Forex Analysis – October 04, 2022


Our previous Forex analysis can be viewed here

Technical Analysis

FOREX ANALYSIS: AUDUSD – Indecision. Possible upside?

AUDUSD 1 Hour Chart

As suggested in yesterday’s Forex analysis, the AUDUSD reversed around the range resistance area and the moving averages.

Price is indecisive and has been moving sideways. The moving averages are tight and have been crossing, so the market indecision may continue. But recent price action has been bullish and has closed above the recent range resistance area, so AUDUSD may become bullish.

Buying opportunities could exist around the moving averages, around the diagonal support area and around the horizontal levels at 0.6525 and 0.6395. A bullish move may stall or reverse around 0.6580, 0.6670 and 0.6730.

FOREX ANALYSIS: EURGBP – Down-trending

EURGBP 1 Hour Chart

The EURGBP has been bearish and has swung lower, as suggested in yesterday’s analysis.

Price is down-trending and is currently forming a swing lower. The moving averages are bearish and widening, so the downside momentum could continue. EURGBP continues to be indecisive on higher time-frames.

Selling opportunities may exist around the dynamic resistance of the moving averages, around the trend resistance area and around the horizontal levels at 0.8695, 0.8825 and 0.8885. A bearish move could find support around 0.8630.

FOREX ANALYSIS: EURUSD – Further upside?

EURUSD 1 Hour Chart

As suggested in our previous chart analysis, price has been bullish and has swung higher.

The EURUSD has formed a series of higher swing highs and higher swing lows – price is currently up-trending. The moving averages are bullish and steady, signalling that the upside direction may continue. But EURUSD is down-trending on higher time-frames and is currently testing a resistance area, so price may become bearish.

Long opportunities could exist around the dynamic support of the moving averages, around the trend support area and around the horizontal levels at 0.9840, 0.9745 and 0.9650. A bullish move may be rejected or reverse around 0.9880, 0.9955, 0.9970 and 1.0035.

FOREX ANALYSIS: GBPUSD – Up-trending. Potential bearish move.

GBPUSD 1 Hour Chart

Price has continued to be bullish and move higher, as suggested in our previous analysis.

The GBPUSD is currently up-trending. Price is moving within a bullish channel and is currently testing the channel resistance area, so GBPUSD could form a retrace move. The moving averages suggest that the upside direction could continue – they are bullish and steady. But price continues to downtrend on higher time-frames though, so the GBPUSD could become bearish.

Opportunities to go long may exist around the dynamic support of the moving averages, around the bullish channel support area and around the horizontal levels at 1.1355, 1.1220, 1.1040 and 1.0900. A bullish move could find resistance around the channel resistance area and around the horizontal levels at 1.1470, 1.1480 and 1.1580.

FOREX ANALYSIS: USDCAD – Potential downside?

USDCAD 1 Hour Chart

As suggested in our last Forex chart analysis, USDCAD closed below the range support area and has since been bearish.

Price was up-trending. Price then formed a range and is now bearish. The USDCAD has swung below recent swing lows and below the range support area, so the bearish direction may continue. The moving averages confirm this – they are becoming bearish.

Shorting opportunities could exist around the moving averages and around the horizontal levels at 1.3605 and 1.3820. A bearish move may find support around 1.3535, 1.3425, 1.3320 and 1.3245.

FOREX ANALYSIS: USDCHF – Indecision

USDCHF 1 Hour Chart

USDCHF has been moving sideways, as suggested in our last analysis.

Price continues to be indecisive. The moving averages confirm the market indecision – they have been crossing and are moving sideways. The USDCHF is up-trending on higher time-frames, so price could become bullish.

Trading opportunities may exist around the moving averages and around any of the horizontal levels at 0.9685, 0.9735, 0.9845, 0.9945 and 0.9965.

FOREX ANALYSIS: USDJPY – Indecision

USDJPY 1 Hour Chart

As suggested in yesterday’s analysis, price has been moving sideways.

USDJPY continues to be indecisive and lack trend direction. Price is moving within a large range at 140.70-145.75. The moving averages have been crossing frequently and are moving sideways – confirming the market indecision.

Trading opportunities could exist around the moving averages and around any of the horizontal levels at 142.60, 142.75, 143.95, 144.25 and 145.15 and 145.75.

METAL ANALYSIS: XAUUSD – Up-trending

XAUUSD 1 Hour Chart

Price has been bullish.

GOLD has formed a large bullish move and has swung above key resistance levels, so the upside direction could continue. The moving averages confirm this – they are bullish and steady. But XAUUSD is around a key resistance level on higher time-frames, signalling potential downside.

Buying opportunities may exist around the moving averages, around the trend support area and around the horizontal levels at 1705, 1685, 1682, 1673 and 1662. A bullish move could find resistance around 1712, 1730 and 1734.

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

1400 UTC – USD – Job openings
0100 UTC – NZD – RBNZ rate statement

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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