Daily Market Analysis By FXOpen

NZD/USD Analysis: The Rate Reaches a 2-month High



This morning, as the NZD/USD chart shows, one USD was worth 0.605 New Zealand dollar, for the first time since August 10.
The strengthening of NZD was facilitated by:
→ rumours that China is planning a major stimulus package to boost the economy amid the real estate crisis. And the Australian and New Zealand dollars, as one can see, are showing growth against the backdrop of positive news from China;
→ the weakness of the US dollar due to the fact that Fed members make it clear in their statements that it is no longer worth raising rates further.




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Bank of England Expresses Concern Over Overvalued US Tech Stocks Amid Macro-Economic Uncertainty



The Bank of England has voiced concerns over the soaring valuations of US technology stocks, citing the current macroeconomic landscape and the surge in interest rates. This commentary underscores the evolving dynamics in global financial markets.
The UK stock market stands in stark contrast to its tech-focused counterpart in the United States, particularly the NASDAQ. The London Stock Exchange is home to well-established blue-chip firms with traditional corporate foundations.

These companies span industries such as retail, pharmaceuticals, energy, leisure, and heavy industry. In contrast, NASDAQ boasts tech giants from Silicon Valley, including titans like Apple and Google, as well as recent entrants through Special Purpose Acquisition Companies (SPACs), with valuations soaring into the billions.

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The Dollar Continues to Correct in Anticipation of the FOMC Minutes Publication



In the middle of this week, the main currency pairs continued their upward correction against the US dollar. Buyers of the EUR/USD pair managed to pass the level of 1.0600, the GBP/USD currency pair tested the important level of 1.2300, and sellers of USD/JPY yesterday tried to break through the support level at 148.00. However, the current market situation may change at any time, as very important macroeconomic data is expected to be published in the coming trading sessions.

USD/JPY



The USD/JPY currency pair is trading in a narrow sideways range between 148.20 and 149.50. Investors are wary of currency interventions by the Bank of Japan, which may become relevant if the price passes the level of 150.00. However, sellers are in no hurry to enter into transactions since the Fed most likely does not plan to change monetary policy in the coming months. The large gap between yen and dollar interest rates makes this pair very attractive to buy and prevents it from falling below 148.00-147.00. Any hints of a change in monetary policy by the American regulator or disappointment in the fundamental indicators of the dollar could cause a sharp decline in the pair.

Today at 15:30 GMT+3, the publication of data on producer prices (PPI) in the United States for September is expected. At 21:00 GMT+3, the minutes of the last Fed meeting will be published. Alsoб early the next morning, it is worth paying attention to the speech of a member of the board of directors of the Bank of Japan, Asahi Noguchi.

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E-mini S&P 500 Positive Ahead of Earnings Season



As we wrote in our October 8 market analysis, the S&P 500 chart made bullish arguments, including:
→ the S&P 500 price has reached the lower boundary of the ascending channel (shown in blue);
→ RSI fell to its minimum in 12 months.
Technically, these factors were justified, because today, the S&P 500 has strengthened, the price is near the psychological level of 4,400. Yesterday’s news also contributed to this:
→ inflation suddenly accelerated. The Producer Price Index (PPI) was 0.5%, although 0.3% was expected. The acceleration of inflation was influenced by the September peak in the oil market. But with the price of oil already back more than 10% from its peak, traders are not expected to be too worried about the PPI rise;
→ a "majority" of Fed officials thought another rate hike would "likely be appropriate" to help cool demand and bring inflation closer to its 2% inflation target over the next two years, while "some" said “no". “Participants generally noted that it was important to balance the risk of overtightening against the risk of insufficient tightening,” the minutes said.




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Markets Awaiting US Inflation Data



Yesterday, the major currency pairs were trading in fairly narrow ranges. Positive data on the US producer price index for September and the publication of the latest Fed minutes did not contribute to increased volatility in the market. Most likely, investors are expecting today's inflation data in the US. If the indicator is at the forecast level or even lower, this could lead to a change in the Fed's monetary policy, which in turn could contribute to the start of a medium-term downward impulse for the US dollar. Conversely, high inflation could force officials to keep rates high for a long time, which could trigger a new wave of greenback growth.

