative scenario: breakout and consolidation above the level of 1946.61 will allow the pair to continue rising to the levels of 1987.87 – 2059.86.

Analysis: a descending correction appears to have formed as the fourth wave (4) of a larger degree on the daily chart. The fifth wave (5) is unfolding, with the first wave 1 of (5) formed as its part. Apparently, a downside correction continues developing as second wave 2 of (5) on the H4 time frame chart, with wave c of 2 forming inside. The fifth wave (v) of c is developing on the H1 chart, with wave ii of (v) completed and wave iii of (v) forming as its part. If the presumption is correct, the pair will continue declining to the levels of 1834.55 – 1781.66. The level of 1946.61 is critical in this scenario as a breakout will enable the pair to continue rising to the levels of 1987.87 – 2059.86.

Price chart of XAUUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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EUR/GBP ends the week knocking on the ceiling near 0.87


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The EUR/GBP made a late-week break for the 0.87 handle.
The Pound Sterling continues to give up ground after a dovish BoE shrank from rate hikes,
EU PMI figures came in mixed, keeping Euro gains restrained.

The EUR/GBP stretched for the 0.8700 major handle in Friday trading, closing the week with over a full percent of upside gains with the Euro (EUR) seeing its best trading week against the Pound Sterling (GBP) since early February.

BoE balks on rate hike, EU Manufacturing PMI misses the mark

The Bank of England (BoE) pulled back from a broadly-anticipated rate hike this Thursday after inflation figures for the UK economy came in broadly lower than expected. The UK central bank is seeing inflation fall away faster than previously expected, and the BoE is set to see a “none and done” end to the rate hike cycle.

Eurozone Purchasing Manager Index (PMI) figures came in mixed early Friday, with the headline Composite PMI for September printing at 47.1, reversing the forecast decline 46.5 and climbing further from the previous period’s 46.7.

The underlying components were less positive, leaving the Euro with limited upside following the release.

The EU Services PMI printed at 48.4, well above the forecast 47.7 and improving from the previous 47.9.

The Manufacturing component flubbed market forecasts, printing a disappointing 43.4, ticking down from the previous 43.5 and entire missing the market’s expected improvement to 44.0.

Read more:

BoE holds interest rate steady at 5.25% in split vote

Eurozone Preliminary Manufacturing PMI unexpectedly falls to 43.4 in September vs. 44.0 expected

Next week is particularly anemic for both the Euro and the Pound Sterling, though next Friday will be seeing Gross Domestic Product (GDP) figures for the UK, to be closely followed by Consumer Index Price (CPI) numbers for the Eurozone.

EUR/GBP technical outlook

The EUR/GBP managed to etch in another gainer week, coming within sight of the 200-day Simple Moving Average (SMA) currently treading water near 0.8720.

The pair has accelerated cleanly through the descending trendline from July’s swing high into the 0.8700 handle, and continued buying pressure will see the pair mount the psychological level and stage further gains.

On the downside, immediate technical support is coming from the 100-day SMA, currently turning bullish from 0.8600, and the bottom of recent consolidation is sitting further below near 0.8520.

EUR/GBP daily chart

EUR/GBP technical levels

 

 

 

 

 

 

 

 

 

 

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