U.S. equities ended the week with a sharp drop throughout last Friday’s trading. The Dow Jones Industrial Average dropped 630 points to close at 29296.79. The S&P 500 slid 2.8% to close at 3639.66. The tech-heavy Nasdaq composite lost 3.8% to close at 10652.4. U.S. equities fell as the unemployment rate and payrolls jumped above market expectations. U.S. unemployment rate printed 3.5%, beating market expectations of 3.7% as the labour participation rate edged lower to 62.3%. U.S. nonfarm payrolls increased by 263,000 for the month, beating market expectations of 275,000. The upside surprise on the labour market has damped equities outlook as market participants interpreted Friday’s economic data release as favouring further tightening by the Fed.

Average hourly earnings rose 0.3% over the month, in line with market expectations. Further dissecting the jobs report—leisure and hospitality led to gains in hiring as the sector increased by 83,000 jobs. The healthcare sector generated 60,000 positions, while business services and manufacturing contributed 68,000 jobs. Markets are now widely expecting the Fed to continue the pace of its rate hikes with another 75 basis point increase in November.

Main Pairs Movement

The Dollar index rose 0.43% throughout last Friday’s trading. The upside shock of private sector hiring has decimated any notion that the Fed will ease its pace of tightening. A rise in expectations on short-term interest rates aided the Dollar to close the week in positive territory. Market participants will now turn their attention to the U.S. CPI data, which is scheduled to be released on October 13^th.

EURUSD lost 0.52% throughout Friday’s trading. Selling pressure for EURUSD mounted as U.S. job reports were released. A robust U.S. job market has pointed to further interest rate hikes by the Fed.

GBPUSD lost 0.62% throughout Friday’s trading. Cable fell as the U.S. Greenback gained momentum after the release of better-than-expected job reports.

XAUUSD fell 1.04% throughout last Friday’s trading. The precious metal fared worse against the Dollar as bidding for the Greenback returned due to a rise in short-term interest rate expectations.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair declined further on Friday, witnessing some fresh selling and dropped to one-week lows near the 0.9750 level following the release of the US official employment report. The pair is now trading at 0.9806, posting a 0.75% loss daily. EUR/USD stays in the negative territory amid a stronger US dollar across the board, as the greenback gained upside momentum and climbed to a fresh weekly high after the release of the Nonfarm Payrolls report. The US Nonfarm Payrolls rise by 263,000 in September, which came in better than the market expectation of 250,000 and reaffirmed Fed rate hike bets. The prevalent risk-off mood is also exerting additional pressure on the EUR/USD pair. For the Euro, the data released earlier in the session showed that Germany’s Retail Sales contracted 4.6% YoY in August and Industrial Production dropped 0.8%.

For the technical aspect, RSI indicator 38 figures as of writing, suggests that the sellers remain on the sidelines for the time being as the RSI has been moving sideways. As for the Bollinger Bands, the price remained under pressure and moved alongside the lower band, therefore the downside traction should persist. In conclusion, we think the market will be bearish as the pair tests the 0.9755 support. Sustained weakness below that support should favour the bears and remain the pair’s bearish view.

Resistance:  0.9836, 0.9921, 0.9986

Support: 0.9755, 0.9664, 0.9551

GBPUSD (4-Hour Chart)

The GBPUSD tumbled on Friday, falling to a level around 1.1100 at the time of writing, as the upbeat US NFP data reaffirms Fed rate hike bets and acts as a tailwind for the bucks. The US dollar reverses an intraday dip and climbs to a fresh weekly high after the headline NFP report showed that the US economy added 263K new jobs in September. The reading marks a notable slowdown from the 315K reported in the previous month, though surpasses consensus estimates for a reading of 250k. Moreover, the US unemployment rate fell to 3.5% during the reported month from 3.7% in August, reaffirming hawkish Fed expectations. This, in turn, remains supportive of elevated US Treasury bond yields and underpins the greenback, which exerts some pressure on the GBP/USD pair. Apart from rising bets for a more aggressive policy tightening by the Fed, the prevalent risk-off mood is seen as another factor benefitting the safe-haven greenback. In the UK zone, the cables are weighed down by concerns about the UK government’s fiscal policy and looming recession risks.

From the technical perspective, the RSI indicator figures 40 as of writing, implying the downside momentum would persist and test the lowest level of 1.1090 since October. As for Bollinger Band, the price broke through the lower band at the moment of NFP data released, then continued wandering in the lower middle area, a signal telling the pounds would probably be bearish for a while.

