Forex Analysis – October 12, 2022
Our previous Forex analysis can be viewed here…
*FOMC (1800 UTC) may cause volatility across the FX markets today*
Technical Analysis
FOREX ANALYSIS: AUDUSD – Down-trending. End of the trend?
As suggested in yesterday’s Forex analysis, the AUDUSD has been bearish.
Price is down-trending but is struggling to break recent lows, suggesting that downside momentum may be weakening – the downtrend may becoming to an end. The moving averages are bearish and steady though, signalling that the downtrend may continue. AUDUSD is also down-trending on higher time-frames.
Selling opportunities could exist around the dynamic resistance of the moving averages and around the horizontal levels at 0.6330, 0.6365, 0.6395 and 0.6435. Price may continue to find support around the lows at 0.6250.
FOREX ANALYSIS: EURGBP – Indecision. Potential upside?
The EURGBP reversed around the range resistance area and then the range support area, as suggested in yesterday’s analysis.
Price is now above the recent range resistance area, so EURGBP could start up-trending. The moving averages confirm the potential upside – they are bullish and steady. Price continues to be indecisive on higher time-frames.
Trading opportunities may exist around the moving averages and around any of the identified horizontal levels at 0.8665, 0.8695, 0.8735, 0.8810, 0.8885, 0.8905 and 0.9040.
FOREX ANALYSIS: EURUSD – Market indecision?
As suggested in our last chart analysis, price reversed around the longer-term moving average.
The EURUSD was down-trending but price is now looking indecisive – price action is sideways and is forming a possible range at 0.9675-0.9765. The moving averages continue to be bearish, so EURUSD may become bearish again. Price continues to downtrend on higher time-frames.
Trading opportunities could exist around the moving averages and around the horizontal levels at 0.9540, 0.9650, 0.9675, 0.9765, 0.9840 and 0.9925.
FOREX ANALYSIS: GBPUSD – Potential downside? Market indecision?
Price has been bearish, as suggested in our last analysis.
The GBPUSD is down-trending – price action has formed a series of lower swing highs and lower swing lows. The moving averages suggest that the downside direction could continue – they are bearish and steady – but price is looking indecisive, signalling possible market indecision.
Trading opportunities may exist around the moving averages and around any of the horizontal levels at 1.0580, 1.0670, 1.0775, 1.0900, 1.1165, 1.1225, 1.1365 and 1.1480.
FOREX ANALYSIS: USDCAD – Indecisive. Potential uptrend?
As suggested in our previous Forex chart analysis, USDCAD reversed around the longer-term moving average.
Price is indecisive but recent price action has been bullish, suggesting that USDCAD may move higher. The moving averages confirm this – they are bullish and steady. Price is clearly up-trending on higher time-frames.
Buying opportunities could exist around the dynamic support of the moving averages, around the diagonal support area and around the horizontal levels at 1.3730, 1.3685, 1.3565 and 1.3505. A bullish move may be rejected or reverse around the recent highs at 1.3850.
FOREX ANALYSIS: USDCHF – Up-trending
USDCHF has reversed off the longer-term moving average, as suggested in our previous analysis.
Price is up-trending and is currently in a retrace move. The moving averages are bullish and steady, so the uptrend could continue.
Long opportunities may exist around the longer-term moving average, around the trend support area and around the horizontal levels at 0.9920, 0.9860 and 0.9785. A bullish move could stall or reverse around the shorter-term moving average and around the horizontal resistance level at 0.9985 and the recent swing high at 1.0015.
FOREX ANALYSIS: USDJPY – Up-trending
As suggested in yesterday’s analysis, price has been bullish.
USDJPY is up-trending – price action has formed a series of higher swing highs and higher swing lows. Price is above the recent consolidation area and the moving averages are bullish and steady, so the uptrend may continue. BOJ intervention may cause a strong bearish move though.
Opportunities to go long could exist around the moving averages, around the trend support area and around the horizontal levels at 145.80, 145.15 and 144.25.
METAL ANALYSIS: XAUUSD – Potential indecision?
Price has been bearish, as suggested in our last chart analysis.
GOLD has been down-trending but is struggling to break the recent swing low at 1662, suggesting that downside momentum could be weakening. The moving averages are still bearish and widening though, so the downtrend could continue. XAUUSD is starting to look sideways, signalling market indecision. Price could start ranging between 1662 and 1682.
Trading opportunities may exist around the bearish moving averages and around the horizontal levels at 1622, 1642, 1662, 1682, 1686, 1706, 1725 and 1726.
Fundamental Analysis
Key Analysis
Global inflation, a European energy crisis, the war in Ukraine and warnings of a 2023 global recession are driving the markets.
Recent European government interventions with energy prices may help to reduce rising inflation.
Recent missile attacks on Ukrainian cities have escalated the Russian-Ukrainian war.
The BOJ has started intervening in the FX markets, in an attempt to strengthen the Yen.
GBP crashes to record lows.
Recent negative USD economic figures suggest that the dollar surge could becoming to an end.
Today’s Major Scheduled News
1230 UTC – USD – PPI
1800 UTC – USD – FOMC
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 only 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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