USD/CAD

After a sharp decline last week, the USD/CAD pair found strong support in the 1.3600-1.3570 range. At these marks, there are alligator lines on the daily timeframe. Price behaviour at a given location can provide more clues as to the future direction of the pair. A sharp rebound from current levels could return the price back to 1.3700-1.3780. But a move below 1.3520 may contribute to a renewed decline in the direction of lower fractals at 1.3415 and 1.3370.
In addition to inflation data, today at 15:30 GMT+3, it is worth paying attention to the weekly data on applications for unemployment benefits in the United States. Also, at 18:00 GMT+3, weekly data on crude oil inventories will be released.




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The Price of Gold Rises More Than 5% Since Last Friday



The rise in the price of the (considered a safe haven) asset was driven by:
→ escalation of geopolitical conflicts;
→ increasing US government debt and rising bond prices make gold a more attractive option for a defensive portfolio.
Also, according to Business Insider, global central banks are buying gold in an effort to diversify reserves away from the dollar.




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GBP/USD Analysis: The Rate Is Near October Highs



In early October, the GBP/USD decline exceeded 10% from its summer high, which was very worrying. However, the weakening of the US dollar and changes in sentiment in the US government bond market allowed the pound to strengthen.

Important news about UK GDP was published this morning:
→ The Office for National Statistics estimates that real gross domestic product (GDP) rose 0.2% in August 2023, after falling 0.6% in July 2023;
→ production of services grew by 0.4% in August 2023 and became the main driver of GDP growth;
→ the construction sector performed worse than others, falling 0.5% in August 2023 after falling 0.4% in July 2023.
In general, although the UK GDP picture gives reason for some optimism, the GBP/USD rate today reacted with a decline to the publication of this news. Perhaps influencing factors that are noticeable to technical analysis are coming into play?




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Gold Price Surges While Crude Oil Price Dips Amid Israel-Hamas War



Gold price surged above the $1,848 resistance after the Israel-Hamas war escalated. Crude oil price saw swing moves and is now trading below the $83.70 resistance.

Important Takeaways for Gold and Oil Prices Analysis Today

 

1. Gold price started a steady increase from the $1,810 zone against the US Dollar.
2. A key rising channel is forming with support near $1,868 on the hourly chart of gold at FXOpen.
3. Crude oil prices failed to clear the $86.00 region and corrected gains.
4. There is a connecting bearish trend line forming with resistance near $83.00 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 $1,810 zone. The price started a steady increase after the Israel-Hamas war.
There was a decent move above the 50-hour simple moving average. The bulls pushed the price above the $1,848 and $1,868 resistance levels. Finally, the price tested the $1,885 zone before the bears appeared.

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The Probability of Oil Prices Rising to $100 Is Increasing



This week, Saudi energy minister Prince Abdulaziz bin Salman visited Moscow to discuss plans for oil production in the context of the Israeli-Palestinian conflict. The Russian president announced that Saudi Arabia and Russia's production cuts are "likely" to continue.
Meanwhile, Magid Shenouda, deputy chief executive of commodities trading giant Mercuria, told the industry conference in the UAE that oil prices could reach USD 100 a barrel if the situation in the Middle East worsens.




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EURUSD Analysis: New Test for Support Level of 1.0500



Yesterday, another indicator of inflation in the United States was published — the CPI (Consumer Price Index). Like the PPI (Producer Price Index), the values of which were published on Wednesday, the CPI index indicated that inflation in the US remains stable (actual = 3.7%, forecast = 3.6%, a month earlier = 3.7%, two months earlier = 3.2%), however, this time, the reaction of market participants was sharper:
→ the stock market declined;
→ gold fell in price (although buyers in the Asian session on Friday contributed to the recovery);
→ the dollar index rose sharply.
Before the publication of news about inflation, the probability of a rate hike at the December Fed meeting was at 28%, but now it is 40%. The thesis “higher rates for a longer time” has returned to relevance.
For a technical analyst, changes in sentiment and spikes in volatility provide a new piece of valuable information. Let's take the EUR/USD chart for example.




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Watch FXOpen's 9 - 13 October Weekly Market Wrap Video


Weekly Market Wrap With Gary Thomson: OIL & ISRAEL-GAZA CONFLICT , S&P 500 POSITIVE, GOLD RISEN.

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.

