US stocks rallied on Wednesday, regaining upside strength and ending their six-day slide after the Bank of England’s decision to stage a market intervention boosted UK bonds and tentatively calmed markets. The BOE decided to buy long-dated UK government bonds starting today to restore market conditions and later confirmed that it could buy just £1.025 billion in the emergency QE operation.

Therefore, the BoE’s decision supported the market sentiment and global markets enjoyed a break from the brutal selling that has gripped them since the Fed embarked on the most aggressive path of interest-rate hikes since the 1980s.

However, several US Federal Reserve officials lined hawkish, repeating the well-known message of another 75 bps coming up next. In the Eurozone, ECB President Christine Lagarde participated in a US-European GeoEconomics forum and said they would continue to hike rates in the next several meetings. Other ECB Governing Council members also openly favoured a 0.75% rate hike in the next meeting.

The benchmarks, S&P 500 and Dow Jones Industrial Average both advanced higher on Wednesday as the S&P 500 snapped a six-day rout and rose the most since early last month. The S&P 500 was up 2.0% daily the Dow Jones Industrial Average also climbed higher with a 1.9% gain for the day. All eleven sectors in S&P 500 stayed in positive territory as the Energy and Communication Services sectors are the best performing among all groups, rising 4.40% and 3.18%, respectively. The Nasdaq 100 meanwhile advanced with a 2.0% gain on Wednesday and the MSCI World index was down 0.1% for the day.

Main Pairs Movement

The US dollar declined sharply on Wednesday, failing to preserve its upside traction and dropped to a daily low below the 112.70 mark in the late US session after a positive turnaround in the global risk sentiment. But the downside for the US dollar seems limited amid the prospects for a more aggressive policy tightening by global central banks, including the Federal Reserve. The market focus now shifts to the German inflation data.

GBP/USD rebounded higher on Wednesday with a 1.42% gain after the cable touched a daily top above the 1.090 mark amid the Bank of England’s (BoE) efforts to cap the fixed income market. On the UK front, the Bank of England entered the bond market on Wednesday which aimed to stimulate the economy. Meanwhile, EUR/USD also staged a goodish rebound and refreshed its daily high near 0.974 level amid US dollar weakness. The pair was up almost 1.45% for the day.

Gold surged higher with a 1.91% gain for the day after climbing to a daily top above the $1,660 mark during the late US trading session, as a sharp pullback in the US bond yields weighed on the greenback and underpinned the safe-haven metal. Meanwhile, WTI Oil advanced higher with a 4.95% gain for the day after recovering towards the $82 area amid the risk-on market mood.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD rallied more than 1% over the previous trading day amid a broad-based Dollar sell-off. The short-term U.S. 10-year treasury yield retreated back 3.8% and is currently trading at 3.737%. Market participants rotated out of the U.S. Dollar into equities as equity markets rebounded off of fresh lows. All major U.S. equity indices rose more than 1%. A 75 basis point interest rate hike by the ECB is now being entertained as the E.U. continues to struggle with soaring inflation.

On the technical side, EURUSD has rebounded strongly off of our previously estimated support level of 0.96. Should the Dollar continue to weaken, EURUSD could head back above the 0.97 price region. RSI for the pair sits at 39.8, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.9550, 0.9400

GBPUSD (4-Hour Chart)

Cable rallied 1.45% over the previous trading day. The decision by the BoE to restart its bond purchasing program to control the Pound’s recent freefall has allowed the Pound to rise against the U.S. Dollar. The BoE’s plan to purchase longer-dated bonds to stabilize its currency, however, has attracted many criticisms, including comments from the IMF. The short-term decision by the BoE continues to raise our previous concerns about the health of British credit. Further widening its credit deficit could put the British economy under tremendous stress; furthermore, members of the British Finance ministry have come forward to confirm that there are no plans to reverse the cancellation of its latest tax policy.

On the technical side, GBPUSD has found support just below our previously estimated support level and is now consolidating around the 1.08 price region. Short-term resistance for the pair stands at the 1.1 price region. RSI for this pair sits at 29.34, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.08, 1.053

XAUUSD (4-Hour Chart)

Gold rebounded more than 1.8% over the previous trading day. The precious metal saw a surge in price as the U.S. Greenback witnessed a broad-based sell-off. The non-yielding metal found momentum as market participants rotated out of the Dollar and into equities. The macroeconomic environment for the yellow metal, however, remains unchanged. While Gold bulls can find a day of breathing room and profit-taking space, the short-term upward movement of Gold does not suggest a break away from its recent downward trend. Market participants will be paying close attention to the U.S. GDP data, scheduled to be released during today’s American trading session.

On the technical side, XAUUSD rebounded strongly from our previously estimated support level of $1619 per ounce and is now trading above our higher level of support for Gold at $1660 per ounce. Note that $1,660 could change polarity and become a short-term resistance for Gold. RSI for this pair sits at 35.7, 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: 1619, 1600

Economic Data

In the Eurozone, multiple leaks in Russia’s gas pipeline in the Baltic Sea raise concerns about the escalating energy conflict between Europe and Russia, which pushed European natural gas prices higher and exerted bearish pressure on investors’ moods.

US stocks declined on Tuesday, dropping for the sixth session and ending a volatile session lower as the fears of a worldwide recession keep leading the market sentiment.

