Daily Market Analysis By FXOpen

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Major Currency Pairs Test Important Ranges

Yesterday, one could observe measured range trading on the market. The main currency pairs once again tested the previously formed extremes, but neither the continuation of old trends nor the formation of reversal combinations was observed. Most likely, investors and market participants are waiting for today's inflation data in the US. The core consumer price index could provide more clues about the Fed's future monetary policy.

USD/CAD

The rise in oil prices prevented the USD/CAD pair from strengthening above 1.3680. Last week, greenback buyers were determined to move above 1.3700 and test the May highs of this year. The attempt was unsuccessful, and a sharp pullback from 1.3690 allowed sellers to seize the initiative and form a bearish tweezers combination on the daily timeframe. At the moment, the signal to decline is being worked out; the nearest target for sellers will be the range of 1.3500-1.3400. If the upcoming fundamental data of the next trading sessions are positive for the US currency, another approach to 1.3700 may occur. Otherwise, the pair will face a deeper downward correction.

Today at 15:30 GMT+3, we are waiting for data on inflation in the United States, and at 17:30 GMT+3, weekly data on crude oil reserves will be published. A little later, the main Thomson Reuters/Ipsos Canadian Consumer Sentiment Index (PCSI) for September will be released.

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EUR/AUD Approaches Important Support Zone

Euro currency traders are focused on the ECB meeting, the decision of which will be published today at 15:15 GMT+3. There will be a press conference at 3:45 p.m.

According to Reuters, the probability of a rate hike is about 60%. The figure stood at 50% at the start of the week as the ECB's updated forecasts expect inflation to remain above 3% next year, well above its 2% target.

At the same time, Australian dollar traders experienced a spike in volatility this morning following the release of strong labor market data in Australia. Last month, the number of employed people increased by almost 65,000 people — the second highest figure in 2023.

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Dollar Trying to Resume Upward Movement After Rise in Core CPI

Yesterday's inflation data in the US turned out to be higher than analysts expected. Thus, in general, the level of consumer prices increased by 3.7% year on year, while on a monthly basis, prices increased by 0.6%. Such data indicate that the Fed's hawkish policy has not yet produced the expected results in the fight against inflation, and, most likely, the rate will be raised again at the September meeting. However, the major currency pairs reacted rather subduedly to yesterday's fundamentals. The euro/US dollar, the pound/US dollar and the US dollar/yen managed to remain in the previously formed flat corridors.

EUR/USD

Buyers of the single European currency once again defended support at 1.0700. The development of an upward correction has not yet been observed, as investors are waiting for today's statement from the ECB. At 15:15 GMT+3, the decision on the base interest rate will be announced, and a press conference with Christine Lagarde will take place a little later. If the head of the ECB announces a possible pause in the rate hike, the pair could instantly find itself at 1.0600-1.0500. Conversely, the hawkish tone of officials could contribute to a rise to 1.1000.

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Gold Price Eyes Recovery While Crude Oil Price Surges

Gold price is eyeing a fresh increase above the $1,915 resistance level. Crude oil price is surging, and it could climb further higher toward the $92 resistance.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a recovery wave from the $1,900 zone against the US Dollar.
• It broke a major bearish trend line with resistance near $1,908 on the hourly chart of gold at FXOpen.
• Crude oil prices rallied above the $88 and $90 resistance levels.
• There is a key bullish trend line forming with support near $89.00 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 $1,900 zone. The price traded as low as $1,900.93 and recently started a recovery wave.

There was a decent move above the 50-hour simple moving average. The bulls pushed the price above a major bearish trend line with resistance near $1,908. It is now testing the 50% Fib retracement level of the downward move from the $1,930 swing high to the $1,900 low.

The RSI is back above 50 and the price could aim for more gains. Immediate resistance is near the $1,915 level. The next major resistance is near the $1,924 level.

The 76.4% Fib retracement level of the downward move from the $1,930 swing high to the $1,900 low also sits at $1,925. An upside break above the $1,924 resistance could send Gold price toward $1,930. Any more gains may perhaps set the pace for an increase toward the $1,950 level.

Initial support on the downside is near the 50-hour simple moving average or $1,908. The first major support is $1,900. The main support is $1,888. If there is a downside break below the $1,888 support, the price might decline further. In the stated case, the price might drop toward the $1,865 support.

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Market Reaction to the ECB's Decision to Raise Rates to 4.5%

According to the ECB report, published yesterday:

→ Inflation in Europe continues to decline, but will remain too high for too long.
→ Average inflation is forecast at 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025. This is an upward revision for 2023 and 2024, which mainly reflects rising energy prices.
→ The eurozone economy is forecast to grow by 0.7% in 2023, 1.0% in 2024 and 1.5% in 2025.

