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Forex Analysis & Reviews: EUR/USD. Why is the dollar appreciating?

The US Dollar Index rose to a near six-month high on Tuesday. Currency pairs of the "major" group changed their configuration accordingly. In particular, the EUR/USD pair plummeted to the 1.0717 level, dropping to its lowest point in nearly three months. Moving forward, traders should be cautious about the current price dynamics. Short positions appear risky despite the swift and sharp decline in price.

Overall, Tuesday's "downward breakout" is solely due to the dollar's strength. At first glance, the greenback has strengthened without any apparent reason, given the nearly empty economic calendar. The primary reason for this has a deeper, more global nature: the dollar is trading higher amid a risk off mood. The US economy is showing signs of resilience, while there are signs that China and Europe are slowing, disappointing investors with declines in key macroeconomic indicators.

The US dollar received support from Chinese fundamental data. Notably, the decline of the Caixin Services PMI reading to 51.8 in August from 51.9 in July, missing market forecasts of an increase to 53.4 points. This is the lowest reading since January. This disappointing result has renewed concerns about the slowdown in the Chinese economy. In response to this report, the Shanghai Composite Index fell by nearly 1%, and the Hang Seng Index dropped by almost 2%.

This report should be considered in conjunction with other reports published in China over the past few weeks. For instance, China's manufacturing PMI rose to 49.7 in August from 49.3 in July. This reading has been below the 50-point mark for the fifth consecutive month. China's non-manufacturing activity index also fell short of the forecast, rising to 51.0 against expectations of 51.3. While it remains "above the waterline," the downtrend has persisted for six months.

At the end of August, The Wall Street Journal published an article on the prospects of China's economic growth. It was quite pessimistic: surveyed economists concluded that the economic model that took China to great-power status seems broken. Weak Chinese fundamental data in July and August (GDP data, trade figures, industrial indicators, PMIs) only illustrated the resounding material from WSJ.

Weak growth in other countries, primarily China and the EU, prompts market participants to acquire the US dollar. Furthermore, according to some experts, the resilient US economy, combined with high inflation (slow decreases in inflation figures), "guarantee" that the Federal Reserve's interest rate will remain high for a long time.

Recent US economic reports indicate that the American economy is feeling fairly confident, despite the extensive and rather aggressive tightening of the Fed's monetary policy. In particular, Goldman Sachs trimmed its prediction for the chance of a recession in the US to 15% from 20%. Therefore, discussions about rate cuts in early next year have essentially been put to rest. Moreover, markets are pricing in another round of rate hikes by the Fed by the end of this year (a 40% probability of a rate hike in November).

At the same time, European reports, for the most part, have been disappointing (PMIs, IFO indices), and representatives of the European Central Bank are expressing concerns about the pace of economic growth in the eurozone. The recently published minutes of the ECB's July meeting also reflected negative trends: ECB members agreed with the chief economist of the ECB that the near-term economic prospects of the eurozone had "deteriorated significantly." Such a news flow has sparked rumors that the central bank may need to start lowering interest rates in the first half of next year. Moreover, the probability of an ECB rate hike in September has decreased to around 30%. Underwhelming China macro data (the EU's largest trading partner) only adds fuel to the fire, simultaneously sparking a risk-off sentiment in the markets.

The dollar, in turn, is benefiting from this situation. On Tuesday, the euro slipped further amid risk-aversion, allowing bears to exit the 8-figure territory and establish a new price range between 1.0710 and 1.0800.

The oil market has also provided more (indirect) support to the greenback, as spike in oil prices reignited fears about US inflation accelerating. Brent crude futures rose above $90 per barrel (the first time since November 18, 2022) on news that Saudi Arabia and Russia are extending voluntary oil production cuts by a combined 1.3 million b/d.

Considering that the EUR/USD pair has approached the lower band of the aforementioned price range (1.0710 - the lower Bollinger Bands line on the daily chart), it's better to be cautious with short positions. In this case, it would be wise to either wait for a bullish correction (to enter short positions aiming for 1.0710) or a breakdown of the support level. In the latter case, the next target for the downward movement will be the 1.0640 level, which is the lower Bollinger Bands line on the weekly chart.

Analysis are provided by InstaForex

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XAUUSD H4 | Reacting off 1st Resistance?

