US stocks tumbled heavily on Wednesday, witnessing fresh downside momentum and surrendered all of their daily gains after the Fed chief Powell said the Fed still has some ways to go in its policy cycle as rates could peak at higher levels than previously thought. The US Federal Reserve announced that it raised the policy rate by 75 bps to the range of 3.75-4% as expected and suggested policymakers would soon slow the pace of QT.

However, Fed Chair Jerome Powell’s speech spurred turmoil in the market as he said that a restrictive policy stance should stay for some time and the ultimate level of rates would be higher than previously expected. The comments revived the odds of a fifth 75 bps in December and weighed heavily on global equity markets. In the Eurozone, the Euro might be under pressure due to interest-rate differentials between the Fed and the European Central Bank (ECB), as the United States will enjoy rates at 4.50% by the end of 2022, while the Eurozone will likely be at 2%.

The S&P 500 and Dow Jones Industrial Average both slumped dramatically on Wednesday as the S&P 500 suffered its worst rout on a Fed decision day since January 2021. The S&P 500 was down 2.5% daily and the Dow Jones Industrial Average also dropped lower with a 1.6% loss for the day. All of the eleven sectors in the S&P 500 stayed in negative territory as the Consumer Discretionary sector and the Information Technology sector is the worst performing among all groups, losing 3.79% and 3.47%, respectively. The Nasdaq 100 meanwhile dropped the most with a 3.4% loss on Wednesday and the MSCI World index was down 1.7% for the day.

Main Pairs Movement

The US dollar advanced higher on Wednesday, regained upside strength and pared all of its earlier losses around the 112.00 area during the US trading session after Fed Chair Jerome Powell surprised with a hawkish speech. He mentioned that slowing the pace of rate hikes will become necessary at some point but interest rates in the United States would go higher than September’s projections. Therefore, the hawkish statement increased volatility despite a slightly dovish FOMC monetary policy statement.

GBP/USD declined lower on Tuesday with a 0.80% loss after the cable retreated from daily highs and holds lower ground near a one-week low amid renewed US dollar strength. On the UK front, the Bank of England is less likely to impress the GBP/USD buyers even by announcing the 75 bps rate hike amid the fears of the UK’s recession. Meanwhile, EUR/USD surrendered its daily gains and plunged 150 pips from weekly highs amid a stronger US dollar and a hawkish Federal Reserve. The pair was down almost 0.60% for the day.

Gold dropped with a 0.77% loss for the day after extending its intra-day side to the $1,632 area during the late US trading session, as Powell’s hawkish commentary undermined the precious metal. Meanwhile, WTI Oil advanced higher with a 1.84% gain for the day as oil price pares recent losses around the $89.00 area.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD keeps hovering eventually in a range from 0.9850 to 0.9950 level as investors stay on the sidelines while preparing for the Fed’s policy announcements. The central bank is expected to raise interest rates by 75bps for the fourth consecutive meeting and prepare market players for a slower pace of quantitative tightening sometime shortly. With the mounting speculations that this would be the last 75 bps hike, and the December meeting will bring a 50 bps move, the US data showed a different opinion. The US inflation is still stubbornly high, while growth has probed resilient. Furthermore, employment-related data released these days has shown the sector is strong enough to bear with QT. The US ADP survey just released showed that the private sector added 239K new job positions in October, beating expectations of 195K, which shows the central bank could easily maintain its aggressive path for a couple more meetings. Investors need to keep eye on what Chair Jerome Powell’s stance is, which would highly change the direction of the equity market and the US Dollar.

From the technical perspective, the four-hour scale RSI indicator fell sharply to 41 as of writing, suggesting that the EURUSD was surrounded by heavy selling pressure during the first half of the US trading session. As for the Bollinger Bands, the pair was capped by a 20-period moving average and U-turned to below 0.9870 level. Therefore, we think the pair was more favoured to the downside path in the near term to challenge the lower band support around the 0.9844 level.

Resistance:  1.0000, 1.0092

Support: 0.9751, 0.9664, 0.9548

GBPUSD (4-Hour Chart)

The GBPUSD has continued to extend losses after having dropped below 1.1500 in the second half of the day on Wednesday, as US Dollar managed to regather upside momentum ahead of Federal Reserve’s policy announcement, forcing the pair to stay under modest bearish pressure. The Fed is on track to raise 75 basis points once again in November. However, the decision itself is unlikely to trigger a significant reaction as investors stay focused on the US central bank’s communique on the December policy step. Heightened expectations about a smaller 50 bps Fed rate hike in December made it difficult for the greenback to extend its rally in the past couple of weeks. In case FOMC chairman Jerome Powell notes that a 50 bps rate hike will be on the table at the last policy meeting of the year, Wall Street’s main indices could rise dramatically and trigger a US Dollar selloff in the late US trading session. Earlier, the pound was struggling to make a decisive move in either direction as FTSE 100 index and US stock index futures traded virtually unchanged on the day, reflecting a cautious market stance.