The safe-haven US dollar continued to find demand after the Fed delivered a third jumbo hike and warned of more pain to come, meanwhile Federal Reserve’s James Bullard also added to a chorus of officials saying more rate hikes are needed and the risks to the economy remain elevated. Some US Federal Reserve officials tried to pour cold water into the dollar’s recent strength but failed despite Fed’s Charles Evans saying he was getting concerned about going too far, too fast with rate hikes.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Tuesday as the harsh central bank tightening programs sparked the S&P 500’s longest losing streak since February 2020. The S&P 500 was down 0.2% on a daily basis and the Dow Jones Industrial Average also dropped lower with a 0.4% loss for the day. Seven out of eleven sectors in the S&P 500 stayed in negative territory as the Consumer Staples sector and the Utility sector are the worst performing among all groups, losing 1.76% and 1.70%, respectively. The Nasdaq 100 meanwhile advanced slightly with a 0.2% gain on Tuesday and the MSCI World index was down 1.3% for the day.

Main Pairs Movement

The US dollar climbed higher on Tuesday, extending its previous rally and touched a daily high above the 114.40 mark during the US session amid the risk-off market sentiment. On top of that, the firmer US Durable Goods Orders and CB Consumer Confidence data also acted as a tailwind for the safe-haven greenback, as the US Durable Goods Orders declined by only 0.2% in August and US CB Consumer Confidence also improved to 108.00 for September.

GBP/USD rebounded slightly on Tuesday with a 0.43% gain after the cable recovered towards the 1.080 level amid the overnight special statement from the Bank of England. On the UK front, the BoE added that it is monitoring developments in financial markets very closely. Meanwhile, EUR/USD remained under pressure and finished the day right below the 0.9600 mark amid a risk-off market mood. The pair was down almost 0.15% for the day.

Gold rebounded with a 0.40% gain for the day after climbing to a daily top above the $1,640 mark during the European session, as some profit-taking witnessed in the US dollar earlier in the day has provided support to the safe-haven metal. Meanwhile, WTI Oil advanced higher with a 1.94% gain for the day after recovering towards the $79 area despite hawkish rhetoric from Fed officials.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD continued to fall for the second straight day despite efforts to recover above 0.96. The energy crisis continues to trouble the European economy; furthermore, with Russia expanding its aggression by the day, the spillover effect of the Russian-Ukrainian war will quickly take a toll on the whole European economy. On Wednesday, ECB President Christine Lagarde will participate in the Frankfurt Forum, and so will Fed Chair Jerome Powell. Both heads of central banks are expected to deliver a speech.

On the technical side, EURUSD has traded slightly below our previous estimated support level of 0.96. The pair is attempting to defend this support level, but with the U.S. Greenback gaining more demand by the day, we expect a lower support level for the pair at around 0.95. RSI for the pair sits at 32.08, as of writing. On the four-hour chart, EURUSD currently trades well below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.96, 0.94

GBPUSD (4-Hour Chart)

Cable, after sinking to historical lows on Tuesday, has recovered 0.43% by yesterday’s close. The broadly weaker Dollar across markets has allowed the British Pound to gain traction against the U.S. Greenback. The British Pound was also stimulated by the BoE’s, seemingly emergency, statement after the Pound’s plunge. The statement by the BoE stated that the central bank will intervene in the decline shall the British Pound continue to fall uncontrollably. Markets are still pricing in an  80% chance that the BoE will raise rates to 3.5% by November from 2.25%.

On the technical side, GBPUSD has rebounded from our previously estimated support level of 1.035. Short-term resistance for GBPUSD stands at around 1.08 and 1.12. RSI for the pair sits at 40.37, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.035, 1.000

XAUUSD (4-Hour Chart)

Gold found some breathing room on the 27th as the Dollar slowed its growth. Furthermore, as mentioned in yesterday’s report, the mobilization of Russia’s armed forces, riots in Iran, geopolitical and instability in the South China Sea have all contributed as a potential catalyst for astronomical upside potential for Gold. On the contrary, tightening by global central banks has eliminated any upward space for Gold save a catastrophic global geopolitical conflict.

On the technical side, XAUUSD has broken below our previously estimated support level of $1640 per ounce and is heading towards our estimated next level of support at $1600 per ounce. RSI for the non-yielding gold sits at 37.83, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1695, 1724

Support: 1620, 1600

Economic Data

US stocks declined on Monday, extending their recent slide and fell in a volatile session amid the fact that worldwide central bankers insisted on battling inflation at any cost. On the economic data side, US Durable Goods Orders and CB Consumer Confidence are taking centre stage on Tuesday.

The UK markets were in focus on Monday as the UK’s plan to lift its economy fueled fears that heightened inflation would push rates higher and ignite a global recession. Despite the Bank of England Governor Andrew Bailey’s repeated they would not hesitate to alter interest rates if necessary and added that they are closely monitoring financial markets developments, the comments did little to reassure traders who were waiting for a broader policy response.

In the Eurozone, investors are awaiting the European Central Bank (ECB) President Christine Lagarde’s speech, which will provide cues for likely monetary policy action ahead.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined on Monday as the S&P 500 ended yesterday’s session at its lowest level since December 2020 meanwhile the Cboe Volatility Index spiked past 30. The S&P 500 was down 1.00% daily and the Dow Jones Industrial Average also dropped lower with a 1.1% loss for the day. Ten out of eleven sectors in the S&P 500 stayed in negative territory as the Real Estate sector and the Energy sector are the worst performings among all groups, losing 2.63% and 2.57%, respectively. The Nasdaq 100 meanwhile dropped the least with a 0.5% loss on Friday and the MSCI World index was down 2.0% for the day.

