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The Japanese yen is sharply higher on Friday. USD/JPY is trading at 143.49 in the European session, down a massive 1.1%.

Tokyo Core CPI matches BoJ’s target

Tokyo Core CPI, which excludes fresh food, slowed to 2% in September, down from 2’s.4% in August and matching the market estimate. The drop was largely driven by the resumption of government subsidies for utility bills.

The inflation reading indicates that Japan is on track to hit the Bank of Japan’s target of sustainable 2% inflation and the yen has responded with sharp gains today. This reading will support the case for further rate hikes, although that’s unlikely until December or early next year.

Governor Ueda said this week that the BoJ is not in any rush to hike rates and that the focus will be on services prices data for October, which won’t be released until November, too late for the October 31 meeting. Wages have been rising but it remains to be seen if this will translate into higher services inflation. If it does, there will be pressure on the BoJ to raise rates at the December meeting.

The week wraps up with US Core PCE Price Index, which is considered the Fed’s preferred inflation indicator. The index has hovered at 2.6% for the past three months and is expected to tick up to 2.7% for August. Monthly, the Core PCE is expected to remain at 0.2%. An unexpected reading could shake up the US dollar and the rate-cut odds for the Fed’s November meeting. The odds of a 50-basis point cut have slipped to 47%, down from 54% a day earlier, according to the CME’s FedWatch tool.

USD/JPY Technical

• USD/JPY faces weekly resistance lines at 147.58 and 150.66
• There is support at 142.67 and 140.84

EUR/USD concluded a stable week, trading around the 1.1170 mark, despite earlier momentum favoring the US dollar. Earlier in the week, the dollar surged—its fastest pace since early June—as markets anticipated insights from key Federal Reserve policymakers. However, no definitive data emerged to significantly sway the dollar's trajectory; rather, subtle market expectations about future Fed actions on interest rates seemed to influence movements.

Fed spokeswoman Adriana Kugler expressed support for the recent decision to implement a half-percentage point rate cut but remained non-committal about future monetary policy directions. Meanwhile, Atlanta Fed President Raphael Bostic cautioned against hastening rate reductions, suggesting that the Fed has the luxury of time before making further adjustments.

These mixed signals from Fed officials highlight a lack of consensus among fiscal policymakers, reflecting the complexity of current economic conditions.

Despite initial gains this month, the US dollar faced another downturn towards the week's end, marking its third consecutive day of declines—a pattern extending into a fourth session.

EUR/USD Technical Analysis

The EUR/USD pair found support at 1.1121 and subsequently formed a growth wave peaking at 1.1188. Currently, the market is shaping a broad consolidation pattern around 1.1155. Today's analysis suggests a potential continuation of the growth wave towards 1.1222, followed by a retest of 1.1155 from above. If successful, the range could expand further to 1.1290. The MACD indicator supports this bullish outlook, with its signal line positioned above zero and pointing upwards, indicating that growth potential remains robust.

the hourly chart, after completing a growth phase to 1.1164 and a correction to 1.1125, the market initiated another upward impulse to 1.1188. Currently, a corrective move to 1.1150 is underway. Upon reaching this level, the potential for a new growth wave to 1.1189 will be evaluated. A breakthrough above this level could signal a continuation of the upward trend towards 1.1222. This scenario is corroborated by the Stochastic oscillator, whose signal line is below 50 and poised to drop towards 20, suggesting a temporary pullback before further gains.

Eurozone Economic Sentiment Indicator fell slightly from 96.5 to 96.2 in September. Employment Expectations Indicator ticked up from 99.4 to 99.5. Economic Uncertainty Indicator rose from 17.5 to 17.8. Industry confidence fell from -9.9 to -10.9. Services confidence rose from 6.4 to 6.7. Consumer confidence rose from -13.4 to -129. Retail trade confidence fell from -7.9 to -8.5. Construction confidence rose from -6.3 to -5.8.

EU Economic Sentiment Indicator was unchanged at 96.7. For the largest EU economies, the ESI worsened markedly in France (-1.4) and Germany (-1.2), while it improved significantly in Poland (+2.0), Spain (+1.9), Italy (+1.2) and, more moderately, in the Netherlands (+0.5).

Full EZ ESI release here.