From the technical perspective, the four-hour scale RSI indicator dropped to 43 as of writing, suggesting that GBPUSD is amid strong downside traction. As for the Bollinger Bands, the pair was falling from a 20-period moving average to the 1.1460 level at the time of writing. As a result, we think the downside trend of the pound would persist unless breaking through the 1.1634 resistance.

Resistance: 1.1633, 1.1738

Support: 1.1281, 1.1114, 1.0955

XAUUSD (4-Hour Chart)

Gold has lost its bullish traction and retreated below the $1650 mark after having climbed toward $1660 earlier in the day, as investors may have decided to book their profits while gearing up for the Fed’s rate decision. Although the main event will be the release of the monetary policy statement, the market has already priced in a 75 basis points hike. ll eyes now remain on the expected 75 bps Fed rate hike decision, with Chair Jerome Powell’s press conference to grab the limelight, as investors eagerly await any hints of a smaller rate increase from December. The speculation about a signal to softer hikes from December has been increasing over the last weeks, and the market is split about the size of the next move. With extremely sensitive about the Fed’s forward guidance, any hint might trigger a significant deal of volatility. Meanwhile, the benchmark US 10-year T-bond yields hold a steady high level above 4%, which weighs on the non-yielding yellow metal.

From the technical perspective, the four-hour scale RSI indicator remained at 50 as of writing, suggesting that gold has no clear direction with investors staying cautious. As for the Bollinger Bands,  the yellow metal rebounded from the 20-period moving average, $1645 level, and was moving with little volatility ahead of Fed’s decision, which is a signal that gold has no clear path in the near term. Hence, we think investors need to focus on the following Fed’s conference to look for clues about the future direction.

Resistance: 1675, 1700, 1725

Support: 1632, 1615, 1600

Economic Data

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With the standard time commencing in the US on 7 November, there will be changes to the trading hours for certain products on MT4/MT5.

Please refer to the table below outlining the affected instruments:

*All times are provided in GMT+2.

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US stocks suffered daily losses on Tuesday, failing to preserve their upside traction and finished lower as the upbeat US data bolstered speculation that Federal Reserve policy could remain aggressively tight despite the threat of a recession. The Fed’s 75 bps rate hike might keep weighing on equity markets in absence of signals favouring a slower lift to rates in December, as an unexpected rebound in US job openings keeps the pressure on the Fed. The US JOLTS Job Openings rise to 10.7 million in September, which came in higher than the market expectation of 10 million and provided firm support to the US dollar.

The US central bank will announce its monetary policy during the US session today and it will be crucial to watch for fresh impulse, as the Fed is widely anticipated to hike rates by 75 bps and send the main rate to 3.75%-4%. In the Eurozone, the European Central Bank (ECB) policymakers said that rates in the Euro area should peak at a level that ensures that inflation returns to the 2% target over the medium term.

The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated lower on Tuesday as Wall Street finished with decent losses amid upbeat data revealing that the United States economy remains in expansionary territory. The S&P 500 was down 0.4% daily and the Dow Jones Industrial Average also dropped lower with a 0.3% loss for the day. Six out of eleven sectors in the S&P 500 stayed in negative territory as the Communication Services sector and the Consumer Discretionary sector are the worst performings among all groups, losing 1.81% and 1.35%, respectively. The Nasdaq 100 dropped the most with a 1.0% loss on Tuesday and the MSCI World index was up 0.2% for the day.

Main Pairs Movement

The US dollar was nearly unchanged on Tuesday, regained upside strength and recovered most of its daily losses around the 111.50 area during the US trading session amid a risk-off market mood. The market’s anxiety ahead of the key Fed meeting and firmer US Treasury yields continued to act as a tailwind for the safe-haven greenback. Market players now gear up for the US Federal Reserve’s interest rate decision.

GBP/USD edged higher on Tuesday with a 0.13% gain after the cable retreated slightly from daily highs but maintained its positive bias above the 1.1480 mark amid renewed US dollar strength. On the UK front, the Bank of England is widely expected to hike their borrowing rates by 75 bps this week. Meanwhile, EUR/USD trimmed its daily gains and refreshed its daily low under the 0.9860 mark amid a stronger US dollar across the board. The pair was down almost 0.05% for the day.