Main Pairs Movement

The US dollar climbed higher on Monday, preserving its upside strength and touched the highest since 2002 above the 114.5 mark amid recession fears and rising interest rates. The Federal Reserve’s 75 basis point hike in interest rates and the promise of further increases as the central bank looks to quell inflation has underpinned the safe-haven greenback and pushed major pairs into fresh multi-year lows.

GBP/USD tumbled sharply on Monday with a 1.04% loss after the cable recovered slightly from the all-time low marked on Monday amid the pessimism surrounding the UK. On the UK front, British finance minister Kwasi Kwarteng announced the scrapping of the top rate of income tax and cancelled a planned rise in corporate taxes. Meanwhile, EUR/USD preserved its downside momentum and traded near a fresh two-decade low of 0.9549 amid US dollar strength. The pair was down almost 0.60% for the day.

Gold declined with a 1.29% loss for the day after dropping to the lowest in more than two years below the $1,623 mark during the US trading session, as the risk aversion keeps traders’ flows toward the greenback and weighed on the safe-haven metal. Meanwhile, WTI Oil retreated further with a 3.74% loss for the day after retreating from the $80.0 area amid concerns about a global economic slowdown.

Technical Analysis

EURUSD (4-Hour Chart)

The Euro sank against the Dollar on the first trading day of the week. The shared currency extended its decline from last week and is heading towards multi-year lows amid a strong Dollar. Risk-off sentiment across markets have allowed the Dollar to gain tremendous bidding at the start of the Asia trading session. A string of speeches by Fed officials is set to happen for this week, starting with Fed Chair Jerome Powell’s speech on Tuesday the 27th. The U.S. 10-year treasury yield has continued to rise as bonds sell off—yields have topped 3.8%, as of writing. The Fed’s most recent conference has delivered a clear message of reining in inflation at all costs. The U.S. PCE report, which is scheduled for September 30th, will be in focus as it is a favoured leading inflation indicator for the Fed.

On the technical side, EURUSD has once again traded towards our previously estimated support level of 0.96. The next level of support for EURUSD could form around 0.94 should the U.S. Greenback continue to gain strength. RSI for the pair sits at 37.96, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.96, 0.94

GBPUSD (4-Hour Chart)

Cable tumbled on the first day of the new trading week. The British Pound witnessed a fresh historic low as the Pound sold off during the Asia and European trading sessions. Market participants dumped the Pound as news of Britain’s latest corporate tax reduction sparked concerns over the fiscal deficit of the British government. As mentioned in last week’s report, we see rising credit risk from Britain as the country continues to face significant growth challenges, while the BoE continues to hike rates; on the other hand, the British government has decided to run a further budget deficit to finance the private sector and subsidize energy costs for British residents. Members from the BoE and the Fed are scheduled for speeches throughout the week—starting with Fed Chair Jerome Powell on the 27^th.

On the technical side, Cable has broken below our previously estimated support level of 1.08 and is now consolidating around the 1.06 price level. Parity is now firmly in play for Cable as the Dollar continues to reach historical highs. RSI for the pair sits at 43.13, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.06, 1

XAUUSD (4-Hour Chart)

Gold slid more than 1% on the first trading day of the week. The Dollar denominated Gold could fare worse against the Dollar as market participants continue to demand the U.S. Greenback. As of writing, Gold has sunk to $1,624 per ounce, the lowest level since April of 2020. Some reasons contribute to the plummet of gold—hawkish central banks across the globe, rising yields on sovereign debt, and risk-averse market sentiment, which is typically a positive signal for Gold but market participants have favoured the U.S. Greenback over gold. However, as Russia begins their partial mobilization of its armed forces, Gold prices could see a surge should the war between Russia and Ukraine take a turn for the worse.

On the technical side, XAUUSD has broken below our previously estimated support level of $1640 per ounce. The next level of support for the non-yielding metal forms around the $1600 per ounce price level. RSI for the pair sits at 32.8, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1695, 1724

Support: 1620, 1600

Economic Data

US stocks tumbled sharply on Friday, coming under heavy bearish pressure and suffered daily losses amid the risk-off market sentiment and surging US dollar.

The UK’s plan to lift its economy fueled concerns about heightened inflation and added to fears of a global recession. Liz Truss’s new UK government delivered the most sweeping tax cuts since 1972 as the Bank of England is struggling to rein in inflation. Earlier in the day, the data from the UK revealed that the business activity in the private sector continued to contract in early September with the preliminary Composite PMI dropping to 48.4 from 49.6 in August, which came in below the market expectation of 49.

Furthermore, the Fed’s decision on Wednesday to lift rates by 0.75% and open the door for another 120 bps increase has also reignited US recession fears.

In the Eurozone, the Eurozone Manufacturing PMI arrived at 48.5 in September, which fell further into contraction in September and came in below the market’s estimations.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined on Friday as a selloff in the riskier corners of the market deepened amid the escalating fears of a global recession. The S&P 500 was down 1.7% daily and the Dow Jones Industrial Average also dropped lower with a 1.6% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Energy sector and the Consumer Discretionary sector is the worst performing among all groups, losing 6.75% and 2.29%, respectively. The Nasdaq 100 meanwhile retreated lower with a 1.7% loss on Friday and the MSCI World index was down 2.1% for the day.