In order to combat inflation, the ECB decided to raise the key interest rate by 25 basis points to 4.5%, which was a surprise, since it was expected to remain at 4.25%. At the same time, the deposit rate reached a historical maximum.

Importantly, the ECB noted that "interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target” — this was perceived by market participants as a signal that the growth cycle (10 rate increases in a row) is completed.

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Yuan Retreats from Multi-year Highs on Strong Economic Data

The US dollar index hit its highest level since early March this week, but the yuan is one of the few currencies to rise against the USD over the period.

This was facilitated, among other things, by strong economic data published today:
→ Industrial production growth in August amounted to +4.5% in annual terms (expected +3.9). This is the strongest progress in 1 month since autumn 2022.
→ Retail sales in August increased by 4.6% year on year (expected +3.0%).

The chart shows that after a multi-year high (B) of about USD 7.36 per yuan set on September 8, the rate has retreated sharply. That is, sales of dollars (B→C) for yuan increased. And the sharp increase in A→B is completely leveled out. This is a bearish sign, indicating that the bulls have completely retreated.

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Market Analysis: The US Dollar Rises on Strong Data

Investors are assessing the August report on consumer prices in the US, which was published the day before and caused a muted market reaction. Thus, the index increased by 0.6% over the month after 0.2% in the previous period, which resulted in an increase in the annual indicator to 3.7% from 3.2% previously. The benchmark index, which US Federal Reserve officials rely on when setting monetary policy, adjusted to 4.3% from 4.7% previously, the lowest reading since October 2021, when it first reached 4.0%. Against this background, experts’ confidence in maintaining the interest rate at 5.25–5.50% at the US Federal Reserve meeting on September 19-20 even increased and, according to the FedWatch Tool indicator from the Chicago Mercantile Exchange (CME), now amounts to more than 97.0 %.

EUR/USD

The European currency fell against the US dollar on Thursday as the euro came under pressure after the European Central Bank signaled an end to its rate hike cycle. The ECB raised interest rates at its 10th straight meeting on Thursday to combat persistent inflation but signaled it was likely to ease policy. The central bank of the 20 countries that use the euro raised its deposit rate to 4% from 3.75%, bringing it to a record high level. Markets and economists expect policy tightening to be the ECB's final move and now expect a long pause followed by rate cuts in the second half of next year. The euro fell 0.89% to 1.0635 after falling to 1.0629, its weakest since March 17 and on pace for its biggest one-day percentage drop since July 27. Immediate resistance can be seen at 1.0711, a breakout to the upside could trigger a rally to 1.0740. On the downside, immediate support is seen at 1.0630, a break below could take the pair towards 1.0594.

Over the past week, a price range has formed with boundaries of $1.0685 and $1.0748. Now the price has moved to the upper half of the range and may continue to rise.

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Watch FXOpen's 11 - 15 September Weekly Market Wrap Video

Weekly Market Wrap With Gary Thomson: GBP/USD, DOLLAR TRYING TO UPWARD, GOLD PRICE EYES RECOVERY.

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.

• GBP/USD analysis: Price sets a minimum of 3 months after GDP news
• Dollar trying to resume upward movement after rise in core CPI
• Gold price eyes recovery while crude oil price surges
• Market reaction to the ECB's decision to raise rates to 4.5%

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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#fxopen #fxopenyoutube #fxopenuk #fxopenint #weeklyvideo

 

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GBP/USD Extends Losses While EUR/GBP Gains Strength

GBP/USD extended losses and traded below the 1.2465 support. EUR/GBP is rising and might climb above the 0.8615 resistance.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is showing bearish signs below 1.2420.
• There is a key bearish trend line forming with resistance near 1.2465 on the hourly chart of GBP/USD at FXOpen.
• EUR/GBP is rising and trading above the 0.8600 zone.
• There was a break above a connecting bearish trend line with resistance near 0.8600 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 1.2500. However, the British Pound failed above 1.2540 and started a fresh decline against the US Dollar.

There was a clear move below the 1.2465 support and the 50-hour simple moving average. The pair even tested the 1.2380 support zone. A low was formed near 1.2378 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 1.2548 swing high to the 1.2378 low at 1.2420 and the 50-hour simple moving average.

The next major resistance is near a bearish trend line at 1.2465. It is close to the 50% Fib retracement level of the downward move from the 1.2548 swing high to the 1.2378 low.

A close above the 1.2465 resistance zone could open the doors for a move toward 1.2510. Any more gains might send GBP/USD toward 1.2545. On the downside, there is a key support forming near 1.2380. If there is a downside break below the 1.2380 support, the pair could accelerate lower.

The next major support is near the 1.2320 zone, below which the pair could test 1.2250. Any more losses could lead the pair toward the 1.2200 support.

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USD/CAD Analysis: Canadian Dollar Strengthens Ahead of Inflation News

On September 7, we wrote that the level of 1.365 could serve as resistance, from which the price will form a bearish reversal.