Gold advanced with a 0.88% gain for the day after extending its intra-day rally to the $1,656 area during the European trading session, as the precious metal keep being dragged down by increasing hawkish Fed bets. Meanwhile, WTI Oil advanced higher with a 2.13% gain for the day after the solid recovery in oil prices lost traction near the $88.50 area.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD abandons the area of daily highs around the 0.9950 level and makes an abrupt U-turn to revisit the sub-0.9900 zone following the better-than-expected prints from the US ISM Manufacturing for the month of October (50.2), compared to the market expectation of 50.  Besides that, additional releases in the US calendar also underpinned the rebound in the dollar, like Construction Spending unexpectedly expand 0.2% MoM in September, the final S&P Global Manufacturing PMI at 50.4, also surpassing estimates, and the JOLTs Job Opening increase to 10.717M in September. In fact, the results do nothing but reinforce the view of a resilient US economy at a time when some Fed’s rate-setters have hinted at the potential start of a debate over the probability of slowing the pace of the subsequent rate hikes as soon as at the December meeting.

From the technical perspective, the four-hour scale RSI indicator dropped sharply to 41 as of writing, suggesting the pair was surrounded by heavy selling pressure. As for the Bollinger Bands, the EURUSD was falling from the 20-period moving average to around the lower band 0.9870 area, and the gap between upper and lower remained the same size, signalling that the pair amid strong bearish momentum but the lower drew support for it. Therefore, we think the downside trend is more favoured in the near term.

Resistance: 1.0000, 1.0092

Support: 0.9751, 0.9664, 0.9548

GBPUSD (4-Hour Chart)

The GBPUSD has lost its upside traction and retreated around the 1.1450 level during the American trading session on Tuesday, as the US dollar managed to regather its strength on upbeat data. A series of better-than-expected macroeconomic releases have boosted confidence in the momentum of the US economy, easing concerns of a potential slowdown triggered by previous disappointing releases and clearing the path for the Federal Reserve to extend its aggressive tightening path beyond November. This has sent the greenback and US treasury bonds surging. Beyond that, the JOLTS job openings have displayed the strength of the US labour market, despite the Fed’s efforts to cool it off. JOLTS job vacancies increased to 10.7 million in September, up from 12.2 million in August, and against market expectations of a decline to 10M. Furthermore, Wall Street’s main indices turned negative as of writing, undermining the risk sentiment and providing an additional boost to the greenback.

From a technical perspective, the four-hour scale RSI indicator fell dramatically to 42, suggesting that the pair were surrounded by strong bearish traction. As for the Bollinger Bands, the pounds were dropping from the 20-period moving average to the lower band and the size between the upper and lower bands remained unchanged, signalling that the pair was more favoured to the downside path in the near term.

Resistance: 1.1633, 1.1738

Support: 1.1281, 1.1114, 1.0955

XAUUSD (4-Hour Chart)

Gold advanced and rebounded from a weekly low of $1630.60 to the $1648 mark as of writing, as diminished US Dollar demand throughout the first half of the day. However, the greenback recovered some ground in the American trading session, following a slightly better-than-expected ISM Manufacturing PMI, as the October index came in at 50.2, better than the 50 expected by the markets. In addition, the reading of job openings increased to 10.7 million on the last business day of September, according to the US Bureau of Labor Statistics. Given that US data was positive, a Fed pivot could lose some weight, as it justifies additional tightening, with the chance of hiking 75 bps from 86 to 88 per cent shown by the CME FedWatchTool. As for December’s decision, the odds are 50% chances of lifting rates by 50 or 75 bps. Furthermore, speculative interest pulled out long-dollar bets as US Treasury bond yields retreated, with that on the 10-year note bottoming at 3.92%. Nevertheless, it quickly changed course after upbeat US data and news indicating that the US Department of Treasury announced a series I bond that will pay a 6.89% annual interest rate through April 2023, which weighs on the XAUUSD.

From the technical perspective, the four-hour scale RSI indicator wandered around 50 as of writing, suggesting that the pair has no clear direction. As for the Bollinger Bands, the XAUUSD was pricing on the 20-period moving average and the size of upper and lower bands got closer, which is a signal that the price would hover in a narrow range from $1640 to $1660 marks in the near term.

Resistance: 1675, 1700, 1725

Support: 1632, 1615, 1600

Economic Data

Dear Client,

Please note the adjustment on the following products due to the international holiday in November:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact [email protected].