 

1. Geopolitical Tensions Rattle Markets: US Stocks Decline, Oil Surges Amid Israel-Gaza Conflict #Oil
2. E-mini S&P 500 Positive Ahead of Earnings Season #eminiS&P500 #earningsseason
3. Markets awaiting US inflation data #USinflation
4. The price of gold has risen more than 5% since last Friday #Gold

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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GBP/USD Restarts Decrease, EUR/GBP Aims Higher



GBP/USD started a fresh decline from the 1.2335 resistance zone. EUR/GBP is rising and might climb above the 0.8665 resistance.
Important Takeaways for GBP/USD and EUR/GBP Analysis Today

 

1. The British Pound is again declining and trading below the 1.2200 support.
2. There was a break below a key bullish trend line with support near 1.2220 on the hourly chart of GBP/USD at FXOpen.
3. EUR/GBP is rising and trading above the 0.8650 zone.
4. There was a break above a major bearish trend line with resistance near 0.8635 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair attempted a fresh increase above 1.2200. However, the British Pound failed above 1.2320 and started a fresh decline against the US Dollar.
There was a clear move below 1.2250 and the 50-hour simple moving average. The bears pushed the pair below a key bullish trend line with support near 1.2220. It opened the doors for a move toward the 1.2120 level.
A low is formed near 1.2122 and the pair is now consolidating losses. On the upside, the GBP/USD chart indicates that the pair is facing resistance near the 23.6% Fib retracement level of the downward move from the 1.2337 swing high to the 1.2122 low at 1.2175.
The next major resistance is near the 50-hour simple moving average at 1.2200. The main resistance could be the 50% Fib retracement level of the downward move from the 1.2337 swing high to the 1.2122 low at 1.2220.
A close above the 1.2220 resistance zone could open the doors for a move toward 1.2335. Any more gains might send GBP/USD toward 1.2450.
On the downside, there is a key support forming near 1.2120. If there is a downside break below the 1.2120 support, the pair could accelerate lower. The next major support is near the 1.2040 zone, below which the pair could test 1.2020. Any more losses could lead the pair toward the 1.2000 support.

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S&P500 Volatility: Is It 1987 All Over Again? Not Yet!



Just over a week has passed since global headlines were dominated by reports on the beginning of renewed and far more serious than usual conflict in Israel and Gaza, drawing attention away from various other subjects, be they social or financial.
The inundation of social media posts and news articles has become the norm, even affecting professional platforms like LinkedIn, where many are sharing personal accounts and opinions from near and far on the geopolitical situation rather than business-related content.

In such critical geopolitical moments, it's almost inevitable that financial markets experience some form of impact.
Last week, when European and American markets opened for trading after the conflict began, the NYSE and NASDAQ exchanges, along with the US dollar, experienced significant value gains. This surge can be attributed to the presence of military companies listed on American exchanges, which garnered investor confidence in anticipation of heightened demand.
However, as the conflict rages on with no sign of peace and escalating tensions, the S&P 500 index has seen a dip.

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In One Session, Price of Gold Rose by Approximately $60



The opening price on Friday was around 1,870, the closing price was around 1,930. The reason for the rapid growth of the XAU/USD quote is geopolitical tension. Israeli forces announced a ground operation in the Gaza Strip, which may be why before the weekend the markets were dominated by the forces of demand for gold as a defensive asset.
The Chinese Foreign Ministry said Israel's actions went beyond self-defense. And the famous investor Ray Dalio expressed the opinion that the risk of global war is 50% due to the situation in the Middle East.
The XAU/USD chart shows that the price of gold has reached the upper limit of the downward channel.




Technically:
→ the price of gold may encounter resistance from the upper border;
→ the price may roll back from the overbought zone, which is indicated by the stochastic oscillator;
→ the price may be supported by the psychological level of 1,900;
→ support may be provided by the level of 1,885; previously the price formed reversals from it.

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Dollar Consolidates Near Record Highs



In the US, the August budget report will be published today, followed by September data on retail sales and industrial production tomorrow. Experts expect a slowdown in production dynamics from 0.4% to 0.1%. Sales data could decline from 0.6% to 0.2%, while the ex-automotive figure could slow from 0.6% to 0.1%. The monthly budget report from the US Federal Reserve expects a deficit of USD 78.6 billion in August after a surplus of USD 89.0 billion the month before. Hawks do not rule out another increase in borrowing costs in November, but the main scenario at the moment seems to be maintaining a wait-and-see attitude, given the gradual decline in inflationary pressure.

EUR/USD



EUR/USD is showing weak growth, correcting after last week's bearish end, as a result of which the euro retreated from local lows of September 25. The pair is testing the 1.0525 mark for a breakout upward in anticipation of the emergence of new drivers on the market.
The focus of investors today will be the September statistics on the consumer price index in Italy: forecasts suggest that the indicator will remain at 0.2% monthly and 5.3% annual. Also, during the day, the EU will present August data on the dynamics of the trade balance. Investors are still trying to assess the prospects for further tightening of monetary policy by European and American regulators.