Resistance: 1.1380, 1.1475, 1.1715

Support: 1.1090, 1.0800, 1.0650, 1.0390

XAUUSD (4-Hour Chart)

The XAUUSD price dropped below the $1,700 figure, in the aftermath of the US jobs report. Before the US Nonfarm Payrolls report was released, the yellow metal meandered around $1710. However, once the headline crossed newswires, gold’s initial reaction slid towards the $1700 region, but the initial move dissipated. As of writing, it rebounded from $1690 to $1702 in a volatile reaction. Data-wise, a report from the US Bureau of Labor Statistics (BLS), showed that the US economy added 263K new jobs, smashing estimations of 250K, while the Unemployment Rate ticked lower to 3.5%, from 3.7% expectations, which would further cement the case for Fed rate hike. US Treasury bond yields pushed to the upside, with the US 10-year Treasury bond yield advancing 3 bps, at 3.865%, while the US Dollar Index, a gauge of the bucks value vs. six currencies, is up 0.28%, at 112.565.

From the technical perspective, the RSI indicator figures 50 as of writing, showing a more stable status, would hover in the range of $1,695 to $1,712. As for Bollinger Band, the price was breaking through the moving average and touching the lower band, indicating that the price might slight rebound and wander in the lower area of Bollinger Band.

Resistance: 1712, 1725, 1740

Support: 1663, 1644, 1620

The US will release several key data items this week, including the inflation data reflected in the Consumer Price Index, the producer price index, and retail sales data. The preliminary consumer sentiment data reported by the University of Michigan and the minutes from the Federal Open Market Committee will also be released.

Meanwhile, the UK will publish its GDP data mid-week.

• UK Gross Domestic Product (12 October)

Gross domestic product in the UK grew 0.2% in July from June, rebounding from a 0.6% fall in the previous month.

Analysts forecast that the economy will grow 0.1% in August.

• US Producer Price Index (12 October) 

US producer prices fell 0.1% in August, following a 0.4% drop in July. According to economists, prices are forecast to remain steady (0%) for September.

• FOMC Meeting Minutes (13 October)

In its September meeting, the Federal Open Market Committee increased the federal funds rate by 75bps (3%-3.25% range). The Fed also projected that interest rates will rise to as high as 4.4% by December 2022 and stay at 4.6% in 2023.

• US Consumer Price Index (13 October)

According to the Bureau of Labour Statistics, the US consumer price index rose 0.1% in August from July. This follows a flat reading in the previous month and is higher than a forecast decline of 0.1%. Analysts expect that September’s CPI will be up by 0.2%.

• US Retail Sales (14 October)

The US retail sales increased by 0.3% in August from July, following a revised 0.4% fall in the previous month. Markets expect retail sales figures to increase by 0.2% in the current month.

• Prelim UoM Consumer Sentiment (14 October)

In September, the University of Michigan’s consumer sentiment index was released to be 58.6, revised from 59.5 in a preliminary figure. The index had been above 58.2 in August and at its highest in five months.

Analysts predict a range of figures for the index, with some believing it will surpass 58.5, while others believe it will fall below that level.

U.S. equities traded lower throughout yesterday’s trading. The Dow Jones Industrial Average slipped 1.15% to close at 29926.94. The S&P 500 dropped 1.02% to close at 3744.52. The tech-heavy Nasdaq Composite edged 0.68% lower to close at 11073.31.

Learn more about Indices with VT Markets

U.S. initial jobless claims came in at 219K, above market expectations of 190K. The upside surprise of jobless claims sparked a brief rally among equities; however, market participants will now turn their focus on today’s nonfarm payrolls figure and the unemployment rate to better gauge the health of private sector hiring.

In contrast to traditional thinking, worse-than-expected payroll gains and higher-than-expected unemployment rates could be a good signal for equities. A slowdown in private sector hiring could provide proof of the Fed’s tightening efficiency.

The benchmark U.S. 10-year treasury yield rose on Thursday and was last seen trading at 3.821%.

Other key factors that market participants should be aware of are the average hourly earnings figures, which are estimated to increase by 0.3% month over month and 5.1% over the year. A lower figure could indicate the Fed’s tightening showing its effect; conversely, an upside surprise could point to further tightening on the horizon. Recent remarks from Fed officials have reaffirmed the Fed’s stance on its determination on bringing inflation down.