US stocks declined lower on Monday, coming under selling pressure and trimming its big October rally as investors awaited Wednesday’s Federal Reserve decision for clues on whether officials will dial back the pace of rate hikes as early as December. Investors are now in anticipation of continued rate hikes from central banks that will cause a strong US dollar and elevated US bond yields, therefore the sentiment has exerted bearish pressure on equity markets at the start of the week where the FOMC is expected to deliver a fourth consecutive 75bp rate hike this week. Tepid Chinese data released at the beginning of the day and continued signs that global inflation is out of control have also fueled risk-averse sentiment.

On the economic data side, the annualized Eurozone Harmonised Index of Consumer Prices (HICP) jumped by 10.7% in October, which came higher above estimates of 10.9% and weighed on market sentiment. In the Eurozone, the hawkish expectations from the European Central Bank (ECB) and the multi-year high inflation data failed to provide support for the shared currency as Monday’s risk-aversion joined fears of more economic hardships for the old continent.

The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated lower on Monday as the big-tech companies weighed heavily on the S&P 500. The S&P 500 was down 0.7% daily and the Dow Jones Industrial Average also dropped lower with a 0.4% loss for the day. Ten out of eleven sectors in the S&P 500 stayed in negative territory as the Communication Services sector and the Information Technology sector are the worst performing among all groups, losing 1.68% and 1.34%, respectively. The Nasdaq 100 dropped the most with a 1.2% loss on Monday and the MSCI World index was down 0.4% for the day.

Main Pairs Movement

The US dollar advanced higher on Monday, extending its intra-day rally and touched a daily high above 111.50 level during the US trading session amid a risk-off market mood. The Fed’s pre-anxiety continued to act as a tailwind for the safe-haven greenback as investors shifted to the risk aversion theme amid uncertainty ahead of the interest rate decision by the Fed. The central bank will announce its decision on Wednesday, which might hint it will start slowing the pace of rate hikes in December.

GBP/USD tumbled on Monday with a 1.26% loss after the cable saw a pullback and dropped to a daily low near the 1.1460 mark as UK’s business confidence has dropped to pandemic levels. On the UK front, the Bank of England is also expected to deliver another 0.75% hike on Thursday in an attempt to tame the soaring inflation pressures. Meanwhile, EUR/USD remained under pressure and refreshed its daily low under the 0.9880 mark amid downbeat market sentiment and US dollar strength. The pair was down almost 0.83% for the day.

Gold declined with a 0.69% loss for the day after refreshing its daily low around the $1,632 area during the late US trading session, as the rising hawkish Fed bets continued to undermine the precious metal. Meanwhile, WTI Oil retreated lower with a 1.56% loss for the day despite recovering some daily losses near the $86.20 area.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD extended its last week losses on Monday and breaches the key support at 0.9900 the figure, as the continuation of the strong recovery in the greenback keeps undermining the sentiment around the euro and favours extra decline in the pair. EURUSD was pricing at 0.98847 level as of writing. With investors getting ready for the most salient event of the week, the Federal Open Market Committee meeting on Wednesday, the US dollar accelerated its well bid and climbed above 111.5 level at the moment of writing. In the euro docket, advanced inflation figures in the euro area now see the CPI rising more than the expected 10.7% in the year to October, which is more than the expected 10.2%, and the Core CPI is seen gathering 5.0% from a year earlier. Apart from that, the European area economy is predicted to expand 0.2% QoQ in Q3 and 2.1% every year, according to preliminary results. In the first turn, German Retail Sales contracted by 0.9% in September vs. the same month of 2021.

From the technical perspective, the four-hour scale RSI indicator 39 figured as of writing, suggesting that the pair was surrounded by heavy selling pressure, and the downtrend movement would persist until the RSI fell around 30, the oversold zone. As for the Bollinger Bands, the pair was pricing around the lower band and the gap between the upper and lower bands got larger. As a result, we think the pair would continue the bearish momentum and test the 0.9845 support.