Market Picture

The cryptocurrency market went on to break previous peaks at the end of August, adding over 2.8% in 24 hours to reach 2.29 trillion, a high of almost two months. This rise confirmed the breakdown of the downtrend from the March peak after a higher local low in August. We foresee an easier climb up to previous pivot levels near 2.4 trillion, 4.8% above current prices.

Bitcoin, formerly the growth engine of the crypto market due to risk appetite in traditional finance, also made an important technical breakout. BTCUSD has consolidated above its 200-day moving average, broken local consolidation resistance, and is above the previous area of highs, having risen to $65.3K at the time of writing. The ability to break above $66K in the coming days would signal a move to all-time highs in the coming weeks.

News Background

In another recalculation, the first cryptocurrency’s mining difficulty decreased by 4.6% to 88.4T. The average hashrate for the period since the previous value change was 740.3 EH/s.

A decrease in the inverted US government bond curve after the Fed rate cut creates conditions for strengthening positions in risk assets, including bitcoin, Standard Chartered believes. Positive expectations are supported by an increase in open interest in call options maturing on 27 December with a strike price of $100,000.

CoinShares said in a report that Ethereum’s investment potential remains unclear. Ethereum’s growth is largely dependent on transactional demand for the asset, but so far, on-chain activity has focused mainly on speculation. The popularity of L2 solutions in recent years has ‘absorbed’ demand for the underlying network asset.

Payments giant PayPal has opened the ability for corporate customers in the US to buy, store and sell cryptocurrencies directly from their business accounts. Business account holders can also make external transfers of coins in the blockchain to third-party wallets.

On 26 September, crypto exchanges started trading Hamster Kombat token (HMSTR), a native cryptocurrency of the Telegram game of the same name, issued on the TON blockchain. The trading volume of HMSTR exceeded $150 million in the first half an hour. The cryptocurrency Wallet built into Telegram failed to cope with the load on the TON network and stopped loading. The Hamster Kombat team presented plans for the game’s development in the coming months. The developers promised new games, NFT and token burning.

• AUDUSD continues to experience high volatility
• It tests the resistance set by a long-term trendline
• Momentum indicators send a mixed message

 AUDUSD is trading sideways today, following three very volatile sessions that pushed it to the highest level since February 2023. It is currently testing the resistance set by the February 25, 2021 downward sloping trendline, with today’s US PCE report potentially proving pivotal in the outcome of this battle. In the meantime, the bullish trend that started on August 5, 2024 remains firmly in place and it is supported by a series of higher highs and higher lows.

The momentum indicators are mixed at this juncture. In more detail, the Average Directional Movement Index (ADX) is edging aggressively higher and thus signalling a strong bullish trend in AUDUSD, while the RSI is comfortably trading above its 50-midpoint. Interestingly, the stochastic oscillator is hovering inside its overbought territory, but it has failed, up to now, to record a higher high. This developing bearish divergence could threaten the prevailing bullish trend.

Should the bulls remain confident, they could try to push AUDUSD above the February 25, 2021 trendline. If successful, they could then test the 50% Fibonacci retracement level of the October 13, 2022 – February 2, 2023 uptrend at 0.6924. Even higher, the 0.7000 level could be the next plausible target.

On the flip side, the bears may try to regain market control by keeping AUDUSD below the February 25, 2021 trendline, and then gradually pushing it towards the busy 0.6780-0.6797 area. This is populated by the November 15, 2022 high and the 38.2% Fibonacci retracement. A break below the August 5, 2024 trendline could then open the door to a retest of the 0.6663-0.6684 region, and give bears the chance to break the recent series of higher lows.

To sum up, AUDUSD bulls have benefited from RBA’s relative hawkishness, but another upleg needs fresh catalysts like a weak US PCE report.

• GBPJPY surpasses 50- and 200-day SMAs
• Stochastic and RSI tick up in overbought regions

GBPJPY has created an aggressive bullish rally to a fresh two-month high of  195.95 over the last ten days following the strong rebound off the 183.70 support level. The market successfully surpassed the 200-day simple moving average (SMA) and the 195.00 round number, being ready for a bullish correction.

Technically, the stochastic is still rising in the overbought region, while the RSI is trying to cross above the 70 level.