Main Pairs Movement

The US dollar surged higher on Friday, extending its intra-day rally and refreshing its 20-year highs above the 113.0 mark during the US trading session amid the risk-off market mood. The Fed’s aggressive tightening cycle and UK’s plan to bolster the economy both provided strong support to the safe-haven greenback as traders worries that Fed’s aggression would tip the US economy into a recession.

GBP/USD plummeted sharply on Friday with a 3.60% loss as the cable slumped to fresh multi-decade lows below 1.1050 level amid the risk-averse environment. On the UK front, UK Prime Minister Liz Truss announced the energy relief package for households and businesses to help slow inflation. Meanwhile, EUR/USD remained under pressure and plummeted to two-decade lows near the 0.970 mark amid the stronger US dollar across the board. The pair was down almost 1.50% for the day.

Gold declined with a 1.65% loss for the day after refreshing its two-year lows below the $1,687 mark during the US trading session, as the US dollar strength and higher US Treasury bond yields both exerted bearish pressure on the safe-haven metal. Meanwhile, WTI Oil retreated further with a 5.02% loss for the day after dropping to daily lows near the $78.0 area amid as traders expect that the oil demand would diminish following the US Federal Reserve’s decision to increase rates.

Technical Analysis

EURUSD (4-Hour Chart)

EURUSD has continued to drop lower as the U.S. Greenback regains demand. The Germany PMI, which was released during the European trading session of the 23^rd, revealed a lower figure compared to last month’s print. The lower PMI could be a warning sign for the E.U. economy ahead—slowing structural growth amid rising energy costs and rising inflation. The ECB raised interest rates in their September 14^th meeting, but markets are not reacting well to the hawkish actions of the ECB as purchasing activity in the private sector has entered a decline, while inflation has not seen a material decline. In contrast, while the Fed has hiked interest rates for the fourth time this year, U.S. PMI has risen to 49.3, compared to 44.6 in August, showing a robust private sector and still an expanding economy despite contractual monetary policies.

On the technical side, EURUSD has slumped below our previously estimated support level of 0.98. The fresh support level for EURUSD now forms at around the 0.96 price region. RSI for the pair sits at 43.33, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.98, 0.96

GBPUSD (4-Hour Chart)

GBPUSD has dropped to below 1.09 and a new multi-decade low as the U.S. Greenback surged on the 23^rd. The U.S. PMI data, indicating 49.2, has shown signs of continual growth in the U.S. private sector despite contractual monetary policies. On the other hand, the BoE announced a 50 basis point interest rate hike on the 22^nd, while no economic data released from the U.K., so far, has shown an economy that could survive further interest rate hikes. Furthermore, while new Prime Minister Liz Truss has promised a subsidy package that would put a cap on energy bills, the fiscal budget of the U.K. has already been in deficit since early 2020. In addition, U.K. finance minister Kwasi Kwarteng has announced the cancellation of the planned increase of corporate taxes to 25%, to stimulate the private sector—again, this is running a wider fiscal deficit. Rising credit risk could bring parity into play as Q4 approaches. September 30th will be key for Pound Bulls as the U.K. will release its quarterly GDP figure.

On the technical side, GBPUSD has broken well below our previously estimated support level of 1.12. The next level of support for the pair sits near parity at 1.08. RSI for Cable sits at 29.53, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.12, 1.08

XAUUSD (4-Hour Chart)

The Dollar denominated gold has plunged over the last trading day. The surging Dollar exerted tremendous selling pressure throughout trading sessions on the 23^rd. Despite rising tensions in Eastern Europe and the South China Sea, Gold could not find demand as market participants try to find yields in other assets that will provide any type of yield. The better-than-expected U.S. PMI figure announced during the American trading session on the 23rd, sparked a further sell-off of Gold. The benchmark U.S. 10-year treasury yield has cooled off to 3.685% on the 23rd, after running beyond 3.7% on the 22^nd. On the economic docket, the U.S. is set to release GDP figures on the 29^th, and the U.K. is set to release GDP figures on the 30^th.

On the technical side, XAUUSD has dropped below our previously estimated support level of $1,660 per ounce and is heading toward the second support level of $1600 per ounce. RSI for Gold sits at 44.6, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1695, 1724

Support: 1640, 1600

Economic Data

This week will see a much lighter schedule of data releases compared to last week.

Some significant releases to watch out for include the CB Consumer Confidence and Core PCE Price Index in the US and the Gross Domestic Product in Canada.

US CB Consumer Confidence | 27 September 2022

The US Consumer Confidence Index rose to 103.2 in August 2022, up from 95.3 in July. According to recent forecasts, Consumer Confidence in the US will increase more to 104, indicating that consumers are confident in the stability of their income and thus may be more inclined to spend.

Canadian Gross Domestic Product | 29 September 2022

According to Statistics Canada, the Canadian economy expanded by 0.1% in June. The agency’s latest estimate for July has the economy contracting 0.1% m/m from the previous month.

US Core PCE Price Index m/m | 30 September 2022

The Federal Reserve Board’s monthly report on consumer prices states that the CPI for Core PCE in the US, which excludes food and energy, rose 0.1% in July from a 0.6% increase in June.