Resistance:  1.0088, 1.0191

Support: 0.9845, 0.9747, 0.9653, 0.9552

GBPUSD (4-Hour Chart)

The GBPUSD struggles to find acceptance above the 1.1600 mark on Monday and retreats over 100 pips from the daily peak. Spot price extend the steady intraday descent and fell below the 1.1500 psychological level as of writing. The losses mainly come from sustained US dollar buying. The greenback builds on last week’s bounce from over a one-month low and gains traction for the third successive day, which exerts downward pressure on the pair. The US dollar index also climbed to a multi-day high level above 111.5 level at the moment of writing and is drawing support from a combination of factors. The Fed is universally expected to deliver another supersized 75 bps rate hike at the end of a two-day monetary policy meeting on Wednesday, which remains supportive of elevated US Treasury bond yields. However, mounting speculation that the US central bank might soften its hawkish stance, amid signs of a slowdown in the US economy, could act as a headwind for the greenback. Meanwhile, British Prime Minister Sunak has announced last week that they will unveil the fiscal plan on November 17, rather than the 31 set by Liz Truss. According to Reuters, futures markets are pricing in a 98% probability of a 75 basis points BoE rate increase on Thursday despite the lack of clarity on the budget.

From the technical perspective, the four-hour scale RSI indicator 43 figured as of writing, suggesting that the pair was surrounded by heavy selling pressure. As for the Bollinger Bands, the pair was priced around the lower band and the gap between the upper and lower bands get larger. Therefore, we think the pair would remain bearish in the near term.

Resistance: 1.1641, 1.1738

Support: 1.1285, 1.1124, 1.0949

XAUUSD (4-Hour Chart)

Gold tumbled and extends its yearly losses at the beginning of the week as a dismal market mood fueled demand for the dollar. XAUUSD has continued to slide and was heading for its longest streak of monthly losses on record with investors now in anticipation of continued rate hikes from central banks that will cause a strong US dollar and elevated US bond yields. The Federal Reserve is scheduled to announce its decision on Wednesday and is widely expected to deliver another supersized 75 bps rate hike. However, signs of a slowdown in the US economy might force the Fed to soften its hawkish stance, and the focus will be on the accompanying policy statement and the post-meeting press conference. Investors need to look for clues about the Fed’s future rate hike path, which will influence the near-term USD price dynamics and provide a fresh directional impetus to the non-yielding gold. Meanwhile, a leg up in the US Treasury bond yields should act as a tailwind for the greenback and weigh on the yellow metal. However, the risk-off impulse could underpin the safe-haven gold as weak-than-expected Chinese business activity data released earlier this Monday revives fears about a deeper global economic downturn and tempers investors’ appetite for risky assets.

From the technical perspective, the four-hour scale RSI indicator 35 figured as of writing, suggesting the gold amid heavy selling pressure which would persist until RSI fell to 30, an oversold region. As for Bollinger Bands, the pair was pricing around the lower band and the size between the upper and lower bands remained became larger. Hence, we think XAUUSD would move downward to test the $1626 support and aim to YTD low $1615 marks in the near term.

Resistance: 1667, 1675, 1700

Support: 1622, 1615, 1600

Economic Data

The US Federal Reserve, Reserve Bank of Australia, and Bank of England have upcoming interest rate decisions scheduled throughout the week.

New Zealand and Canada will release their Employment Change data, while the US will release its Non-Farm Employment Change figures.

RBA Rate Statement – Australia (1 November)

The Reserve Bank of Australia (RBA) increased the cash rate by 25bps to 2.6% during its October meeting after hiking the benchmark interest rate by 50bps in each of the prior four months and 25 basis points in May.

RBA said that inflation in Australia was too high and that a further increase in prices is expected over the months ahead.

Analysts predict that the RBA will raise another 25bps at this month’s meeting.

ISM Manufacturing PMI – US (1 November)

The ISM Manufacturing PMI decreased in September to 50.9, reflecting the slowest growth in factory activity since 2020.

Based on historical trends, we expect that the index will rise to 51 for October.

Employment Data – New Zealand (2 November)

In the second quarter of 2022, New Zealand’s unemployment rate rose to 3.3% from 3.2% in the previous quarter. Employment data remained unchanged (0%). 

The unemployment rate for the third quarter of 2022 is forecast at 3.2%, with employment data to rise by 0.4%.

FOMC Statement and Fed Funds Rate – US (3 November)

Last month, the Federal Reserve boosted the federal funds rate by 75bps to 3%-3.25%. This increase is the third consecutive three-quarter point increase. 

Analysts expect the Fed to raise its target rate by another 75bps this month.

Bank of England Official Bank Rate and Monetary Policy – UK (3 November)

The Bank of England raised its key interest rate by 50bps to 2.25% in September, marking the 7th consecutive increase.

Analysts expect a further 75bps increase this month.

ISM Services PMI – US (3 November)

The Institute for Supply Management’s Services Purchasing Managers Index declined to 56.7 in September from 56.9 in August, but still above the historical average of 55.

Employment Data – Canada (4 November)

In September 2022, Canada added 21,100 jobs, the first rise in employment since May.

