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Gold drifted lower and back into the broken 2022 bearish channel after its two-day exciting rally stalled at 1,729 – the highest since September 13.

The RSI and the stochastics have abandoned the overbought region, raising concerns that the latest bullish wave has probably peaked. The weakness in the MACD is also endorsing the current negative momentum in the price.

Nevertheless, sellers would not be ruining the short-term positive trajectory unless they drive forcefully below the 200-period simple moving average (SMA) and the bullish channel at 1,698. The 20-period SMA is also converging on that area. In case the decline officially violates the upward pattern below the 38.2% Fibonacci of 1,688, the price may seek shelter around the former resistance of 1,676. If it fails to rebound here, the 50-period SMA, which coincides with the 23.6% Fibonacci retracement of the 1,807–1,614 downtrend, could next come to the rescue at 1,660.

In the bullish scenario, where the precious metal bounces back above the 50% Fibonacci of 1,711, the bulls may attempt to reach the cautious zone of 1,735–1,746. A decisive close higher could confirm additional gains towards 1,765.

To summarize, gold traders are engaging in profit-taking after a strong rally earlier this week, but the market

Bulls are taking a breather under new highest since Sep 15 as recent rally faced headwinds on approach to 1.1500 barrier.

Fundamentals work in favor of pound, as U-turn in government’s plan to cut tax to the highest rate of income boosted the sentiment, while traders expect fresh signals from Fed, after the latest data showed signs of wobbling US economic growth that would prompt the central bank to reduce the pace of tightening, in the fight against high inflation.

The dollar will lose strong support in such scenario that would further boost pound’s near-term recovery.

Traders started to collect profits after six consecutive days of rally, on overbought conditions on daily chart and awaiting fresh signals.

Dips face initial support at 1.1285 (20DMA, reinforced by bull-cross with rising 5DMA), with extended pullback to find firm ground above 10 DMA (1.1090) and keep near-term bulls in play for fresh push towards pivotal barriers at 1.1500/50 (round-figure/Fibo 61.8% of 1.2293/1.0348 descend).

Recovery is also supported by long-tailed candles of last week and month which showed strong rejection after pound hit a record low vs dollar, however, the developments on fundamental front are expected to remain a key driver.

Res: 1.1500; 1.1550; 1.1590; 1.1738.
Sup: 1.1379; 1.1321; 1.1285; 1.1225.

According to an Ifo survey, price expectations of German businesses rose from 48.1 to 53.5. The balance is obtained by subtracting the percentage of companies that want to lower their prices from the percentage of those that want to raise their prices.

For food industry, the indicator rose further from 96.9 to 100, meaning that a 100% of food companies are expecting to raise prices.

"Unfortunately, this probably means the wave of inflation isn't about to subside," says Timo Wollmershäuser, Head of Forecasts at ifo. "Especially when it comes to gas and electricity, the price pipeline is not yet exhausted."

Full release here.

UK PMI Services was finalized at 50.0 in September, down from August's 50.9, weakest reading since February 2021. PMI Composite was finalized at 49.1, down from prior month's 49.6, lowest since January 2021.

Tim Moore, Economics Director at S&P Global Market Intelligence: "September data highlighted an absence of growth in the UK service sector for the first time in 19 months as the energy crisis continued to hit business and consumer spending.... Service sector businesses trimmed their growth expectations to the lowest seen for nearly two-and-a-half years in September, which survey respondents linked to concerns about falling disposable income and the unfavourable global economic outlook."

Full release here.

Eurozone PMI Services was finalized at 48.8 in September, down from August's 49.8, a 19-month low. PMI Composite was finalized at 48.1, down from prior month's 48.9, a 20-month low.

Looking at some member state, Ireland PMI Composite rose to 52.2 while France rose to 51.2. But Spain dropped to 48.4 (8-month low). Italy dropped to 47.6 (20-month low). Germany dropped to 45.7 (28-month low).

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: "Any hopes of the eurozone avoiding recession are further dashed by the steepening drop in business activity signalled by the PMI. Not only is the survey pointing to a worsening economic downturn, but the inflation picture has also deteriorated, meaning policymakers face an increasing risk of a hard landing as they seek to rein in accelerating inflation.