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Wall Street Awaits Earnings from Tesla and Netflix



According to Yahoo Finance, the third-quarter earnings season started well despite the uncertain macroeconomic environment.
Already, 32 companies in the S&P 500 have reported earnings, according to Bank of America Research's equity strategy group. Moreover:
→ actual earnings per share exceeded Wall Street expectations by an average of 9%;
→ EPS increased 1% compared to the same quarter last year, which is a positive sign.
This week's headliners could be reports from Tesla and Netflix, which are important components of the S&P 500 and Nasdaq indices.




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Bitcoin Tests Psychological Level of $30k



Paradoxically, cryptocurrencies, which conceptually pursue decentralization goals, have become overly sensitive to regulatory news.
Surprising news from Cointelegraph that the SEC would approve an application for a spot Bitcoin ETF from BlackRock raised the price of the coin to USD 30,000.
The market’s positivity was added by the opinion of SkyBridge Capital founder Anthony Scaramucci, who believes that Bitcoin’s capitalization can with ease reach USD 15 trillion due to the actions of the Fed and global de-dollarization.
On some crypto exchanges, the price of derivatives associated with the main cryptocurrency even significantly exceeded the psychological mark of USD 30k.
However, Cointelegraph later deleted the post.
And on Tuesday morning, the BTC/USD rate consolidated below 29k USD.




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Pound, Yen, and Euro Test Important Supports



The rise in the core consumer price index in the US, published last week, contributed to the start of a new upward impulse for the US dollar. European and commodity currencies interrupted the upward correction that began in early October and retested significant supports.
Thus, the GBP/USD currency pair almost reached 1.2100, the EUR/USD pair fell below 1.0500, and USD/JPY buyers lacked a couple of dozen points to update the recent high at 150.20. However, yesterday, greenback sellers managed to seize the initiative, and the American currency had to retreat from record highs of the current year. The continuation of recent trends will depend on the incoming fundamental data of the coming trading sessions.

USD/JPY

The failure of USD/JPY buyers to consolidate above 150.00 may lead to another downward impulse in the direction of 148.20-147.40. Over the past three weeks, the price has tried several times to overcome the resistance at 150.20-149.80, but as we see, to no avail. On the daily timeframe, we can see the formation of a double top pattern, which will be confirmed after moving below 147.40. At the moment, the pair is trading in a rather narrow flat corridor, to exit from which, most likely, a good news driver is needed.
Today at 15:30 GMT+3, we are waiting for the publication of data on the basic US retail sales index for September. Michelle Bowman, a member of the US Federal Open Market Committee (FOMC), is scheduled to speak a little later.




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EUR/USD Could Recover, USD/JPY Inches Toward 150.00



EUR/USD is slowly moving higher from the 1.0500 level. USD/JPY is rising and might soon attempt a move above the 150.00 resistance.
Important Takeaways for EUR/USD and USD/JPY Analysis Today

 

1. The Euro started a decent increase above the 1.0570 pivot level.
2. There is a key bullish trend line forming with support near 1.0570 on the hourly chart of EUR/USD at FXOpen.
3. USD/JPY climbed higher above the 149.00 and 149.45 levels.
4. There is a connecting bullish trend line forming with support near 149.45 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a fresh decline from the 1.0640 zone. The Euro declined below the 1.0595 support zone against the US Dollar.
A low was formed near 1.0500 and the pair is now attempting a recovery wave. There was a break above the 50% Fib retracement level of the downward move from the 1.0639 swing high to the 1.0495 low.
The pair even settled above the 1.0570 zone and the 50-hour simple moving average. There is also a key bullish trend line forming with support near 1.0570.
On the upside, the pair is now facing resistance near the 61.8% Fib retracement level of the downward move from the 1.0639 swing high to the 1.0495 low at 1.0585. The next major resistance is near 1.0595. An upside break above 1.0595 could set the pace for another increase. In the stated case, the pair might rise toward 1.0640.
If not, the pair might start a fresh decline. The first major support on the EUR/USD chart is near 1.0570. The next key support is at 1.0530. If there is a downside break below 1.0530, the pair could drop toward 1.0500. The next support is near 1.0480, below which the pair could start a major decline.

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