The unemployment rate in Canada declined to 5.2% in September of 2022 from 5.4% in the month before, showing a tight Canadian labour market. 

Analysts expect jobs to reduce by 5,000 in October as well.

Non-Farm Employment Change – US (4 November)

US average hourly earnings held steady at 0.3% in September, as employers added 263,000 jobs and the unemployment rate fell to 3.5%.

Analysts estimate that the average hourly earnings will remain at 0.3% for the month, and an additional 200,000 jobs will be created, with unemployment falling below 3.5%.

US stocks rallied on Friday, regaining upside momentum and ended a turbulent week with a sizable gain as the economic data suggested that the Federal Reserve’s battle against inflation is making progress. Investors have already priced in a 0.75% hike by the Fed in December, but the increasing rumours about the possibility of scaling down monetary tightening in December are weighing on the US dollar and providing support to the equity markets. The market now expects that the Federal Reserve might start softening its monetary tightening pace over the next months.

On the economic data side, the US annual Core PCE inflation rose to 5.1% every year in September, which came slightly lower than market expectations of 5.2%. In the Eurozone, estimations for further tightening by the European Central Bank are warranted as the inflation in Germany for October increased by 10.4% YoY and came in higher than market expectations. Some ECB speakers also commented that interest rates are still low and the ECB will decide on interest rate increases, meeting by meeting.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced on Friday as the S&P 500 notched their longest weekly rising streak since August amid gains in big-tech companies including Microsoft Corp. and Google parent Alphabet Inc. The S&P 500 was up 2.5% daily and the Dow Jones Industrial Average also advanced higher with a 2.6% gain for the day. Ten out of eleven sectors in the S&P 500 stayed in positive territory as the Information Technology sector and the Communication Services sector are the best performing among all groups, rising 4.52% and 2.98%, respectively. The Nasdaq 100 climbed the most with a 3.2% gain on Friday and the MSCI World index was down 0.3% for the day.

Main Pairs Movement

The US dollar edged higher on Friday, touching a daily high above the 111.0 mark but then failed to preserve its upside during the US trading session amid further action warranted by the Fed. The core Personal Consumption Expenditure (PCE) jumped above August’s figures, which further justified the case for the Fed’s 75 bps interest-rate hike at the November meeting and acted as a tailwind for the safe-haven greenback.

GBP/USD advanced on Friday with a 0.43% gain after the cable refreshed its daily high above the 1.161 mark as the rumours of Fed pivoting are keeping USD bulls on a leash. On the UK front, Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are working on reducing the piled debt of the UK to bring financial stability. Meanwhile, EUR/USD was nearly unchanged on Friday and rebounded slightly after retreating from a daily high near the 1.000 mark amid renewed US dollar weakness. The pair was up almost 0.03% for the day.

Gold declined with a 1.11% loss for the day after refreshing its daily low near the $1,640 level during the US trading session, as the Core PCE data underpinned the US dollar and exerted bearish pressure on the precious metal. Meanwhile, WTI Oil retreated lower with a 1.32% loss for the day after dropping to a daily low of around $87.4 area. But the EU’s oil embargo should lend support to oil prices.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD was little changed on Friday and continued to trade above 0.9950 at the moment of writing, as the dollar struggles to gather positive traction ahead of the weekend. The latest data from the US showed that core PCE inflation rose at a slightly softer pace than expected in September and that Pending Home Sales declined by 10.2%. Apart from that, EURUSD has reversed its direction to the downside as investors assess the European Central Bank’s (ECB) monetary policy decisions and communication.  As widely expected, the ECB raised its key rate by 75 basis points (bps) following the October policy meeting. The ECB president Christine Lagarde did not provide any details regarding a potential quantitative tightening move during the press conference, and she avoided committing to a specific size of a rate hike in December. On the data side, although the German Gross Domestic Product expanded at an annual rate of 1.2% in the third quarter, more than the expected 0.8%, it failed to underpin the European currency.

From the technical perspective, the four-hour scale RSI indicator 52 figured as of writing and turned weak compared to days ago, suggesting the bullish momentum has been lost and is ready to get into the consolidation phase. As for the Bollinger Bands, the pair dropped below the 20-period moving average and priced at a lower area, indicating the pair has no clear pressure direction and would put into sideways in the near term.

