Forex Analysis – October 03, 2022


Our previous Forex analysis can be viewed here

Technical Analysis

FOREX ANALYSIS: AUDUSD – Down-trending. Market indecision?

AUDUSD 1 Hour Chart

As suggested in our previous analysis, price is currently moving sideways.

AUDUSD has been down-trending but recent price action has been sideways. The moving averages confirm the market indecision – they are tight and moving sideways. Price is currently ranging between 0.6365-0.6525. AUDUSD continues to downtrend on higher time-frames, so price could become bearish again.

Trading opportunities may exist around the moving averages, around the support and resistance areas of the range and if price moves out of the range (break-out trade).

FOREX ANALYSIS: EURGBP – Down-trending

EURGBP 1 Hour Chart

Price has reversed around the shorter-term moving average and diagonal resistance area, as suggested in our previous chart analysis.

EURGBP has formed a series of lower swing highs and lower swing lows – price is down-trending. The moving averages are bearish and widening, so the downtrend may continue. EURGBP is indecisive on higher time-frames.

Selling opportunities could exist around the dynamic resistance of the moving averages, around the trend resistance area and around the horizontal levels at 0.8885 and 0.9040. A bearish move may stall or reverse around the horizontal support levels at 0.8715, 0.8690 and 0.8630.

FOREX ANALYSIS: EURUSD – Possible upside?

EURUSD 1 Hour Chart

As suggested in our last analysis, EURUSD has been bullish.

Overall, price is down-trending and is currently in a retrace move. But the moving averages are bullish and widening and the EURUSD is above the moving averages, so price could struggle to swing lower. EURUSD has formed some higher swing highs and higher swing, suggesting potential upside.

Trading opportunities may exist around the moving averages and around any of the identified horizontal levels at 0.9540, 0.9650, 0.9745, 0.9840, 0.9880, 0.9955 and 0.9970.

FOREX ANALYSIS: GBPUSD – Up-trending

GBPUSD 1 Hour Chart

GBPUSD reversed off the shorter-term moving average and has been bullish, as suggested in our last Forex analysis.

Price is currently up-trending after a long-term downtrend. Price action has formed a bullish channel and is nearing the channel resistance area. The moving averages are bullish and steady, so the upside momentum may continue.

Buying opportunities could exist around the dynamic support of the moving averages, around the bullish channel support area and around the horizontal levels at 1.1220, 1.1040, 1.0900 and 1.0580. A bullish move may be rejected or reverse around the channel resistance area and around the horizontal levels at 1.1355, 1.1460, 1.1480 and 1.1580.

FOREX ANALYSIS: USDCAD – Up-trending. Indecision?

USDCAD 1 Hour Chart

As suggested in Friday’s analysis, price has been indecisive and has been moving sideways.

The USDCAD has been clearly up-trending. Price is struggling to swing higher and is starting to look indecisive. The moving averages confirm the market indecision – they have been crossing frequently and are moving sideways. USDCAD could start ranging between 1.3605 and 1.3820.

Trading opportunities may exist around the moving averages, around the support and resistance areas of the range and if price moves out of the range (break-out trade). A break to the downside could find support around 1.3535 and 1.3425.

FOREX ANALYSIS: USDCHF – Indecision

USDCHF 1 Hour Chart

Price has been moving sideways, as suggested in Friday’s chart analysis.

The USDCHF is indecisive and is lacking trend momentum. The moving averages are tightening and are moving sideways – confirming the market indecision. Price is up-trending on higher time-frames though, so price may become bullish.

Trading opportunities could exist around the moving averages and around any of the identified horizontal levels at 0.9620, 0.9685, 0.9735, 0.9845 and 0.9965.

FOREX ANALYSIS: USDJPY – Indecision

USDJPY 1 Hour Chart

As suggested in our previous analysis, the USDJPY has been moving sideways.

Price is clearly indecisive and is lacking trend direction. USDJPY is moving within a large range at 140.70-145.75. The moving averages confirm the market indecision – they are tight and crossing frequently. If price moves up the 145.75 area, USDJPY could become bullish.

Trading opportunities may exist around the moving averages and around any of the horizontal levels at 142.60, 142.75, 143.70, 143.95, 144.85 and 145.75.

METAL ANALYSIS: XAUUSD – Indecision?

XAUUSD 1 Hour Chart

GOLD has failed to swing lower, as suggested in our last Forex chart analysis.

Price was down-trending but recent price action is indecisive and is lacking trend direction. XAUUSD is above the moving averages and the moving averages are bullish, so the recent downtrend may now be over.

Trading opportunities could exist around the moving averages and around any of the horizontal levels at 1617, 1622, 1642, 1662, 1682, 1686, 1705 and 1712.

Fundamental Analysis

Key Analysis

Global inflation, a European energy crisis, the war in Ukraine and the possibility of a 2023 global recession are driving the markets.

Recent European government interventions with energy prices may help to reduce rising inflation.

Ukraine has taken significant ground from Russia.

The BOJ has started intervening in the FX markets, in an attempt to strengthen the Yen.

The Dollar continues to be king.

GBP crashes to record lows

Today’s Major Scheduled News

0630 UTC – CHF – CPI
1400 UTC – USD – Manufacturing PMI

Interest Rate Analysis

A summary of recent central bank rate changes and statements…

Australia (AUD)

The Reserve Bank of Australia (RBA) has increased rates again, by another 0.50% to 2.35% – the third consecutive 50-bps hike. The rate increases throughout 2022 have been to tackle rising inflation. The RBA have stated that the economic outlook is cloudy, due to inflation, the war in Ukraine and China’s anti-COVID measures, so the RBA will respond when necessary to tackle inflation and stabilise the Australian economy.

The RBA recently mentioned that there may be no more need for large rate hikes, so future rate hikes could be much lower (5-15 bps).

Canada (CAD)

The Bank of Canada (BOC) has raised it’s interest rate by 75bps, increasing the official bank rate to 2.5% – it’s fifth consecutive rate hike. The BOC have announced that further hikes are expected to tackle rising inflation. Short-term inflation expectations are still high.

Euro Area (EUR)

The European Central Bank (ECB) has increased it’s rates by 75bps, bringing the official rate to 1.25%. Further rate hikes are expecting in coming meetings but no large rate hikes are expected.

Japan (JPY)

The Bank of Japan (BOJ) continues to keep interest rates at the record low of -0.10%. The Japanese economy is making a steady but moderate recovery from the COVID crisis but not as great as initially thought – inflation and a resurgence of COVID cases are weighing on the Japanese economy. The BOJ will intervene in the FX markets in order to strengthen the Yen.

Switzerland (CHF)

The Swiss National Bank (SNB) have hiked rates by 75bps, bringing the official rate to 0.5% – interest rates being positive for the first time in over a decade. The SNB did not rule out further rate hikes in future or the possibility of intervening in foreign exchange markets. The rate increase is to tackle rising prices.

United Kingdom (GBP)

The Bank of England (BOE) have increased it’s official bank rate again. This time by 75bps. The official rate is now set to 2.25%. This is the 7th consecutive rate hike by the BOE. Further rate hikes are expected. The BOE has started purchasing government bonds to tackle the rapid decline of currency and bond prices.

United States (USD)

The Federal Reserve has raised the official funds rate by an additional 75bps% – it’s fifth rate hike in 2022. The rate is currently now set at 3.25%. The increase in rates is to tackle rising inflation. The Fed currently plan to increase rates further – economists expecting a rate of around 4.00-5.00% by the end of 2022.

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