Core PCE prices are projected to increase 0.3% in August.

On Wednesday, U.S. central bank officials raised interest rates to a new range of 3.0% to 3.25%. Policymakers also expect to lift rates higher than before and maintain that level, projecting the fed funds rate rising to 4.4% by the end of this year and 4.6% by the end of 2023. Numerous central banks from all over the world Thursday followed the Fed’s lead. The Bank of England increased its key rate by 50 basis points, and Switzerland’s National Bank hiked it by 75 basis points. Market observers also anticipate the European Central Bank to raise rates when it meets next month.

After the Federal Reserve’s most recent policy announcement and following comments from Chair Jerome Powell drove markets into chaos, U.S. stocks ended Thursday’s volatile day lower. The benchmark S&P 500 dropped by 0.9%, while the Dow Jones Industrial Average shed 100 points. The technology-heavy Nasdaq Composite fell 1.4%. The moves extend a Fed-induced sell-off Wednesday that saw the S&P 500 and Dow each erase around 1.7% and the Nasdaq plummet 1.8%, and mark a third straight day of declines for U.S. equity markets.

Boeing Co. agreed to pay $200 million to settle Securities and Exchange Commission allegations that the company and its former Chief Executive Officer Dennis Muilenburg failed to disclose safety issues with its 737 Max jetliner, resolving one of the final US investigations related to two crashes that killed 346 people.

The settlement, announced by the SEC on Thursday, concludes a probe into whether Boeing withheld key information from shareholders about a flawed software system linked to the 2018 and 2019 crashes. The SEC said the company and its former CEO violated securities laws by making “materially misleading” public statements. Without admitting or denying the findings, Boeing and Muilenburg agreed to pay $200 million and $1 million, respectively, to settle the allegations.

Main Pairs Movement

Following the US Federal Reserve meeting, several central banks made monetary policy announcements. The Bank of Japan decided to maintain its current monetary policy. . After reaching an intraday high of 145.89 during the meeting, the USD/JPY pair fell sharply to 140.34. It currently trades at around 142.40. The benchmark rate at Switzerland National Bank was increased by 75 basis points. However, USD/CHF advanced, ending the day in the 0.9780 price zone. The Bank of England, pulled the trigger by 50 bps.

The EUR/USD lacks conviction on Thursday, moving between small gains and losses, likely constrained by rising U.S. The EUR/USD pair trades around 0.9830, meeting intraday sellers at around 0.9900. The AUD/USD pair posted a modest intraday advance and hovers around 0.6640/50, while USD/CAD trades at 1.3480.

Spot gold posted a modest intraday gain and settled at $1,672 a troy ounce. Crude oil prices ended the day essentially steady, with WTI now changing hands at $83.50 a barrel.

Technical Analysis

EURUSD (4-Hour Chart)

After a 1.3% loss over the previous trading day, EURUSD has found footing around the 0.98 price level. The Dollar index continued to trend higher during Asia and European trading sessions on the 22nd, but demand for the U.S. Greenback slowed as the American trading session began. The key U.S. 10-year treasury yield has soared passed 3.7% as the short-term yield curve continues to get even more loaded after the Fed remarks on the 21^st. On the economic docket, Germany is set to release its manufacturing PMI for September during the European trading session today.

On the technical side, EURUSD has found support near our previously estimated support level of 0.98; however, the previously estimated support level of 0.99 has changed polarity to become a short-term resistance for the pair. RSI for the pair sits at 43.66, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.0011, 1.0055

Support: 0.9902, 0.98

GBPUSD (4-Hour Chart)

Cable some upward movement ahead of the BoE’s interest rate decision; however, the pair soon faced selling pressure after the BoE announced an increase of 50 basis points on its benchmark interest rate. The hawkish stance of the BoE failed to attract sustained demand for the British Pound as markets have already priced in a 50 basis point rate hike by the BoE; furthermore, the economic fundamentals of Britain have not improved by much since the BoE’s last interest rate decision. Without a press conference by the BoE following its interest rate announcement, market participants are left to interpret the central bank’s move on their own. On the economic docket, the U.K. will announce PMI data during today’s European trading session.

On the technical side, GBPUSD has found support at slightly above our previously estimated support level of 1.12. Our previous estimated support level of 1.1463 has changed polarity and now becomes a short-term resistance level for GBPUSD. RSI for the pair sits at 47.55, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.1463, 1.12

XAUUSD (4-Hour Chart)

Gold has shrugged off the impacts of interest rate hikes by global central banks and managed to find upward traction amid escalating tensions in global geopolitical events. Russian President Vladimir Putin’s decision to mobilize half of Russia’s military forces has caused concern among market participants. At the onset of the Russia-Ukraine war, Gold staged a historical rally to beyond $2050 per ounce as market participants fled for safety. A rare and irregular rally of the non-yielding metal, however, should not be ruled out under current geopolitical conditions—tensions rising in the South China sea, possible further escalation of the Russian- Ukrainian war, and the competition for global domination between China and the U.S.—are all possible catalysts for a historical run by Gold.

