Forex Analysis – October 05, 2022


Our previous Forex analysis can be viewed here

Technical Analysis

FOREX ANALYSIS: AUDUSD – Indecision. Possible upside?

AUDUSD 1 Hour Chart

As suggested in our last analysis, price has been moving sideways.

AUDUSD is indecisive and is lacking trend momentum. The moving averages have been crossing frequently – confirming the market indecision. But price action has formed a higher swing high and is forming a potential ascending triangle pattern, so the AUDUSD could become bullish.

Trading opportunities may exist around the moving averages, around the diagonal support area and around the horizontal levels at 0.6365, 0.6395, 0.6540, 0.6580, 0.6670 and 0.6730.

FOREX ANALYSIS: EURGBP – Down-trending. End of the trend?

EURGBP 1 Hour Chart

Price found resistance around the shorter-term moving average, as suggested in our last chart analysis.

EURGBP is down-trending. Price is currently in a retrace move. The moving averages are bearish and steady, so the downtrend may continue. But the EURGBP recently swung above the diagonal resistance area, suggesting that downside momentum may be weakening – the downtrend may becoming to an end. Price is indecisive on higher time-frames.

Opportunities to go short could exist around the dynamic resistance of the moving averages and around the horizontal levels at 0.8845 and 0.8885. A bearish move may be rejected or reverse around the previous diagonal resistance area and around the horizontal support levels at 0.8665 and 0.8630.

FOREX ANALYSIS: EURUSD – Up-trending

EURUSD 1 Hour Chart

As suggested in yesterday’s analysis, EURUSD has been bullish and has swung higher.

Price is up-trending – price action has formed a series of higher swing highs and higher swing lows. EURUSD is currently attempting a move higher. The moving averages are bullish and steady, so the uptrend could continue. But the EURUSD is testing a key resistance area on higher time-frames, so price could become bearish.

Opportunities to go long may exist around the dynamic support of the moving averages, around the trend support area and around any of the horizontal levels at 0.9955, 0.9880, 0.9840 and 0.9745. A bullish move could find resistance around 1.0035.

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

GBPUSD 1 Hour Chart

GBPUSD has been finding resistance around 1.1480 and the bullish channel resistance area, as suggested in yesterday’s Forex analysis.

Price is clearly up-trending within a bullish channel and is currently testing the channel resistance area. GBPUSD is testing resistance on higher time-frames and the bullish channel resistance area, so price may be due a bearish retrace move. The moving averages continue to be bullish and steady, so the uptrend may continue.

Long opportunities could exist around the dynamic support of the moving averages, around the bullish channel support area and around any of the identified horizontal levels at 1.1355, 1.1220, 1.1040 and 1.0900. A bullish move may find resistance around the channel resistance area and around the horizontal resistance levels at 1.1480 and 1.1580.

FOREX ANALYSIS: USDCAD – Potential downside?

USDCAD 1 Hour Chart

As suggested in our previous analysis, price has been bearish.

The USDCAD was up-trending but recent price action has been bearish. Price is below a key swing low and the moving averages are bearish and widening, so USDCAD could start down-trending. Price continues to uptrend on higher time-frames though, so price could become bullish.

Shorting opportunities may exist around the bearish moving averages and around the horizontal levels at 1.3540, 1.3605 and 1.3820. A bearish move could stall or reverse around the horizontal levels at 1.3425, 1.3320 and 1.3245.

FOREX ANALYSIS: USDCHF – Indecision

USDCHF 1 Hour Chart

Price has been moving sideways, as suggested in our previous Forex chart analysis.

The USDCHF continues to be indecisive. Price is ranging between 0.9735 and 0.9965. The moving averages have been crossing and moving sideways, so the market indecision may continue. Price is up-trending on higher time-frames.

Trading opportunities could exist around the moving averages, around the support and resistance areas of the range and if the USDCHF moves out of the range (break-out trade). A break to the downside may find support around 0.9685 and 0.9620.

FOREX ANALYSIS: USDJPY – Ranging

USDJPY 1 Hour Chart

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

Price is indecisive and ranging between 143.85 and 145.15. The moving averages confirm the market indecision – they have been crossing frequently and are moving sideways. USDJPY is also moving in a much larger range at 140.70-145.75.

Trading opportunities may exist around the support and resistance areas of the smaller range and if USDJPY moves out of the range (break-out trade). A break to the upside could find resistance around 145.75. A break to the downside could find support around 142.75, 142.60 and 141.65.

METAL ANALYSIS: XAUUSD – Up-trending. Possible bearish move?

XAUUSD 1 Hour Chart

GOLD has been bullish, as suggested in our previous chart analysis.

Price is up-trending and is currently forming a swing higher. The moving averages are bullish and widening, so the uptrend may continue. But XAUUSD is testing a key resistance level on higher time-frames, so price may become bearish.

Buying opportunities could exist around the dynamic support of the moving averages, around the trend support area and around the horizontal levels at 1706, 1686 and 1682. A bullish move may find resistance around 1730.

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

1215 UTC – USD – ADP non farm employment change
1400 UTC – USD – Services 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, this time by 0.25%, rather than the expected 0.50%. Rates now stand at 2.60%. The rate increases throughout 2022 have been to tackle rising inflation, which is still too high, so further rate hikes are expected. The RBA have stated that the economic outlook is cloudy, due to inflation, the war in Ukraine and China’s potential recession, 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 (5-25 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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