The XAU/USD chart currently has a bullish momentum, indicating a potential upward trend. There's a likelihood of continued bullish movement towards the first resistance. The first support at 1913.49 is significant, aligning with the 61.80% Fibonacci Retracement. The second support at 1901.55 is also noteworthy, aligning with the 78.60% Fibonacci Retracement. On the resistance side, the first resistance at 1931.97 aligns with the 38.20% Fibonacci Retracement, and the second resistance at 1943.88 aligns with the 78.60% Fibonacci Retracement.

Analysis are provided by InstaForex

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NZDUSD H4 | Falling to 1st support?

The NZD/USD chart currently shows a bullish trend with potential for further upward movement. The 1st resistance at 0.5930, coinciding with the 50.00% Fibonacci retracement, is a key level that may impede bullish progress. Similarly, the 2nd resistance at 0.5992 is also significant for potential resistance.

On the downside, the 1st support at 0.5891 aligns with the 61.80% Fibonacci retracement and serves as a strong support level. The 2nd support at 0.5862, identified as a pullback support, adds to the support zone.

Analysis are provided by InstaForex

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Forex Analysis & Reviews: Forecast for EUR/USD on September 14, 2023

EUR/USD
Yesterday's US CPI data came in around forecast levels. The August Core CPI dropped from 4.7% YoY to 4.3% YoY, while the CPI rose from 3.2% YoY to 3.7% YoY (forecast 3.6% YoY). Considering that industrial production in the eurozone plummeted by 1.1% in July and decreased by 2.2% YoY (forecast -0.3%), the euro's decline could have been greater than the 24 pips that we saw yesterday.

Trading volumes were substantial, indicating that there was market activity, and traders preferred to hold their positions ahead of today's European Central Bank meeting, as the probability of a rate hike stands at 68%. If investors showed an intention not to sell the euro based on US inflation data, they may buy it following the ECB meeting. The bullish target is the 1.0824/32 range. Technical convergence in action. A price above this range will open up the target of 1.0882. The MACD line is approaching this level.

On the 4-hour chart, the price is between the balance and MACD indicator lines. The Marlin oscillator is currently holding an uptrend. A waiting mode is likely until the ECB announces its rate decision.

Analysis are provided by InstaForex

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GBPUSD Day | Bearish Continuation Expected?

The GBP/USD chart displays a dominant bearish trend, emphasized by its position below the bearish Ichimoku cloud and a descending trend line. Key supports stand at 1.2293, backed by the 78.60% Fibonacci Projection, and 1.2182, aligned with the 100% Fibonacci Projection. Resistances are identified at 1.2418 and 1.2632, with the latter being an overlap resistance. The overall outlook remains bearish.

Analysis are provided by InstaForex

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Forex Analysis & Reviews: Technical Analysis of Intraday Price Movement of USD/CAD Commodity Currency Pairs, Wednesday, September 20 2023

From the 4-hour chart of The Lonnie, it can be clearly seen that Sellers are very dominant, this can be seen from the price movement which moves regularly and harmoniously in the Pitchfork channel which dips downwards and the price movement is below the WMA (20) with a downward sloping slope as well as the CCI indicator has succeeded breaking below the three main levels (100, 0, & -100), but currently it appears that USD/CAD is being corrected upwards to test the SBR (support Become Resistance) level at the level 1.3494. As long as this upward correction does not breaks and close above the level 1.3550, then USD/CAD has the potential to continue its decline back to level 1.3422 as the main target and level 1.3380 as the second target if momentum and volatility support it.

Analysis are provided by InstaForex

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GBPUSD Day | Bouncing off support?

The GBP/USD chart shows a bearish trend, with focus on the 1st support at 1.2089, significant due to the convergence of the 127.20% Fibonacci Extension and the 78.60% Fibonacci Retracement. The 2nd support is at 1.1845, a historical swing low. On the resistance side, the 1st resistance is at 1.2311, a pullback resistance aligned with the 61.80% Fibonacci Retracement, serving as a potential barrier.

Analysis are provided by ifxpr.com/3Q0B3oB

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What are the chances of another Bank of England rate hike in November?

In order to understand how the Bank of England is going to act at the remaining two meetings in 2023, we need to consider its potential for raising interest rates. The first and most crucial indicator that the central bank (and the markets) has been relying on for some time is inflation. However, as of September, inflation remains extremely high, well above the target level. One might assume that the BoE will continue to hike rates, but in September, it took a pause. A pause can only mean two things: either the BoE is preparing to end the tightening process, or it has already completed it.

BoE Governor Andrew Bailey and some other members of the BoE's Monetary Policy Committee have mentioned that they expect inflation to drop to 5% by the end of the year. A 5% inflation rate is still very high, 2.5 times above the target. If the BoE is already prepared to conclude its tightening, it may not achieve the target. Furthermore, there's no guarantee that inflation won't start accelerating again. For instance, US inflation has been rising for the past two months. All I want to convey with these arguments is that it's still too early to assume that inflation can return to 2% at the current interest rate level.

Based on that, I believe that the BoE has exhausted its potential for rate hikes, and this is the main reason for the pause in September. Now, the central bank will only raise rates if inflation starts to accelerate significantly. And in that case, the 2% target may be forgotten for several years even with a peak rate, but we could still see 1-2 more emergency rate hikes.

I also want to note that the BoE (like the European Central Bank) is counting on holding rates at the peak level for an extended period to bring inflation back to 2%. This was mentioned after last week's meeting. The Monetary Policy Committee expects inflation to slow down further, but Bailey says cutting rates would be "very premature". Four out of nine committee members voted for a rate hike at the previous meeting. In addition, the Monetary Policy Committee said its balance sheet of government debt will shrink by £100 billion.

Based on the analysis conducted, I came to the conclusion that a downward wave pattern is being formed. I still believe that targets in the 1.0500-1.0600 range for the downtrend are quite feasible, especially since they are quite near. Therefore, I will continue to sell the instrument. Since the downward wave did not end near the 1.0637 level, we can expect the pair to fall to the 1.05 level and slightly below. However, the second corrective wave will start sooner or later.

The wave pattern of the GBP/USD instrument suggests a decline within the downtrend. At most, the British pound can expect the formation of wave 2 or b in the near future. However, even with a corrective wave, there are still significant challenges. At this time, I would remain cautious about selling, as there may be a corrective upward wave forming in the near future, but for now we have not seen any signals for this wave yet.

Analysis are provided by InstaForex

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USDCHF H4 | Falling to support level?

The USD/CHF chart currently has bearish momentum, aiming for the 1st support at 0.9104, supported by the 38.20% Fibonacci Retracement. The 2nd support at 0.8987, coinciding with the 78.60% Fibonacci Retracement, provides additional price support. On the resistance side, the 1st resistance at 0.9211 and 2nd resistance at 0.9326 may limit upward moves.

Analysis are provided by InstaForex

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GBPUSD H4 | Bouncing off support?

The GBP/USD chart is currently bearish, primarily due to its position below the bearish Ichimoku cloud. There's a potential scenario of a bullish bounce off the 1st support at 1.2067, supported by the 127.20% Fibonacci Extension, and the 2nd support at 1.2011, a swing low support with the 161.80% Fibonacci Extension.

On the resistance side, the 1st resistance at 1.2124 is an overlap resistance that may impede bullish movements. Additionally, the 2nd resistance at 1.2265 is also categorized as an overlap resistance.

Analysis are provided by InstaForex

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USDJPY H4 | Bearish Continueation Expected?

The USD/JPY chart currently exhibits bearish momentum due to its position below the Ichimoku cloud. There's a potential bearish scenario with the 1st support at 148.44, a pullback support, and the 2nd support at 147.26, an overlap support. On the resistance side, the 1st resistance at 149.98, a swing high resistance, may limit upward movements.

Analysis are provided InstaForex

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Forecast for EUR/USD on October 9, 2023

EUR/USD
Friday's US labor data for September exceeded expectations. In the non-farm sector, 336,000 new jobs were created compared to a forecast of 170,000, and the August figure was raised by 40,000. Unemployment remained at the previous 3.8%, and a broader measure of unemployment dropped to 7.0% from 7.1% in August. The initial market reaction was quite natural, with the dollar rising and the euro losing 80 pips. However, the dollar was sold off across a wide range of markets, including stock markets and commodities. As a result, the dollar index closed the day down by 0.26%, the S&P 500 rose 1.18%, and oil increased by 0.61% (WTI).

The market's counteraction to strong data is certainly a compelling argument in favor of further (although not very prolonged) euro growth. From a technical standpoint, we saw a rebound from the point of intersection of the price channel line and support level of 1.0483, afterwards the quote exceeded the Fibonacci retracement level at 1.0578. The Marlin oscillator has moved into bullish territory. Now, after breaking through the nearest resistance level at 1.0613, we are waiting for the price to reach the target level of 1.0687 and maybe even 1.0777.

On the 4-hour chart, the price has settled above 1.0578. The morning gap that occurred due to the Hamas attack on Israel will soon be closed. The price is growing above the indicator lines. The Marlin oscillator has firmly strengthened in the bullish territory. We expect the euro to rise further.

Analysis are provided by InstaForex

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NZDUSD H4 I Bearish momentum

 

The NZD/USD chart currently exhibits an overall bearish momentum with a potential scenario for price to make a bearish continuation towards the 1st support level. 

The 1st resistance level at 0.6050 is identified as an overlap resistance. Additionally, the 2nd resistance level at 0.6095 is marked as a pullback resistance that aligns with the 127.20% Fibonacci extension level. 

To the downside, the 1st support level at 0.5989 is identified as an overlap support that aligns with the 50.00% Fibonacci retracement level. Further below, the 2nd support level at 0.5934 is noted as a pullback support.

Analysis are provided by InstaForex

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-- Edited by InstaForex Gertrude on Wednesday 11th of October 2023 07:44:35 AM

GBPUSD H4 I Reacting off resistance level?

GBP/USD is exhibiting strong bullish momentum, with the potential to move higher towards the 1st resistance at 1.2259, a historically significant level where price often faces resistance. Conversely, on the support side, the 1st support at 1.2173, identified as a multi-swing low support, and the 2nd support at 1.2118, aligned with the 78.60% Fibonacci Retracement, hold importance as potential areas for buying interest. In summary, the current trend in GBP/USD leans towards a bullish outlook, and traders will closely monitor these support and resistance levels for potential shifts in market sentiment or reversals.

Analysis are provided by InstaForex

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USDCHF H4 I Potentail bullish reversal?

 

The USD/CHF chart currently displays bullish momentum, suggesting a possible bounce from the first support towards the initial resistance. The first support at 0.8998 aligns with a prior swing low and the second support at 0.8934 coincides with the 161.80% Fibonacci Retracement, providing strong support potential. On the resistance side, the first resistance at 0.9085 represents a multi-swing high resistance, followed by the second resistance at 0.9116, which is an overlap resistance. Additionally, there's an intermediate resistance at 0.9039, also acting as an overlap resistance.

 

Analysis are provided by InstaForex

 

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-- Edited by InstaForex Gertrude on Tuesday 17th of October 2023 04:37:58 AM

Forecast for EUR/USD on October 19, 2023

EUR/USD
Yesterday, the euro lacked the courage to initiate consolidation ahead of the strong resistance level at 1.0613. The price retreated from the daily balance indicator line and dropped below the support level at 1.0552. However, the Marlin oscillator managed to stay in the positive territory. Therefore, consolidation to attack the Fibonacci ray at 1.0613 may form above 1.0552.

The reason for this could be today's US data; weekly jobless claims are expected to increase from 209,000 to 212,000, and existing home sales for September could decrease from 4.04 million to 3.89 million.

On the 4-hour chart, the price is now below the level of 1.0552 and below the balance and MACD indicator lines. The Marlin oscillator has entered the downtrend territory.

The situation appears bearish, but the general trend may lift the quote above the MACD line, where strategic consolidation will take place. If the price stays below yesterday's low at 1.0524, it could push the euro towards the support level at 1.0483. Below this we can find the price channel line at 1.0456.

Analysis are provided by InstaForex

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Analysis of Gold for October 23, 2023 - Rejection of the support zone

Technical analysis:

Gold has been trading upside this morning and I found rejection of the support zone at $1.961 and there is the chance for the higher prices.

As long as the support zone around $1.957 can hold, higher prices might be in the play and the test of $1.997. The short-term trend is still to the upside.

In case of the downside breakout of the support at $1.1957, there is the chance for the downside movement towards lower reference at $1.937

Analysis are provided by InstaForex

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GBPUSD H4 | Bearish Continuation Expected?

The GBP/USD chart currently shows bearish momentum with potential for a bearish continuation towards the 1st support at 1.2106, which aligns with a multi-swing low support. The 2nd support at 1.2049, also a multi-swing low support, adds to its significance as it coincides with the 127.20% Fibonacci Extension level. On the resistance side, the 1st resistance at 1.2270 is characterized as an overlap resistance, while the 2nd resistance at 1.2340 is marked as a swing high resistance.

Analysis are provided by InstaForex

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USDCAD H4 I Heading into resistance?

The USD/CAD chart currently displays bullish overall momentum, with the potential scenario of a bullish continuation towards the 1st resistance level.

The 1st resistance level at 1.3848 is identified as a swing-high resistance that aligns with the 127.20% Fibonacci extension level. Higher up, the 2nd resistance level at 1.3919 is marked as a resistance level that aligns with the 161.80% Fibonacci extension level.

To the downside, the 1st support level at 1.3786 is identified as a pullback support. Further below, the 2nd support level at 1.3736 is noted as an overlap support, potentially acting as a strong support zone.

Analysis are provided by InstaForex

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USDJPY Day I Reacting off resistance level?

USD/JPY displays bearish momentum, potentially heading towards the 1st support at 144.94, which aligns with overlap support. On the resistance front, the 1st resistance at 150.30, marked as a multi-swing high resistance, may hinder further upward movement. A 2nd resistance at 152.72, coinciding with the 100% Fibonacci Projection, adds to its potential as a significant resistance zone.

Analysis are provided by InstaForex

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Forecast for GBP/USD on November 1, 2023

GBP/USD Yesterday, the British pound tried to move towards the target range of 1.2271/87 but stopped by the balance line on the daily chart, just as it was on October 24th. Afterwards, the price returned below the descending price channel line. The signal line of the Marlin oscillator came close to the border of the bearish territory.

In case the Federal Reserve shows a softer stance, the price may reach some bullish targets (1.2271/87, 1.2400). However, the current situation lowers the chances of growth, which warns the speculative nature of the moment. If the price settles below 1.2070, it will likely fall towards 1.1880.

On the 4-hour chart, the price has settled below the balance and MACD indicator lines after a false bullish breakout. The Marlin oscillator has also returned to the bearish territory. As a result of the FOMC meeting, the pound may weaken.

Analysis are provided by InstaForex

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USDCHF H4 I Falling to Support level?

The USD/CHF chart shows bearish momentum with potential movement towards the 1st support at 0.9032, a pullback support strengthened by the 61.80% Fibonacci Retracement. The 2nd support at 0.8982, considered an overlap support, adds to its significance as a potential buying area.

On the resistance side, the 1st resistance at 0.9111, an overlap resistance, might attract selling interest. The 2nd resistance at 0.9177, a multi-swing high resistance, could strongly impede upward movement. Traders should closely watch these levels, given the overall bearish chart bias.

Analysis are provided by InstaForex

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EURUSD H4 I Boucnig off support?

The EUR/USD chart shows bearish momentum, potentially heading towards the 1st support at 1.0678, a pullback support. The 2nd support at 1.0606, coinciding with the 61.80% Fibonacci Retracement, adds to the support zone.

On the resistance side, the 1st resistance at 1.0759, a multi-swing high resistance, could lead to selling pressure. The 2nd resistance at 1.0835 is another potential obstacle for upward movement.

Analysis are provided by InstaForex

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EUR/USD exhibits bullish momentum with a focus on the 1st resistance. The 1st support at 1.0664 coincides with the 38.20% Fibonacci Retracement, a key buying level. Similarly, the 2nd support at 1.0606 aligns with the 61.80% Fibonacci Retracement, enhancing its significance.

Resistance is expected at the 1st resistance of 1.0758, a multi-swing high resistance likely to trigger selling pressure. The 2nd resistance at 1.0835, a pullback resistance, may further impede upward movement

Analysis are provided by InstaForex

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