As the USD/CAD chart shows, the rate dropped from this resistance to the psychological level of 1.3500, which served as support.

Wherein:

→ The bullish trend (shown by the blue channel) is broken. Facing resistance at 1.365, the bulls failed to reach the upper boundary of the channel, which was a sign of weakening uptrend. One could also observe bearish divergences on a number of indicators.

→ The price at the beginning of the week is in a downward trend, which is shown by the red channel.

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Euro vs Turkish Lira: A Tale of Turbulence and Opportunity

As the summer holiday season drew to a close approximately two weeks ago, tourists from across the globe bid farewell to Turkey, a nation known for its captivating landscapes, rich history, and hospitality.

For decades, Turkey has been a favoured destination for travellers from Europe, the Caucasus, the Middle East, and Eurasia. Its vibrant tourist industry, catering to package tours and all-inclusive hotels, has consistently offered families and working individuals a few weeks of relaxation at an affordable price. However, beneath this veneer of holiday bliss, Turkey's economy has grappled with a persistent challenge – the devaluation of the Turkish Lira.

The Lira's Downward Spiral

Over the past six years, the Turkish Lira has been on a rocky path, depreciating significantly against major global currencies.

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Us Dollar Weakens ahead of the Fed Meeting

EUR/USD

The euro rose against the US dollar on Friday, boosted by hopes that the ECB is ending its cycle of rate hikes and data suggesting China's faltering economy may be regaining some momentum. The ECB raised its key interest rate to a record 4% on Thursday and warned it would remain at that level until inflation above target is resolved. Data on Friday showed Chinese retail sales and industrial production figures for August beat economists' expectations, even as the housing market slump deepened. The euro rose 0.2% to $1.0675, off a low of $1.0632, its weakest since March 20. Immediate resistance can be seen at $1.0710, a break higher could trigger a rise towards $1.0760. On the upside, immediate support is seen at 1.0637, a break below could take the pair towards 1.0592.

Based on last week's lows, a new downward channel has formed. Now, the price is in the middle of the channel and may continue to rise.

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S&P 500 under Pressure ahead of Federal Reserve Meeting

The decision on the base interest rate will be published tomorrow at 21:00 GMT+3, and Powell will hold a press conference at 21:30. Although most experts, as reported by the media, expect that the current rate will remain, market participants will closely monitor the Federal Reserve's assessment of the current situation, which includes new data on inflation and the labour market. It is possible that there will be another rate increase before the end of the year.

Meanwhile, the S&P 500 chart shows the market under pressure in mid-September, although the overall picture appears balanced.

The balance of supply and demand is indicated by the fact that the movement B→C is approximately 50% of the movement A→B. And the C→D movement is approximately 50% of the B→C movement. That is, fluctuations die out as buyers and sellers converge.

The price is still within the ascending channel (shown in blue), but it is possible that during tomorrow's news announcement from the Federal Reserve there will be an attempt by the bears to break through it.

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Cryptocurrency Prices Rise on SEC Rumours

Various media outlets report the opinion that SEC Chairman Gary Gensler expressed in a personal conversation. He allegedly intends to approve applications for the creation of ETFs related to the cryptocurrency spot markets. Such applications were submitted by BlackRock, Invesco, WisdomTree, Valkyrie and other respectable funds. But for now, the SEC's decision on the applications has been delayed.

At the same time, it is reported that by giving the go-ahead to applications, Gary Gensler can thereby gain loyalty from the funds, and after the end of his period as head of the SEC, go to work for one of them.

Against the backdrop of the information mentioned, the crypto markets perked up — the prices of bitcoin, Ether and other assets rose by approximately 3% in a few hours. However, it is unlikely that such rumors can become a driver for creating a sustainable trend.

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Yen and European Currencies Retreat from Previously Reached Lows

Last week, European currencies renewed their recent lows, while the yen and commodity currencies managed to remain in their old ranges. However, this week, everything can change dramatically since the fundamental data of the coming trading sessions is as saturated as possible. Data on the consumer price index in the Eurozone will be released today, and tomorrow, a similar index will be published in the UK. Also, central banks in the US and UK will announce their interest rate decisions on Wednesday and Thursday.

USD/JPY

The dollar/yen currency pair is stuck between 146 and 148. After a sharp rise in early September, the price switched to sideways movement and, apparently, is accumulating strength for growth. If greenback buyers manage to gain a foothold above 147.80, the start of a new upward impulse towards last year's highs at 150.00-151.00 may occur. However, if we see a sharp pullback from the current levels or there is a false breakout at 148.00-150.00, a full-scale downward correction may happen.

The pair's pricing will depend almost entirely on tomorrow's Fed verdict (21:00 GMT+3). If a pause in the hawkish policy of the American regulator is announced, USD/JPY could instantly be at 144.00-145.00. If officials declare the need to further increase the rate, a test at 150 may occur.