On the technical side, XAUUSD has found support near our previously estimated support level of $1660 per ounce. The secondary support for the precious metal remains at $1600 per ounce. Near-term resistance for the pair stands at $1695 per ounce. RSI for the pair sits at 37.62, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1695, 1724

Support: 1660, 1600

Economic Data

US stocks tumbled on Wednesday, suffering from heavy losses and extended their intra-day slide as traders were overwhelmed by the many headlines that followed the Federal Reserve decision. The American central bank hiked the benchmark rate by 75 bps to 3.25% as widely anticipated, meanwhile spurring volatility across the FX board and exerting bearish pressure on equity markets. The Fed Chief Jerome Powell was cautiously optimistic about economic progress and has signalled even more aggressive hikes than investors had envisioned, as he said that Fed officials were strongly resolved to bring inflation down to the Fed’s 2% goal and will keep at it until the job is done. Officials forecast that rates would reach 4.4% by the end of this year and 4.6% in 2023.

In the Eurozone, market sentiment was hit by rising geopolitical tensions as Russian President Vladimir Putin announced a mobilization of reserve forces to support the Ukraine war. EU member states have also held a meeting to discuss a coordinated response to the continuation of the war.

The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated sharply on Wednesday as the S&P 500 extended its plunge from a January record to more than 20%. The S&P 500 was down 1.7% on a daily basis and the Dow Jones Industrial Average also dropped lower with a 1.7% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Consumer Discretionary and the Communication Services sectors are the worst performing among all groups, losing 2.37% and 2.29%, respectively. The Nasdaq 100 meanwhile declined the most with a 1.8% loss on Wednesday and the MSCI World index was down 1.5% for the day.

Main Pairs Movement
The US dollar surged higher on Wednesday, preserving its upside momentum and extended the rally towards the 111.0 mark in the late US trading session following the interest rate decision by the Federal Reserve. Fed’s Powell has announced a third consecutive rate hike by 75 bps to tame inflation sooner, which provided strong support to the safe-haven greenback.

GBP/USD suffered daily losses on Wednesday with a 0.97% loss as the cable licked Fed-linked wounds at a 37-year low under the 1.1300 mark after a volatile day. On the UK front, UK Business Department announced that it would cap the cost of electricity and gas for businesses. Meanwhile, EUR/USD coming under bearish momentum and approaches multi-year lows near the 0.982 mark amid the stronger US dollar across the board. The pair was down almost 1.30% for the day.

Gold advanced higher with a 0.53% gain for the day after refreshing its daily top above the $1,687 mark during the US trading session, as the safe-haven metal staged a moderate rebound after a volatile session amid Fed’s monetary policy meeting. Meanwhile, WTI Oil dropped further with a 1.24% loss for the day after retreating from a daily high near the $86.6 area amid fears of energy demand. However, Russia’s mobilization of troops also renewed supply fears.

Technical Analysis

EURUSD (4-Hour Chart)

The Euro sank 1.33% against the U.S. Greenback as the Fed announced its highly anticipated interest rate decision. The Fed has announced a 75 basis point increase on its benchmark interest rate, the fourth interest rate hike for the year. The magnitude of the rate hike came in alignment with market expectations; however, Fed Chair Jerome Powell’s speech has once again conveyed the central bank’s determination to bring inflation down by all means necessary. The Fed has also raised its terminal rate projection to 4.25% ~ 4.5%. Dissecting Fed Chair Jerome Powell’s speech, markets should expect at least one more 75 basis point rate hike before the end of the year.

On the technical side, EURUSD has broken below our previously estimated support level of 0.9902 and is heading towards the next level of support at around the 0.98 price region. Parity has now become the short-term resistance for EURUSD. RSI for the pair sits at 35.73, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.9902, 0.98

GBPUSD (4-Hour Chart)

Cable witnessed a 1% drop over the course of yesterday’s trading. The 75 basis point interest rate hike induced a surge in demand for the U.S. Greenback. The Dollar index rose more than 1% and broke above 112 at one point. The Fed raising terminal interest rate projections has further pushed implied yields upward. However, the BoE is scheduled to release its interest rate decision during today’s European trading session. A 50 basis point interest rate hike is expected from the BoE, however, policymakers could be torn between dismal economic projections and price pressure from the energy sector. Hiking rates is certainly more difficult for the BoE, relative to the Fed, as recent economic data releases from the U.K. has not supported the rhetoric for a hawkish BoE.

On the technical side, GBPUSD has broken below our previously estimated support level of 1.1463 amid an extremely strong Dollar. Our estimated secondary level of support for Cable sits at 1.12. RSI for the pair sits at 31.79, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.1463, 1.12

XAUUSD (4-Hour Chart)

Gold rose against the Dollar over the course of yesterday’s trading. A number of factors allowed the non-yielding metal to rise against the surging Dollar. First, Russian president Vladimir Putin’s announcement for partial mobilization of the Russian military force has sparked a flight to gold as market participants fear a worsening of the Russian-Ukraine War. Second, Fed Chair Jerome Powell’s speech after the interest rate announcement seems to indicate that the central bank is no longer aiming for a “soft landing” and a recession could provoke demand for the precious metal. However, market participants should note that the Fed has upwardly revised its year-end terminal interest rate target and its long-term inflation target, thus Gold, the non-yielding asset, could still fare worse against the Dollar over a longer horizon.

On the technical side, XAUUSD successfully defended our previously estimated support level of $1,660 per ounce. Secondary support for the yellow metal rests at the $1,600 per ounce price level. RSI for the pair sits at 37.74, as of writing. On the four-hour chart, XAUUSD currently trades below its 50,100, and 200-day SMA.