Resistance:  1.0093, 1.0198

Support: 0.9857, 0.9749, 0.9661, 0.9554

GBPUSD (4-Hour Chart)

The GBPUSD edged higher above the 1.1550 area in the second half of the day on Friday as the US dollar lost on the softer-than-expected Core PCE inflation and disappointing Pending Home Sales data for September.  The US Bureau of Economic Analysis’s report showed that US Core PCE Price Index declined from the previous 0.6% to 0.5% monthly rate in September, slightly softer than the market expected. However, the Pending Home Sales data for September reads -10.2%, far from the -5.0% forecast. These figures improved market mood and acted as a tailwind to help the pound hold its ground. Meanwhile, the European Central Bank (ECB) President Christine Lagarde’s dovish tone in the press conference following the bank’s decision to raise key rates by 75bps helped the British pound capture some of the capital outflows out of the euro.

From the technical perspective, the four-hour scale RSI indicator 59 figured as of writing, suggesting the upside traction was weaker as RSI fell from near 70. As for Bollinger Bands, the pair was priced just above the 20-period moving average and the gap between upper and lower bands get closer, signalling the positive movement turned. Hence, we think GBPUSD would slightly edge higher and challenge the resistance of the 1.1639 level in the short term.

Resistance: 1.1639, 1.1738

Support: 1.1250, 1.1071, 1.0953, 1.0392

XAUUSD (4-Hour Chart)

Gold price records a fresh three-day low spurred by a strong US Dollar. XAUUSD had a further decline and now was trading at the $ 1643 mark as stubbornly high US inflation was reported namely the Core Personal Consumption Expenditures (PCE), the Federal Reserve’s favourite gauge of inflation, which increased more than estimates, bolstering the US dollar.  Under the backdrop, the so-called Fed pivot narrative could be discarded as inflation remains at its extremely high level and salaries are rising, despite the Federal Reserve’s effort to tame the runaway inflation. Furthermore, US Treasury yields, namely the 10-year benchmark rate, recover five basis points up at 3.973% and Wall Street holds to gains amidst a decent earnings season, keeping US equities in the green, which undermined the non-yields yellow metal situation. The market participants turn to the next week’s Federal Reserve Open Market Committee (FOMC), in which most analysts expect the Fed to hike rates by 75bps, as reported by the CME FedWatch Tool, with speculations at an 84.5% chance.

From the technical perspective, the four-hour scale RSI indicator 39 figured as of writing, suggesting the gold amid heavy selling pressure which would persist until RSI fell to 30, an oversold region. As for Bollinger Bands, the pair was pricing around the lower band and the size between upper and lower bands remained unchanged, signalling that bearish momentum slow its pace. Therefore, we think XAUUSD would move downward to test the $1626 support, if failed, then a rebound could be expected.

Resistance: 1675, 1700, 1726

Support: 1626, 1616, 1600

Economic Data

U.S. equities were mixed throughout yesterday’s trading. The Dow Jones Industrial Average gained 0.61% to close at 32033.28. The S&P 500 lost 0.61% to close at 3807.3. The tech-heavy Nasdaq Composite plunged 1.63% to close at 10792.68. The Dow Jones Industrial Average was able to close higher on Thursday after new data showed third quarter GDP grew faster than expected and hinted at waning inflation, encouraging some dip buying. Better-than-expected corporate earnings from McDonald’s and Honeywell led the Dow higher. The technology sector continues to take show signs of weakness as Amazon reported Q3 earnings, which came in below consensus estimates; furthermore, Amazon has lowered its Q4 forward guidance to a forecasted 2% growth instead of the 8%, projected during the earlier part of the year.

Apple delivered fiscal 2022 fourth-quarter earnings on Thursday as well. The tech giant delivered an earnings beat. Q4 EPS came in at $1.29, compared to the $1.27 analyst estimate. Revenue for Q4 was up 8.1%, year over year. Despite delivering a surprising earnings beat, Apple did not guide on its first fiscal quarter, which ends in December and contains Apple’s biggest sales season of the year. Apple’s CEO, Tim Cook, has also cited the volatile foreign exchange market, which saw the Dollar soaring against all currencies, as a headwind that significantly reduced Apple’s Q4 performance.

The benchmark 10-year treasury yield has continued to retreat below 4%. The index was last seen trading at 3.922%.

U.S. GDP(QoQ) of Q3, 2022 will be announced on Thursday, Oct 27, given the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, as the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar index rose 0.06% throughout yesterday’s trading. The better-than-expected U.S. Q3 GDP provided a boost to the U.S. Greenback. However, the initial jobless claims figures, which came in below market consensus at 217K, countered some of the gains as market participants interpreted the figure as a sign of a slowdown in the economy.