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EUR/USD Faces Hurdles While USD/JPY Eyes Breakout


EUR/USD started a fresh decline below 1.0715. USD/JPY is rising and might climb further if it clears the 148.00 resistance zone.

Important Takeaways for EUR/USD and USD/JPY Analysis Today

• The Euro started a fresh decline below the 1.0715 support zone.
• There is a key bearish trend line forming with resistance near 1.0715 on the hourly chart of EUR/USD at FXOpen.
• USD/JPY climbed higher above the 147.20 and 147.50 levels.
• There is a connecting bullish trend line forming with support near 147.70 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 1.0760 zone. The Euro declined below the 1.0715 support zone against the US Dollar.

The pair even settled below the 1.0680 zone and the 50-hour simple moving average. A low is formed near 1.0632 and the pair is now attempting a recovery wave above the 50% Fib retracement level of the downward move from the 1.0764 swing high to the 1.0632 low.

On the upside, the pair is now facing resistance near 1.0715 and a key bearish trend line. It is close to the 61.8% Fib retracement level of the downward move from the 1.0764 swing high to the 1.0632 low.

The next major resistance is near 1.0760. The main resistance is now near 1.0780. An upside break above 1.0780 could set the pace for another increase. In the stated case, the pair might rise toward 1.0840.

If not, the pair might resume its decline. The first major support on the EUR/USD chart is near 1.0680. The next key support is at 1.0655. If there is a downside break below 1.0655, the pair could drop toward 1.0630. The next support is near 1.0600, below which the pair could start a major decline.

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S&P 500 Falls amid News from the Fed

Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell:

→ The full effect of tightening the monetary policy has yet to be felt.
→ [They] will continue to act cautiously, basing further decisions on incoming statistical data.
→ Inflation is much higher than the target.

Will the Fed tighten monetary policy further? Opinions are divided. JP Morgan analysts believe that the rate hike cycle is over. On the contrary, Vanguard analysts believe that rates will have to be raised again (and even more than once).

Perhaps the Fed's repeated rhetoric no longer looks like a sign of confidence? One way or another, the US stock market fell sharply, making the recession scenario more pressing.

On September 19, we wrote that the market was under bearish pressure ahead of the FOMC meeting. The graph shows that they managed to realize their advantage.

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Will Stagflation Persist in the UK? EUR/GBP Volatility May Be an Indicator

In recent years, the United Kingdom has found itself mired in a sea of economic uncertainty, prompting widespread speculation about the dreaded 'R-word'—recession.

While the nation has navigated a prolonged cost-of-living crisis marked by noticeable spikes in everyday expenses, mortgage payments, and other essential outlays, it has managed to avert an official recession thus far. However, lurking in the shadows is a different concern: stagflation.

Defining Stagflation

Stagflation, a term often used to describe an economic quagmire characterised by high inflation, low economic growth, and soaring unemployment, has begun to creep into discussions surrounding the UK's economic health. The conflicting signals emanating from the British economic landscape are creating a puzzle that demands careful examination.

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Central Bank Week Shakes Up Gold Market

Yesterday, the main event of the week took place — the Federal Reserve meeting, which had a noticeable impact on the market of assets denominated in US dollars. But besides the Fed meeting, there are a number of other events this week related to central banks:

→ today at 10:30, a meeting of the Swiss National Bank took place. The interest rate remained at 1.75%, although there was a significant possibility of its increase to 2%.
→ today at 14:00 GMT+3, a decision on the Bank of England interest rate is expected;
→ news from the Central Bank of Japan is planned for tomorrow morning — there may be surprises.

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Oil Analysis: Finally, A Bearish Reversal?

The policy of OPEC+ countries to voluntarily reduce oil production was one of the drivers thanks to which the price of WTI oil increased by approximately 40% from its low in June. In such cases, it is appropriate to use the phrase “correction is overdue.”

So a decline from the week's high above USD 92 to current levels seems natural. Note that the reversal began with the appearance of extremely high trading volumes in oil futures on the NYMEX exchange on Tuesday — but what if capital associated with governments of countries that do not benefit from high oil prices, which are fueling already high inflation, entered the market? If so, then WTI oil prices above 90-91 can be considered a “red line” for them.

Bearish arguments:

→ the price increase B→C is near the Fibonacci level of 31.8% of the decrease A→B, which is acceptable for a natural rollback;
→ the psychological level of USD 90 (above which the rate of price growth has slowed down) can now act as resistance;
→ the price has broken through the median line of the uptrend — now resistance can be expected from it;
→ the level of USD 89 has also been broken by the bears — it is possible that it, in turn, will slow down the bulls’ attempts to win back, if any, occur. The rate of decline is being recorded too rapidly this week.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.