Resistance: 1740, 1800

Support: 1660, 1600

Economic Data

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US stocks declined on Tuesday, coming under bearish pressure and suffered daily losses as traders are bracing for a hawkish Federal Reserve that’s expected to boost rates to levels not seen since before the 2008 financial crisis. The US Federal Reserve will announce its monetary policy decision during the US trading session on Wednesday, which is expected to hike rates by at least 75 bps given stubbornly high inflation. The Fed could step up its policy rate by 100 bps, given the tight labour market and robust retail demand. As for now, the Fed’s foremost priority is to bring price stability into the economy and could not let high inflation destroys the confidence of consumers in the economy.

In the Eurozone, European Central Bank (ECB) President Christine Lagarde has cleared that the central bank is committed to bringing down the price pressures in whatever it takes, which might scale up its interest rates further.

The benchmarks, S&P 500 and Dow Jones Industrial Average both retreated lower on Tuesday as the slide in equities pushed the S&P 500 more than 10% below its Aug. 16 high. The S&P 500 was down 1.1% on a daily basis and the Dow Jones Industrial Average also dropped lower with a 1.0% loss for the day. All eleven sectors in S&P 500 stayed in negative territory as the Real Estate and the Materials sectors are the worst performing among all groups, losing 2.57% and 1.90%, respectively. The Nasdaq 100 meanwhile declined the least with a 0.9% loss on Tuesday and the MSCI World index was down 0.9% for the day.

Main Pairs Movement

The US dollar advanced higher on Tuesday, witnessing upside strength and refreshed its daily top above 110.2 level in the late US trading session amid the souring market mood. The higher US government bond yields have provided support to the safe-haven greenback, which soared to its highest in fifteen years ahead of the US Federal Reserve announcement on Wednesday.

GBP/USD suffered daily losses on Tuesday with a 0.47% loss as the market braces for the US Federal Reserve’s (Fed) monetary policy announcement. On the UK front, PM Lizz Truss unveiled a slew of policy measures that included a cut in the stamp duty. Meanwhile, EUR/USD remained under pressure and extended its intraday slide towards the 0.9960 area amid the stronger US dollar across the board. The pair was down almost 0.50% for the day.

Gold was facing selling pressure after retreating lower to daily lows around the $1,662 mark during the US trading session, as the expectations of a bigger-than-expected Fed rate hike have acted as a headwind for the safe-haven metal. Meanwhile, WTI Oil dropped further with a 1.08% loss for the day and touched a daily low near the $83 area as the sentiment surrounding surging inflation and tighter monetary policy continues to weigh on the oil price.

Technical Analysis

EURUSD (4-Hour Chart)

The Euro has seen some downward pressure as the U.S. Greenback continues to gain traction ahead of the key Fed interest rate decision. Volatility should be limited before the Wednesday American trading session for the foreign exchange market. U.S. 10-year treasury yield has blown past the 3.5% threshold as market participants now fully anticipate at least a 75 basis point interest rate hike by the Fed. The German Producer Price Index rose to 45.8%, compared to 37.2% in August. EU inflation has continued to rise further despite the ECB’s move to leave negative interest rate territory. The economic slowdown and soaring energy prices will continue to plague the European economy and ECB’s ability to implement effective interest rate interventions.

On the technical side, EURUSD has successfully defended our previous estimated support level of 0.9969. Should the Fed surprise markets with a more-than-expected interest rate hike, EURUSD could spike down toward our estimated support level of 0.9902. RSI for the pair sits at 43.81, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.9969, 0.9902

GBPUSD (4-Hour Chart)

Cable has entered a consolidation phase around the 1.13 price region ahead of the Fed and BoE interest rate decisions. Short-term interest rates on U.S. government treasuries have risen significantly as markets are now completely pricing in a 75 basis point interest rate hike by the Fed. The rhetoric around a super-sized interest rate hike by the Fed has subsided as economic data from the previous releases have shown signs of economic slowdown in the U.S. The BoE is expected to raise interest rates by a further 50 basis points, but agreement on the magnitude and frequency of interest rate hikes still remains a debate among members of the BoE.

On the technical side, GBPUSD has touched our previous estimated support level of 1.1463. In the case of a super-sized interest rate hike by the Fed, Cable could break below historical lows of 1.07225. RSI for the pair sits at 31.42, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.1463, 1.07225

XAUUSD (4-Hour Chart)

Gold has continued to trend lower against the U.S. Greenback ahead of the Fed interest rate decision. While the U.S. 10-year treasury yield soars past 3.5%, the non-yielding yellow metal continues to lose appeal to market participants. While, traditionally, Gold has been a tool to hedge against inflation, the pace of monetary tightening from global central banks has outpaced any hedging capabilities of the yellow metal.  A surprise 100 basis point interest rate hike by the Fed could send Gold further into correction territory. The $1,600 per ounce price level will be key for Gold in the coming weeks as it marks the level just prior to the astronomic rise of Gold in 2020.

On the technical side, XAUUSD has consolidated around our previously estimated support level of $1,660 per ounce. The second level of support is established around the $1,600 per ounce level. RSI for the yellow metal sits at 37.33, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1740, 1800

Support: 1660, 1600

Economic Data

US stocks staged a goodish rebound on Monday, regaining upside strength and pushed higher in the final hour of the US trading session as financial markets will likely remain in wait-and-see ahead of central banks’ decisions. Traders are geared for another super-sized US rate increase amid multiple central banks’ announcements scheduled for later in the week, as the Fed is expected to hike the rate by 75 basis points regardless of the potential effects on economic growth. On top of that, US President Biden’s readiness to back Taiwan in case China attacks Taipei and upbeat covid updates from China both favoured the market mood yesterday and acted as a tailwind for the equity market.

In the Eurozone, comments from ECB President Christine will remain the focus for traders ahead of the key Wednesday amid the EU policymakers’ readiness to use emergency powers to avoid a supply crisis, as ECB Vice President Luis de Guindos said on Monday that growth slowdown is not enough to ease inflation.

The benchmarks, S&P 500 and Dow Jones Industrial Average both climbed higher on Monday as the rally in mega-caps like Apple Inc. and Tesla Inc. drove a late-day rebound for the market. The S&P 500 was up 0.7% on a daily basis and the Dow Jones Industrial Average also edged higher with a 0.6% gain for the day. Nine out of eleven sectors in the S&P 500 stayed in positive territory as the Materials and the Consumer Discretionary are the best performing among all groups, rising 1.63% and 1.34%, respectively. The Nasdaq 100 meanwhile advanced the most with a 0.8% gain on Monday and the MSCI World index was up 0.4% for the day.

Main Pairs Movement
The US dollar was little changed on Monday, failing to preserve its upside traction and retreated to a daily low near 109.6 level in the late US session amid the recovering market sentiment. Traders brace for major central bank decisions as over fifteen institutions are set to decide between Wednesday and Thursday, including the US Federal Reserve, the Bank of England, the Bank of Japan, and the Switzerland National Bank.

GBP/USD rebounded slightly on Monday with a 0.14% gain as the slightly positive market sentiment lifted the cable higher towards the 1.143 area. On the UK front, the Bank of England is expected to increase the Bank’s Rate by 50 bps on Thursday. Meanwhile, EUR/USD recovered slightly from daily lows and extended its late-day rebound toward the 1.003 mark touching a three-day top above the 1.003 level amid a light calendar and an absence of the UK and Japan. The pair was up almost 0.10% for the day.

Gold was nearly unchanged for the day after recovering from daily lows around the $1,660 mark during the US trading session, as the pre-event cautious, a light calendar and quiet macro both contributed to the metal’s inaction. Meanwhile, WTI Oil advanced higher with a 0.22% gain for the day and rebounded back to the $86 area as markets remain in anticipation of the Federal Reserve and a slew of other central banks that meet this week.

Technical Analysis

EURUSD (4-Hour Chart)

After rising for three straight trading sessions, EURUSD reversed course on the first trading day of the week. The shared currency fared worse against the U.S. Greenback as demand for the Dollar rose on Monday. Trading for the pair, however, has been rather thin and range-bound ahead of the key FOMC meeting, scheduled for Wednesday’s American trading session. Markets are now fully pricing in at least a 75 basis point interest rate hike by the Fed. Should the Fed deliver a super-sized rate hike of 1 percentage point, the U.S. Dollar could surge as short-term interest rates are likely to soar into the historical territory. On the economic docket, ECB president Lagarde is scheduled to speak on the 21^st.

On the technical side, EURUSD has continued to trade below our previously estimated resistance level of near parity. The support level for EURUSD rests at 0.9956. Further down support for EURUSD rests at 0.9902. RSI for the pair sits at 50.31, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.

Resistance:  1.0011, 1.0055

Support: 0.9969, 0.9902

GBPUSD (4-Hour Chart)

Cable saw thin trading and limited price movement on the first trading day of the week as Britain’s trading hours are limited due to the national funeral of Queen Elizabeth II. Range-bound trading for Cable should be expected before the 21st, which will see both the Fed and BoE announce their latest monetary policy and interest rate decisions. The Fed is expected to hike interest rates by 75 basis points, while the expectation for the BoE is 50 basis points. The interest rate differential between the two countries could thus create an arbitrage opportunity for carrying trades; however, market participants should keep in mind the disappointing recent economic data releases from the U.K.

On the technical side, GBPUSD has rebounded from our previously estimated support level of around 1.1371. Short-term resistance for Cable now forms around a previous support level at 1.1463. A super-sized rate hike from the Fed could send Cable well below 1.13. RSI for the pair sits at 40.59, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1.1561, 1.1854

Support: 1.1463

XAUUSD (4-Hour Chart)

XAUUSD dropped a combined 2.43% over the course of last week’s trading. The non-yielding metal has continued to face heavy selling pressure as global central banks continue to raise interest rates in order to combat inflation. Rising U.S. 10-year treasury yields have not helped the case for Gold bulls as the yellow metal continues to fare worse against the U.S. Greenback. Market participants should be aware of Wednesday’s Fed interest rate decision, as a super-sized rate hike could cause extreme price volatility for the non-yielding metal.

On the technical side, XAUUSD has found support around the $1660 per ounce region. This level is key for the precious metal as $1660 per ounce is near the price level just prior to March 2020 when Gold prices suffered a more than 8% drop in the following week. RSI for the precious metal sits at 40.66, as of writing. On the four-hour chart, XAUUSD currently trades below its 50, 100, and 200-day SMA.

Resistance: 1740, 1800

Support: 1712, 1695

Economic Data