Full release here.

NZDUSD finally jumped above the weekly resistance of 0.5730 to top at 0.5800 in the wake of the RBNZ's hawkish policy announcement early on Wednesday.

Although the pair has already reversed its advance, the RSI continues to build its uptrend above its 30 oversold level, signaling that the previous bearish wave in the price has probably bottomed out. Likewise, the MACD is extending its positive momentum above its red signal line, mirroring an improving short-term bias as well.

On the way up, the recovery may initially face some challenges between the 20-day simple moving average (SMA) at 0.5855 and the tentative descending trendline currently seen around 0.5900. If the bulls forcefully pierce through this area, the next obstacle could be found between 0.6000 and the 50-day SMA at 0.6078.

Should the bears retake control, pressing the price quickly below 0.5730, all eyes will turn again to the 0.5563 low. A durable extension beneath that bar would bring the pandemic 2020 trough of 0.5468 and the nearby constraining zone of 0.5415 back under the spotlight.

In brief, buying appetite may keep improving in NZDUSD in the short term once the price successfully overcomes the 0.5725 bar.

The British Pound started a fresh increase from the 1.1000 zone against the US Dollar. The GBP/USD pair was able to climb above the 1.1100 and 1.1200 resistance levels.

There was a close above the 1.1250 level and the 50 hourly simple moving average. It even spiked above the 1.1400 level and traded as low as 1.1489. The pair is now correcting gains, with an immediate support near the 1.1420 level.

On the downside, an initial support is near the 1.1420 level and a connecting bullish trend line. The main support is forming near 1.1280 on FXOpen. A break below the 1.1280 support could even push the pair below the 1.1220 support.

On the upside, the first major resistance sits near the 1.1480 zone. If there is a clear upside break above the 1.1480 resistance, the pair could rise steadily towards the 1.1550 level in the near term.

Daily Pivots: (S1) 164.06; (P) 164.80; (R1) 166.17; More...

Intraday bias in GBP/JPY stays on the upside as rise from 148.93 is in progress for retesting 169.10 high. Strong resistance could be seen there to limit upside, at least on first attempt. On the downside, below 159.41 minor support will turn bias back to the downside for 148.93 again. However, firm break of 169.10 will confirm resumption of larger up trend.

In the bigger picture, strong support from 38.2% retracement of 123.94 to 169.10 at 151.84 suggests that price actions from 169.10 are developing into a corrective pattern only. That is, rise from 123.94 (2020 low) should resume at a later stage. This will now remain the favored case as long as 148.93 support holds.

Daily Pivots: (S1) 142.61; (P) 143.34; (R1) 144.70; More....

Intraday bias in EUR/JPY remains mildly on the upside. Rise from 137.32 should target retesting 145.62 high. Firm break there will resume larger up trend. On the downside, break of 140.77 minor support will turn bias back to the downside, to extend the corrective pattern from 145.62 with another falling leg.

In the bigger picture, as long as 133.38 support holds, the up trend from 114.42 (2020 low) could still extend through 145.62 high. In that case, next target is 149.76 (2015 high). However, sustained break of 133.38 will be a sign of medium term bearish reversal and bring deeper fall to 124.37 support first.

Daily Pivots: (S1) 0.8653; (P) 0.8699; (R1) 0.8749; More...

Intraday bias in EUR/GBP remains mildly on the downside. Rise from 0.8201 could have completed at 0.9267 in three-wave corrective pattern. Sustained break of 55 day EMA (now at 0.8642) will target 0.8201/8338 support zone. On the upside, above 0.8848 minor resistance will turn bias back to the upside for recovery instead.

In the bigger picture, as long as 0.8720 resistance turned support holds, rise from 0.8201 is seen as resuming larger up trend from 0.6935 (2015 low). Break of 0.9499 (2020 high) should be seen at a later stage. However, firm break of 0.8720 will argue that sideway pattern from 0.9499 is extending with another falling leg instead.