If the bulls pick up speed then it may challenge the next resistance levels such as the 199.40 mark and the 201.60 barrier.

On the other hand, a drop beneath the immediate support area of 193.50-195.00 may drive the pair towards the 200-day SMA at 192.70 ahead of the 50- and the 20-day SMAs at 190.60 and 189.35 respectively.

Summarizing, GBPJPY shows some optimism for an upside retracement in the short-term view, especially if there is a move above the 200.00 round number.

Gold price rallied further and traded to a new high above $2,680. Crude oil is showing bearish signs and might decline below $66.80.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a steady increase from the $2,545 zone against the US Dollar.
• A key bullish trend line is forming with support near $2,665 on the hourly chart of gold at FXOpen.
•  Crude oil prices failed to clear the $72.20 region and started a fresh decline.
• There is a connecting bearish trend line forming with resistance at $68.10 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price found support near the $2,545 zone. The price remained in a bullish zone and started a strong increase above $2,600.

There was a decent move above the 50-hour simple moving average and $2,620. The bulls pushed the price above the $2,635 and $2,650 resistance levels. Finally, the price climbed to a new all-time high near the $2,685 level.

The price is now consolidating gains and showing positive signs above the 23.6% Fib retracement level of the upward move from the $2,546 swing low to the $2,685 high, and the RSI is stable above 50.

Initial support on the downside is near $2,665. There is also a key bullish trend line forming with support near $2,665 and the 50-hour simple moving average. The first major support is near the $2,650 zone. If there is a downside break below the $2,650 support, the price might decline further.

In the stated case, the price might drop toward the 50% Fib retracement level of the upward move from the $2,546 swing low to the $2,685 high at $2,615. Any more losses might push the price toward the $2,580 level.

Immediate resistance is near the $2,685 level. The next major resistance is near the $2,700 level. An upside break above the $2,700 resistance could send Gold price toward $2,720. Any more gains may perhaps set the pace for an increase toward the $2,735 level.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price struggled to clear the $72.20 resistance zone against the US Dollar. The price started a fresh decline below the $70.00 support.

The price even dipped below the $68.00 level and the 50-hour simple moving average. The bulls are now active near the $66.80 level. A low was formed at $66.82 and the price is now consolidating losses. If there is a fresh increase, it could face resistance near the 23.6% Fib retracement level of the downward move from the $72.19 swing high to the $66.82 low.

There is also a connecting bearish trend line forming with resistance at $68.10. The first major resistance is near the $69.50 level or the 50% Fib retracement level of the downward move from the $72.19 swing high to the $66.82 low.

Any more gains might send the price toward the $70.90 level. Any more gains might call for a test of $72.20. Conversely, the price might continue to move down and revisit the $66.80 support. The next major support on the WTI crude oil chart is $66.00.

If there is a downside break, the price might decline toward $65.00. Any more losses may perhaps open the doors for a move toward the $62.50 support zone.

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Daily Pivots: (S1) 193.07; (P) 193.72; (R1) 194.92; More...

Intraday bias in GBP/JPY is turned neutral first with current sharp retreat. ON the upside, above 195.95 temporary top will extend the corrective rebound from 180.00 to 61.8% retracement of 208.09 to 180.00 at 197.35 next. However, firm break of 190.11 will argue that this correction might have completed, and turn bias back to the downside for 183.70 support next.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 161.10; (P) 161.51; (R1) 162.28; More....

EUR/JPY falls sharply after edging higher to 163.47 but stays above 159.03 support. Intraday bias is turned neutral first. On the upside, break of 163.47/86 will extend the corrective pattern from 154.40 to 61.8% retracement of 175.41 to 154.40 at 167.38. However, firm break of 159.03 will argue that this corrective pattern has already completed, and bring deeper fall back to 154.40/155.14 support zone.

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8318; (P) 0.8340; (R1) 0.8352; More...

Intraday bias in EUR/GBP stays neutral and more consolidation could be seen above 0.8316 temporary low. Outlook will remain bearish as long as 0.8399 support turned resistance holds. On the downside, below 0.8316 will resume the fall from 0.8624 to 100% projection of 0.8624 to 0.8399 from 0.8463 at 0.8237 next.

In the bigger picture, down trend from 0.9267 (2022 high) is resuming. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. Outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound.