20/10/2022 Daily Reports
- EUR/USD snaps two days of gains, tumbles below 0.9800, after Eurozone (EU) inflation remained elevated, while the US housing market continues to feel the “pain” of higher interest rates, which would continue to increase, as reiterated by Fed speakers. The pair ended Wednesday at around 0.9770, neutral to bearish in the daily chart.
- September’s inflation in the Euro area jumped by 1.2% MoM and 9.9% YoY, increasing the likelihood of a third straight 75 bps interest-rate hike by the European Central Bank (ECB). A slew of policymakers had justified the case of a ¾ percent lift to the bank rate, even though during the last week, the International Monetary Fund (IMF) foresaw a recession in Germany and Italy in 2023.
- Aside from this, US economic data, namely the US Housing Starts for September, shrank by 8,1% MoM, due to the US Federal Reserve’s aggressive monetary policy tightening, with rates about to hit the 4% threshold, as speculations of another big-size rate hike mounted.
- The EUR/USD pair is trading near the 0.9770, down for the day with the neutral stance in daily chart. The pair stabilized between 20 and 50 SMA, indicates neutral strength. Meanwhile, the 20 SMA continued developing below longer ones despite it started turning flat, suggests bears not exhausted yet. On upside, the immediate resistance is 0.9800, break above this level will extend the advance to 0.9875.
- Technical readings in the daily chart support the bearish stances. The RSI indicators hovering below the midlines and stabilized around 46. The Momentum indicator stabilized in the negative territory, indicating downward potentials. On downside, the immediate support is 0.9750 and below this level will open the gate to 0.9700.
- The British Pound slides to fresh two-day lows below 1.1200 against the US Dollar after UK inflation extended to double digits, to a new 40-year high, while US housing data extends its decline due to Federal Reserve (Fed) aggressive policy. The GBP/USD ended Wednesday at around 1.1210 after hitting a daily high at 1.1357.
- Early during the European session, the UK Office for National Statistics (ONS) revealed the Consumer Price Index (CPI) for September rose by 10.1% YoY, above estimates, and higher than August’s 9.9%, cementing the case for further tightening by the Bank of England (BoE). Also, core CPI jumped from 6.3% YoY vs. 6.4% foreseen.
- The GBP/USD tumbled below 1.1200 on the news after political turmoil in the country, linked to the new Prime Minister’s tax-cut plan, witnessed the sacking of Finance Minister Kwarteng, replaced by Jeremy Hunt, who scrapped Liz Truss’s budget. Meanwhile, market participants anticipate that the BoE will hike 75 bps rather than 100 as the UK economy further deteriorates.
- The GBP/USD offers neutral stance in daily chart. Cable now is stabilizing between 20 and 50 SMA, indicating neutral strength in short term. However, the 20 SMA continued developing below longer ones despite it continued developing flat and upside still capped by the long-term bearish trend line, suggesting bears not exhausted yet. On upside, The immediate resistance is 1.1360 with a break above it exposing to 1.1500.
- Technical readings in the daily chart support neutral stances. RSI indicator stabilized around 49, while the Momentum indicator stabilized near the midline, suggesting directionless potentials. On downside, the immediate support is 1.1180, unable to defend this level will resume the decline to 1.1050.
- Gold futures accelerated their downtrend on Wednesday to reach fresh three-week lows right below $1,630. The yellow metal dives nearly 1.5% so far today on the back of a strong USD recovery as risk appetite waned. The pair ended Wednesday at around $1,629, still bearish in the daily chart.
- After the moderate decline of the previous two days, the dollar is going through a solid recovery on Wednesday. The USD has bounced back amid a sourer market mood and the rebound on US Treasury bond yields. The benchmark 10-year bond yield has jumped to 4.12%, its highest level since the 2007 crisis
- Beyond that, the investors have shifted their focus to the Federal Reserve’s monetary policy meeting due on November 1 and 2. With the market anticipating another 75 basis point hike, the aggressive tightening cycle of the US central bank is acting as a tailwind for the USD.
- Gold price stabilized around 1629, down for the day and bearish in the daily chart. The gold price stabilized below 20 and 50 SMA, suggesting bearish strength. Meanwhile, the 20 SMA continued developing far below longer ones despite it started turning flat, indicating bears not exhausted yet. On upside, the immediate resistance is 1668, break above this level will open the gate to extend the advance to 1700 area.
- From a technical perspective, the RSI indicator hold below the midline and stabilized around 37, suggesting bearish strength. The Momentum indicator struggled below the midline, suggests downward potentials. On downside, the immediate support is 1614, below this area may resume the decline to 1600.
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- The USD/JPY pair extends its upside price moves and remains confined above 149.00 through the US session on Wednesday. The pair is currently placed comfortably above the 149.00 mark, just a few pips below the 150.00 mark, still bullish in the daily chart.
- Traders prefer to move to the sidelines amid speculations that Japanese authorities might intervene in the markets to stem any further weakness in the domestic currency. In fact, Japan’s Finance Minister Shunichi Suzuki warned on Tuesday that the government will take decisive action against excessive, speculator-driven currency moves. This, in turn, is seen offering some support to the Japanese yen and acting as a headwind for the USD/JPY pair.
- In fact, the yield on the rate-sensitive 2-year US government bond and the benchmark 10-year Treasury note stand tall near a multi-year peak. In contrast, the 10-year JGB yield is capped at 0.25%. This resultant widening of the US-Japan rate differential continues to weigh on the JPY and offers support to the USD/JPY pair amid a more dovish stance adopted by the Bank of Japan. This, along with the prevalent risk-on mood favours bullish traders.
- The USD/JPY pair stabilized around 149.90, up for the day and bullish in the daily chart. The price still maintains the upward slope and stabilized above all main SMAs, suggests bullish strength. Meanwhile, 20 SMA continued accelerating north and developing above longer ones, indicating bulls not exhausted in the long term. On upside, overcome 150.00 may encourage bulls to challenge 151.00, break above that level will open the gate to 152.00.
- Technical indicators suggest the bullish strength. RSI stabilized around 80, while the Momentum indicator continued developing above the midline, suggests upward potentials. On downside, the immediate support is 148.00, break below this level will open the gate to 147.00 area.
- DJI under the sell pressure, retreated from the intraday high 30820 area to 30250 daily low. It recovered some losses and ended the day at around 30550, down for the day and bearish in the hourly chart. It stabilized below all main SMAs, suggests bearish strength. Meanwhile, 20 SMA continued accelerating south and heading towards longer one, suggests bears not exhausted yet. On upside, overcome 30670 may encourage bulls to challenge 30880, break above this level will open the gate to 31100.
- Technical indicators suggest the neutral to bearish strength. RSI stabilized around 49, while the Momentum indicator stabilized below the midline, suggests downward potentials. On downside, the immediate support is 30250, break below this level will open the gate for more decline to 30000 area.
- Brent continued the advance, jumped from 89.40 area to intraday high 92.84. It hold near the top and ended Wednesday at around 92.55, up for the day and bullish in the hourly chart. The price stabilized above all main SMAs, suggests bullish strength in short term. Meanwhile, the 20 SMA continued accelerating north and heading towards longer ones, indicating bulls not exhausted yet. On upside, overcome 93.20 may encourage bulls to challenge 95.00, break above this level will open the gate to 96.50.
- Technical indicators suggest the bullish movement, hovering above the midline. RSI stabilized around 65, while the Momentum indicator stabilized in positive territory, suggests upward potentials. On downside, the immediate support is 91.00, break below this level will open the gate for more decline to 88.70 area.
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