Main Pairs Movement

The Dollar index rose 0.47% throughout yesterday’s trading. The U.S. Greenback extended gains from the 5^th as U.S. treasury yields recovered above 3.8%. Market participants will now turn their focus to today’s nonfarm payrolls and unemployment rate figures to gauge the Fed’s next move.

EURUSD dropped 0.91% throughout yesterday’s trading. Recent hawkish comments from Fed officials have added selling pressure on the Euro-Dollar pair. ECB monetary policy meeting minutes indicated possible tightening by the ECB as members believe inflation to still be rampant in Europe.

Cable retreated 1.45% throughout yesterday’s trading. U.K. PMI figures came in at 52.3, above the market consensus of 49.2.

XAUUSD dropped 0.22% throughout yesterday’s trading. The return of strength for the Dollar acted as a headwind for the non-yielding metal.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair dropped further on Thursday, preserving its downside momentum and declined to fresh daily lows below the 0.9830 level amid a worsening market mood. The pair is now trading at 0.9806, posting a 0.75% loss daily. EUR/USD stays in the negative territory amid a stronger US dollar across the board, as the downbeat US job data and hawkish comments from Fed’s Kashkari on the policy outlook both provided support to the safe-haven greenback. The US Weekly Initial Jobless Claims rise to 219K in the week ending October 1, which came in worse than the market expectation of 200K and exerted bearish pressure on investors’ mood. For the Euro, the downbeat European data continued to weigh on the shared currency as the German Factory Orders declined by 2.4% MoM in August.

For the technical aspect, RSI indicator 43 as of writing, suggests that the downside is more favoured as the RSI declined sharply below the mid-line. As for the Bollinger Bands, the price preserved its downside traction and dropped below the moving average, therefore a continuation of bearish momentum can be expected. In conclusion, we think the market will be bearish as the pair is heading to test the 0.9765 support. A break below that support might open the door for additional losses.

Resistance:  0.9921, 0.9986, 1.0035

Support: 0.9765, 0.9664, 0.9551

GBPUSD (4-Hour Chart)

The GBPUSD plunged on Thursday, two consecutive day losses erased the gains since October. Early Thursday, the Minnesota Fed President Neil Kashkari crossed newswires. He said that there is still a long way from pausing rates, which weigh on the cables. Data-wise, the US Department of Labor reported that unemployment claims increased, a positive sign for the Federal Reserve. Initial Jobless Claims for the week ending on October 1 rose by 219K, higher than the 203K estimated by analysts. The four-week moving average, which smooths volatile week-to-week results, was almost unchanged. According to a survey from the Bank of England on Thursday, business inflation expectations rose to 9.5% in September, and 8.4% in August. In general, even though BOE is expected to keep rates higher, there might be further weakness in the pound, with the UK still seeing falling into recession and CPI inflation expected to peak lower than previously, indicating probably a more dovish size on the hiking rate than Fed.

From the technical perspective, the RSI indicator below 45, showing the downside pressure would persist. As for Bollinger Band, the pricing was breaking through the lower band as of writing, implying that there might be several continuous drops in the following days and tested the lowest level since October around 1.1069.

Resistance: 1.1379, 1.1507, 1.1714

Support: 1.1069, 1.0797, 1.0632

XAUUSD (4-Hour Chart)

The XAUUSD slightly slip to $1711 as of writing, attracting some intraday selling at a higher level amid a modest USD strength. Gold struggles to gain any meaningful traction on Thursday and seesaws between tepid gains/minor losses through the early US session. The US dollar edges higher for the second straight day and looks to build on the overnight bounce from a two-week low, in turn, acts as a headwind for the dollar-denominated gold. The recent hawkish remarks by several Fed officials reinforced market expectations that another supersized 75 bps Fed rate hike move in November, which remains supportive of elevated US Treasury bond yields and continues to underpin the greenback. Investors need to keep eye on the NFP report released on Friday, which will play a critical role in influencing the near-term USD price. Meantime,  the US bond yields and speeches by influential FOMC members will drive the USD demand. The broader market risk sentiment could provide some impetus to the yellow metal.

From the technical perspective,  the RSI indicator below 60, implying a downside momentum would continue, testing the $1700, a psychological level and weekly low.  As for Bollinger Bands, the price is a breakthrough in the 20-period moving average, a signal telling us that bearish traction could persist for a while.

Resistance:  1726, 1765, 1800

Support: 1614, 1644, 1665, 1700

Economic Data

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Being a trader is not an easy job because you need to learn all the strategies necessary to help you make the right decisions on every trading day. One of these is knowing how to predict market turning points. Although the market can shift quickly, predictions will give you a better chance of getting good results for your trade as opposed to going in blind.

A moving average is the superimposed line over a stock’s price action that you see on a line chart. It represents the total closing prices of a security in a specific number of periods divided by the total number of periods. When you’re in trending markets, moving averages can be used as an area of value. 

There are two types of moving averages: Simple Moving Average (SMA) and Exponential Moving Average (EMA). 

Here’s what you need to know about the moving average and how a trader can use it for predicting market turning points:

What is a trend? 

If you want to use moving averages successfully, you need to understand trends first. A trend is essentially the direction in which a price is going. It could be an uptrend, downtrend, or sideways trend, but remember that these prices rarely continue in a straight line due to constant market shifts. This is why you need the moving average to help determine the exact direction where a trend is going.

How do you calculate a moving average?

To calculate a moving average, you need to define a specified period, the most popular of which is the 50-day moving average. Here, you’ll need to add the closing prices for the last 50 days and then divide it by the number of periods, which is 50. If you want to use the same method over the next few trading days, replace the oldest number with the most recent closing price and follow the same calculations.

You can also use the same calculation for weekly prices, monthly prices, intraday prices, and opening prices. This will depend on what you think will guide you in predicting market shifts, so you’ll also know when to buy, hold off, or sell.

How do you use a moving average as entry or exit?

A moving average is a powerful tool for predicting market turning points, which will help you plan your entry and exit strategy wisely. One of the easiest methods traders use is crossing two or more moving averages with a short- and long-term calculation. For instance, if a short-term moving average crosses below or above a long-term moving average, that could be a signal that a trend is gaining strength or if it’s about to reverse.

In most cases, a short position is determined when a short-term average crosses below the long-term average, while a long position is determined when the short-term average crosses above the long-term average.

Finally, there’s support and resistance, which you probably know by now as the downward or upward direction of a trend. How does this relate to the moving average? When you calculate a moving average and plot it on a chart, it could be an early determining factor of a support or resistance level. This will help you decide if you should buy, sell, or sit it out until the market is more favourable to your goals. 

Moving averages can help you make proper trading decisions if you know how to use them right. 

So, learn how to maximize this strategy and other methods for trading with the help of experts, like VT Markets, in a community where you can get useful trading insights.

U.S. equities retreated throughout yesterday’s trading. The Dow Jones Industrial Average lost 0.14% to close at 30273.87. The S&P 500 lost 0.2% to close at 3783.28. The Nasdaq composite slipped 0.25% to close at 11148.64. 

U.S. ADP nonfarm employment change printed 208K, beating estimates of 185K. The ISM non-manufacturing PMI came in at 56.7, lower than market estimates of 56.9. OPEC+ has also announced that it plans to cut oil production by 2 million barrels per day to shore up prices. The weaker-than-expected economic data sparked a sharp drop among equities, but it also limited stock losses as market participants bank on the Fed to slow the pace of tightening.

However, oil production reduced by OPEC+ could make reining in inflation a further challenge.

U.S. 10-year treasury yield climbed back above 3.7%– yields were last seen trading at 3.751%.

Federal Reserve bank of Atlanta president Raphael Bostic said on Wednesday he favoured raising interest rates to 4.5% by the end of the year, implying 125 basis points of tightening. Market participants betting on a dovish pivot from the Fed could be disappointed as current interest rates are rather not considered restrictive, yet, by the Fed.

On the economic docket, the ECB is set to announce its monetary policy meeting minutes during today’s European trading session. The U.S. will release initial jobless claims figures during today’s American trading session.

Main Pairs Movement

The Dollar index surged 1.39% throughout yesterday’s trading. The U.S. Greenback gained traction as economic data came in better than expected. ADP nonfarm employment change showed an upside shock to 208K—indicating a robust private sector; meanwhile, the non-manufacturing PMI printed 56.7, lower than the market consensus of 56.9. Both economic data supported the Dollar.

EURUSD lost 1.05% throughout yesterday’s trading as the Dollar surged. The shared currency fared worse against the Dollar as economic data from the U.S. shows a healthier economy than that of the E.U.

Cable lost 1.28% throughout yesterday’s trading. British PMI came in at 49.1, lower than the market consensus of 49.6.

The Dollar denominated Gold lost 0.58% throughout yesterday’s trading. The precious metal snapped a 6-day winning streak as market mood soured. 

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair tumbled on Wednesday, coming under renewed selling pressure and dropped to a daily low below the 0.9850 mark as speculations of a Fed pivot towards a dovish stance faded. The pair is now trading at 0.9873, posting a 1.13% loss daily. EUR/USD stays in the negative territory amid renewed US dollar strength, as the upbeat US economic data revealed during the day has provided support to the greenback and dragged the EUR/USD pair down. The data published by Automatic Data Processing (ADP) showed on Wednesday that private sector employment in the US rose by 208K in September, which came in better than the market expectation of 200K and showed that the US economy stayed resilient amidst an aggressive tightening cycle by the Fed. For the Euro, the shared currency remained under pressure amid discouraging EU data, as the Services PMIs for the EU and the German both dipped into contraction territory.

For the technical aspect, the RSI indicator is 52 as of writing, suggesting the pair’s bearish outlook in the near term as the RSI retreated sharply from an overbought level. As for the Bollinger Bands, the price witnessed selling pressure and dropped to the moving average, therefore the downside traction should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 0.9816 support. The falling RSI also reflects bear signals.

Resistance:  0.9986, 1.0035, 1.0155

Support: 0.9816, 0.9765, 0.9664

GBPUSD (4-Hour Chart)

The GBPUSD has lost its traction and declined to the level below 1.1300 as of writing after a dramatic rebound since last Tuesday. The souring market mood helps the dollar regather its strength and weighs on the pair ahead of key macroeconomic data releases from the US. The selling pressure surrounding the dollar and the UK government’s decision to step back on massive tax cuts fueled the cable’s rally earlier this week. However, the escalating geopolitical tensions drove investors to seek refuge early Wednesday and the US dollar index managed to earn a portion of Tuesday’s losses. Russia’s ambassador to the US said that the danger of a direct clash between Russia and the west had escalated after the White House’s decision to provide additional military aid to Ukraine. Looking to the future, investors need to keep eye on the ADP Employment Change data, which is forecast to rebound to 200K in September from 132K in August. Fed policymakers are willing to stay on the aggressive tightening path until they see convincing signs of the labour conditions loosening.

From the technical perspective, the RSI indicator figures 50 at the time of writing, indicating a sign of the pairs would wander in a range from 1.1200  to 1.1400.  As for the Bollinger Bands, the price suffered heavy selling pressure around 200-period SMA on the four-hour chart and dropped to the middle area, we think the bearish momentum will extend if breaks through the 100-period SMA, 1.1200 level.

Resistance: 1.1400, 1.1720

Support: 1.1090, 1.1200

XAUUSD (4-Hour Chart)

The XAUUSD plunged on Wednesday, falling to $1707 marks as of writing following a six consecutive day growth. At the moment of writing, gold has tumbled with 1.08% losses for the day, as the US dollar is seeing a sweeping demand amid a risk-off market profile. Hopes for aggressive Fed rate are back on the table after the hawkish RBNZ 50 bps rate increase, fuelling a fresh upswing in the US Treasury yields across the curve, which weighed on the non-yielding yellow metal. Apart from that, escalating geopolitical tensions between Russia and the West are doing little to offer any respite to XAU bulls, as risk-off flows and the dollar demand dominate across the financial market. Investors now await the top-tier US economic releases and Fedspeak for fresh hints on the next Fed rate policy decision.

From the technical perspective, the RSI indicator is below 70 figures as of writing, implying bullish momentum turned weak to a consolidated phase. The bearish 50-Daily Moving Average (DMA) at $1,724 has tempered the gold price rally. A sustained break above the 50 DMA is needed to challenge the September high at $1,735, above which the $1,750 psychological level will come into play. On the other side, the previous critical resistance now supported at $1700 could offer reprieve to buyers, below which the last day’s low of $1,695 could be revisited.

Resistance: 1725, 1735, 1750

Support: 1661, 1694, 1700

Economic Data

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因应近期日渐波动的美股市场风险，VT Markets 将于 2022 年 10 月 10 日调整美股产品的部份交易设置，详请参考如下：

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The U.S. stocks market rose for a second straight session on Tuesday as investors hoped that the Federal Reserve may ease its aggressive tightening stance in response to employment data. The S&P 500 climbed 112 points (+2.90%) to 3,790, while the Nasdaq 100 surged 352 points (+2.93%) to 11,582 and the Dow Jones Industrial Average surged 825 points (+2.62%) to 30,316.

In August, the U.S. Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) reported 10,053 million job openings, a 14-month low and significantly below the projected 11,1 million. In August, factory orders remained unchanged from the previous month, despite a projected 0.3% decline. The yield on the 10-year Treasury bond decreased by 0.4 basis points to 3.635%.

Twitter (TWTR), the social networking platform, surged 22.24% to $52 as Elon Musk plans to proceed with his acquisition of Twitter for the original proposed share price of $54.20. Meanwhile, Tesla (TSLA), the electric-vehicle maker, rose 2.9% to $249.44.

Main Pairs Movement

The Dollar Index dropped 1.27 per cent during yesterday’s session. Tuesday saw the dollar decline versus most major currencies as the yield on the benchmark 10-year U.S. Treasury declined.

During yesterday’s trading, the EURUSD appreciated 1.67 per cent and closed at a new weekly high. As the Euro continues to capitalise on the weaker Dollar, parity is nearly attained.

Cable increased 1.33 per cent during yesterday’s session. The British Pound has extended its winning streak to five days.

XAUUSD finished higher at approximately $1724 per ounce as the yield on the benchmark 10-year U.S. Treasury note decreased and weakened the Dollar.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced on Tuesday, gathering recovery momentum and refreshing its daily high near the parity level. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the recent pullback in the US Treasury bond yields from a multi-year peak has weighed on the safe-haven greenback for the second day of the week.

For the technical aspect, the Stochastic indicator is at an overbought level as of writing, suggesting that slower bulls are potentially in movement as the indicator is starting to bend lower. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is testing the parity level of 1.000 as its resistance level.

Resistance:  1.0000, 1.0015, 1.0040

Support: 0.9955, 0.9925, 0.9880

GBPUSD (4-Hour Chart)

The GBP/USD pair surged on Tuesday, preserving its upside momentum and extending its daily rally towards a fresh 10-day high above 1.14 in the second half of the day amid the UK government’s U-turn on the fiscal plan. At the time of writing, the cable stays in positive territory with a 1.02% gain for the day. For the British pound, reports suggested that British Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng would reverse a cut to the 45% rate of income tax for the highest earners, which provided a strong boost to the British pound. UK Finance Minister also confirmed later that they will not go ahead with that fiscal plan.

For the technical aspect, the Stochastic indicator is at the overbought level as of writing, suggesting that slower bulls are potentially in movement as the indicator is starting to bend lower. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is heading to test the 1.1475 resistance. A steeper rebound could be expected if the ongoing rally extends above the aforementioned resistance.

Resistance: 1.1475, 1.1535

Support: 1.1410, 1.1350, 1.1290

XAUUSD (4-Hour Chart)

As the US dollar came under bearish pressure amid the retreating US bond yields in early the week, the pair XAU/USD regained upside momentum and extended its rally to fresh multi-week highs above the $1,729 level during the US trading session. XAU/USD is trading at $1,720 at the time of writing, rising 1.60% daily. The sharp decline witnessed in the US Treasury bond yields is acting as a tailwind for the precious metal, as the US Dollar Index is down 1,27% on the day. Meanwhile, the probability of one more 75 basis points Fed rate hike in November has declined toward 50% while investors now waiting for the key US labour market report, which will play a key role in influencing Fed rate hike expectations and provide a fresh directional impetus to gold.

For the technical aspect, Stochastic inside the overbought level with a potential of bending lower, suggesting the pair’s bullish outlook in the near term will continue with a short-term lower movement. For the Bollinger Bands, the price witnessed fresh buying and moved out of the upper band and then back in, therefore a strong continuation of the upside trend could be expected to be slower. In conclusion, we think the market will be bullish as the pair is testing the 1730 resistance. A sustained strength above that level might favour the bull and open the door for additional gains.

Resistance: 1730, 1740, 1750

Support: 1705, 1690

Economic Data

U.S. stocks rallied on the first trading day of the month. The Dow Jones Industrial Average rose 765.38 points to close at 29,490.89. The S&P 500 gained 2.6% to close at 3678.43. The Nasdaq Composite rose 2.3% to close at 10,815.43. The benchmark U.S. 10-year treasury yield fell below 3.7% and was last seen trading at 3.67%. The receding treasury yield allowed a rare day of gains for equities; furthermore, after a month of losses, equities entered a revival rally over the 3^rd. Among the S&P 500 index, the energy sector gained the most as utility stocks benefit from the falling bond yield.

Shares of Credit Suisse took a plunge of as much as 10% on Monday as reports have surfaced that the bank has tremendous exposure to credit default swaps that were previously undisclosed. Internal memos from Credit Suisse management have surfaced that the bank is looking to raise capital in order to cover CDS exposure. Similar to the 2008 credit crisis, Credit Suisse now faces a challenge to raise funds under tight money market conditions; however, other banks have reiterated their credit health and pointed out that Credit Suisse stands alone in this turmoil. Talks of asset sales and potential divestitures have been brought to the table.

Main Pairs Movement

The Dollar Index fell 0.46% over the course of yesterday’s trading. The Greenback fell amid falling bond yields; furthermore, the rallying equity market has attracted cash flow from market participants.

EURUSD climbed 0.25% over the course of yesterday’s trading and closed at a fresh weekly high. Parity is now fully in play as the Euro continues to take advantage of the weaker Dollar.

Cable rose 1.48% over the course of yesterday’s trading. The British Pound has extended its four-day winning streak as the downbeat U.S. PMI data dragged the Dollar lower.

XAUUSD closed at around the $1,700 per ounce price level as the Dollar denominated asset attracted bidding while bond yields retreated. The lower-than-expected PMI release from the U.S. has decreased market bets on a super-sized interest rate hike by the Fed.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair advanced on Monday, gathering recovery momentum and refreshing its daily high above the 0.980 mark after the release of the disappointing ISM Manufacturing PMI from the US. The pair is now trading at 0.9829, posting a 0.28% gain on a daily basis. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the recent pullback in the US Treasury bond yields from a multi-year peak has weighed on the safe-haven greenback on the first day of a new week. The US ISM Manufacturing PMI declines to 50.9 in September, which was weaker than the market expectation and pointed to a loss of momentum in the manufacturing sector’s growth. For the Euro, the German Manufacturing PMI came at 47.8 in September, which came lower than expected.

For the technical aspect, the RSI indicator is 59 as of writing, suggesting that the bulls are in control of the pair as the RSI climbed sharply towards 60. As for the Bollinger Bands, the price rebounded towards the upper band from the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is testing the 0.9836 resistance line. A break above that level could open the road for near-term gains.

Resistance:  0.9836, 0.9880, 0.9969

Support: 0.9755, 0.9664, 0.9551

GBPUSD (4-Hour Chart)

The GBP/USD pair surged on Monday, preserving its upside momentum and extending its daily rally towards a fresh 10-day high above 1.1270 in the second half of the day amid the UK government’s U-turn on the fiscal plan. At the time of writing, the cable stays in positive territory with a 1.02% gain for the day. The downbeat US ISM Manufacturing PMI exerted bearish pressure on the US dollar and provide some support to the GBP/USD pair. For the British pound, reports suggested that British Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng would reverse a cut to the 45% rate of income tax for the highest earners, which provided a strong boost to the British pound. UK Finance Minister also confirmed later that they will not go ahead with that fiscal plan.

For the technical aspect, the RSI indicator is 47 as of writing, suggesting that the pair is preserving bullish strength as the RSI keeps moving north. As for the Bollinger Bands, the price preserved its upside traction and climbed to the moving average, therefore a continuation of the bullish momentum can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.1333 resistance. A steeper rebound could be expected if the ongoing rally extends above the aforementioned resistance.

Resistance: 1.1333, 1.1432, 1.1566

Support: 1.1086, 1.0797, 1.0392

XAUUSD (4-Hour Chart)

As the US dollar came under bearish pressure amid the retreating US bond yields on Monday, the pair XAU/USD regained upside momentum and extended its rally to fresh multi-week highs above the $1,690 level during US trading session. XAU/USD is trading at $1,689.39 at the time of writing, rising 1.72% on a daily basis. The sharp decline witnessed in the US Treasury bond yields is acting as a tailwind for the precious metal, as the US Dollar Index is down 0.25% on the day. Meanwhile, the probability of one more 75 basis points Fed rate hike in November has declined toward 50% after the release of the disappointing ISM Manufacturing PMI data. Investors now waiting for the key US labour market report, which will play a key role in influencing Fed rate hike expectations and provide a fresh directional impetus to gold.

For the technical aspect, the RSI indicator is 69 as of writing, suggesting the pair’s bullish outlook in the near term as the RSI indicator has reached near 70. For the Bollinger Bands, the price witnessed fresh buying and moved out of the upper band, therefore a strong continuation of the upside trend could be expected. In conclusion, we think the market will be bullish as the pair is testing the $1,681 resistance. A sustained strength above that level might favour the bull and open the door for additional gains.

Resistance: 1681, 1705, 1725

Support: 1660, 1644, 1620

Economic Data

U.S. equities have continued to edge lower on the last trading day of the week. The benchmark U.S. 10-year treasury yield recovered above 3.8% as short-term interest rate expectations continue to rise. The Dow Jones Industrial Average lost 1.71%, the S&P 500 slid 1.51%, and the Nasdaq composite lost 1.51%. U.S. equities have suffered their worst monthly performance since March of 2020 after the initial impact of Covid-19; however, the market is set to head lower as the Fed gears up for further interest rate hikes before the end of the year. U.S. PCE price index came in at 0.6%, compared to market expectations of 0.1%, signals a continued upward trend in personal consumption goods.

The cryptocurrency market has been ravaged by the series of interest rate hikes by the Fed and the resulting surge of the Dollar. Bitcoin briefly edged past the $20,000 price level on Friday, but remarks from Federal Reserve vice chair Lael Brainard triggered another drop amid another hawkish signal.

WTI has edged below $80 a barrel by Friday’s close. The Dollar denominated energy commodity has struggled to attract demand as the global economic outlook continues to worsen. Brent crude is last seen trading at around $85 a barrel.

Main Pairs Movement

The Dollar index posted weekly losses for the first time since the first week of September. The downward trending U.S. Greenback has allowed breathing room for most foreign pairs against the Dollar. EURUSD rose 1.17 % over toverweek, GBPUSD rose 2.81% over toverweek, and Gold rose 1.04% over toverweek. However, with at least two more interest rate hikes planned before the end of the year, the Federal Reserve’s hawkish tone is not to be challenged and so is the strength of the Dollar.

USDJPY witnessed a 0.99% gain over the previous week, despite a broadly weaker Dollar. The Japanese Yen has continued to devalue against the Dollar, as there seems to be no immediate plan for the Japanese central bank to intervene in its exchange rate. However, with Japan opening its borders in October, tourism and higher passenger pass-through rates are expected to stimulate organic growth in Japan.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD lost 0.15% over the last trading day of the week. Despite a broadly weaker Dollar on the 30th, the Euro still fell against the Greenback as market participants continued to sell the Euro. European region CPI came in at 10%, which is much higher than the market consensus of 9.1%. The higher CPI in the EU confirms fears over the ECB’s ability to rein in inflation. However, German unemployment change did come in market estimates at 14K. On the economic docket, the ECB is set to announce its interest rate decision during the European trading session on the 6^th.

On the technical side, EURUSD has continued to consolidate around our previously estimated support level of 0.98. Despite a 0.7% loss throughout the week’s trading, EURUSD has continued to head upwards towards parity. RSI for the pair sits at 48.3, as of writing. On the four-hour chart, EURUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.98, 0.96

GBPUSD (4-Hour Chart)

Cable extended its recovery throughout Friday’s trading. The broad-based sell-off of the Dollar has aided the Pounds recovery during Friday’s trading. After Wednesday’s decision by the BoE to intervene in the Gilt market, on top of the Sterling’s freefall, GBPUSD has recovered more than 4% to trade above 1.116. On the economic docket, the U.S. is set to release its ADP nonfarm employment change and non-manufacturing PMI on the 5^th, while Britain will release its manufacturing PMI on the 3^rd. On Friday, the U.S. will release its monthly unemployment rate figure.

On the technical side, GBPUSD has found new resistance at our previously estimated resistance level of 1.12. The short-term support level for the pair remains firm at 1.08. Long-term resistance for Cable stands at around the 1.1371 price level. RSI for this pair sits at 30.67, as of writing. On the four-hour chart, GBPUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.08, 1.053

XAUUSD (4-Hour Chart)

The Dollar denominated gold traded mostly sideways over the last trading day of the week. The non-yielding metal, however, gained over 1% over the previous week amid the Dollar’s cool-off. Russia’s escalation of actions towards Ukraine and the mysterious sabotage of the Nord Stream 1 pipeline have both exacerbated market volatility and the demand for Gold. While Gold has not been performing well under current interest rate conditions, uncertainty and rising risk due to geopolitical confrontations have supported the recent recovery rally of the Dollar-denominated Gold.

On the technical side, XAUUSD has met short-term resistance above the $1,670 per ounce price region and has resumed trading at our previously estimated support level for the pair at $1660 per ounce. RSI for this pair sits at 38.32, as of writing. On the four-hour chart, XAUUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.

Resistance: 1695, 1724

Support: 1660, 1640

Economic Data