EURUSD lost 1.15% throughout yesterday’s trading. The ECB announced a 75 basis point interest rate hike on all three of its leading rates, but the accompanying economic outlook, provided by the ECB, weighed on the Euro.

GBPUSD lost 0.48% throughout yesterday’s trading. Higher demand for the Dollar worked against the Pound. Cable was last seen trading just below the 1.16 level.

Gold dropped 0.11% throughout yesterday’s trading. The non-yielding metal fared worse against the rising Dollar as short-term interest rate expectations continue to rise.

Technical Analysis

EURUSD (4-Hour Chart)

The EURUSD gathered extra downside traction below parity in the early US trading session after having reached its highest level since mid-September at around 1.0100 during the Asian trading hours.  The selling bias in the single currency grabbed extra impulse and forced EURUSD to break below the key parity level on Thursday. Apart from that, European Central Bank (ECB) walked the talk and hiked rates by 75 bps at its event on Thursday, as widely anticipated.  The ECB reiterated that it intends to keep raising rates to endure inflation returns to the bank’s 2% target, and added that it will reinvest principal payments from maturing securities at least until the end of 2024. In the meantime, price action around the European currency is expected to closely follow dollar dynamics and the Fed-ECB divergence. However, the resurgence of speculation around a potential Fed’s pivot seems to have removed some strength from the latter.

From the technical perspective, the four-hour scale RSI indicator fell back from above 70 levels and 55 as of writing, suggesting the pair confronted some selling pressure. As for the Bollinger Bands, EURUSD dropped from the upper band to near the 20-period moving average level, signalling the pair was dragged lower by a heavy downside traction

Resistance:  1.0098, 1.0191

Support: 0.9753, 0.9667, 0.9549

GBPUSD (4-Hour Chart)

The GBP/USD pair has reversed its direction and edged lower below 1.1600 in the US trading session as investors adopted a cautious stance, the greenback stays resilient against its rivals as a safe haven and causing the pair to stay on the back foot. The US dollar makes a solid comeback and rebounds swiftly from over a one-month low touched earlier this Thursday, which exerts some downward pressure on the pounds. The critical factors helping revive demand for the USD are a goodish pickup in the US Treasury bond yields and better-than-expected US GDP reports. The US Bureau of Economic Analysis reported that the world’s largest economy grew by 2.6% annualized pace during the third quarter, beating estimates pointing to a reading of 2.4%. In addition, the US weekly Jobless Claims rose from 214K to 217K during the week ended October 21, though was better than market expectations for 220K. In the domestic, the optimism over the appointment of the new UK Prime Minister Rishi Sunak acts as a tailwind for the British pound.

From the technical perspective, the four-hour scale RSI indicator fell from 70 to 63 on Thursday, suggesting the short-term correction might have begun or the cable price would get into the consolidation phase. As for the Bollinger Bands, the GBPUSD wandered in a small range from 1.1550 to 1.1655 after falling back from the upper band, signalling the pair now had no clear direction. Therefore, we think the pounds need to break through the 1.1655 resistance and persist in the rallied traction, or a strong follow-through selling could be expected.

Resistance: 1.1714, 1.1853

Support: 1.1439, 1.1276, 1.1131

XAUUSD (4-Hour Chart)

The XAUUSD fluctuate in a relatively tight range at around the $1660 mark in the second half of the day on Thursday, as the US dollar gains positive traction despite falling US Treasury yields. Gold was priced at $1,661 marks as of writing. The DXY index rebounded from its lowest level since September 20, which acts as a headwind for the dollar-denominated metal.  On the data side, the release of the US Advance Q3 GDP, which exceeds estimates, with the economy growing by 2.6%, above 2.4% estimates, entering into positive territory, following Q1 and Q2 contractions. The readings capped the upside room for the yellow metal and might comfort Fed officials, which forced investors to trim their bets for less aggressive rate hikes.  In the Eurozone, the European Central Bank (ECB) added another 75 bps rate hike to the deposit rate, which stands at 1.50%. The ECB president, Christine Lagarde, commented that the central bank would be data-dependent and take policy decisions “meeting by meeting”, which bolstered the US dollar.

From the technical perspective, the RSI indicator fell from nearly 70 to 53 as of writing, suggesting the gold was surrounded by negative traction. As for the Bollinger bands, the yellow metal was supported by a 20-period moving average and the gap between the upper and lower bands get closer, implying the XAUUSD’s bearish momentum would persist if drop below $1640 support or would put into a sideway in the near-term.

Resistance: 1675, 1700, 1726

Support: 1642, 1616, 1600

Economic Data

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