Sample Category Title

• AUDUSD tests the 200-day SMA in narrow range
• Trades sideways after failing to extend its upside move
• RSI and MACD look optimistic

AUDUSD is moving slightly lower today, finding strong resistance near the 200-day simple moving average (SMA), which is acting as a resistance line for the bulls. The pair jumped above the steep descending trend line, which had been holding since the November 6 top of 0.6522, but it is holding within a narrow range of space 0.6338-0.6390.

In the meantime, the momentum indicators are somewhat supportive. The MACD oscillator has managed to jump above its trigger line but is still in a bearish territory, while the RSI is pointing upwards below the 50 level.

Should the bulls push higher, they would try to overcome the 200-day SMA and the 20-day SMA around 0.6370. If successful, they could then touch the 0.6390 barrier before hitting the 40-day SMA at 0.6420.

Alternatively, a drop back beneath the downtrend line would open the way towards the preceding bottom of 0.6338. If the bears clear this area, they could then have the chance to test the 0.6315 support level, registered on October 31.

To sum up, AUDUSD bulls are trying to cancel out the rectangle pattern to endorse the positive scenario in the short-term timeframe.

GBPUSD cracked 1.2300 barrier in early European trading on Monday, boosted by better than expected US labor data (Sep wages rose above expectations and employment was significantly up in three months to Sep) which added to hawkish stance on BoE rate outlook.

Cable rises for the third straight day after a bear trap on Friday, with penetration and close within thick daily cloud, contributing to fresh bullish signals, though bulls face headwinds at pivotal 1.2300 resistance zone (round-figure / Fibo 38.2% of 1.2737/1.2037 bear-leg / Nov 11 high).

Clear break here is needed to further strengthen near-term structure and keep in focus key barriers at 1.2428/36 (Nov 6 recovery top / 200DMA).

Strong bullish momentum on daily chart supports the action which needs to hold above broken daily cloud base, reinforced by daily Kijun-sen (1.2249) to keep bullish bias.

Caution on break below daily cloud which would weaken near-term structure and risk test of lower pivot at 1.2186 (last Friday’s spike low).

Markets await release of US Oct inflation report for fresh signals.

Res: 1.2308; 1.2337; 1.2387; 1.2428.
Sup: 1.2249; 1.2202; 1.2186; 1.2095.

GBPUSD

The British pound (GBP) slightly increased on Monday following a cabinet reshuffle by British Prime Minister Rishi Sunak. He appointed ex-Prime Minister David Cameron as a Foreign Secretary and fired U.K. Interior Minister Suella Braverman.

Possible effects for traders

The Bank of England officials Huw Pill and Katherine Mann raised concerns about the long-term impact of rising interest rates. They indicated being supportive of earlier rate cuts due to growing recession fears. The outlook for GBPUSD improved after the preliminary U.K. Gross Domestic Product data exceeded market expectations, suggesting the country might avoid a recession in 2023. Still, economic growth prospects appear grim, with expectations of reduced corporate investments for capacity expansion in Q4 due to weak demand domestically and internationally.

GBPUSD was rising during the early European trading sessions after the U.K. Employment change report showed the number of working people rose by 54,000 in the three months to August 2023, outperforming market expectations of a 198,000 decline. However, the country still faces some economic challenges, which put downward pressure on the GBP exchange rate. Today's key event for GBPUSD traders is the U.S. Consumer Price Index (CPI) report at 1:30 p.m. UTC. Higher-than-expected figures will almost certainly deepen the bearish trend in GBPUSD. However, if CPI numbers are lower than expected, the pair may rise above 1.23000.

XAUUSD

The gold price rose slightly towards 1,945 on Monday, bolstered by safe-haven demand as both the U.S. dollar and Treasury yields declined ahead of today's release of the U.S. inflation data for October.

Possible effects for traders

According to a Reuters survey, economists expect the headline U.S. Consumer Price Index (CPI) to slow down from a 0.4% rise in September to a 0.1% increase in October. The core inflation rate is expected to remain steady at 0.3%. While gold is considered a protection against inflation, rising interest rates increase the opportunity cost of owning the metal.

XAUUSD was declining during Asian and early European trading sessions. Today, traders should focus on the U.S. CPI report at 1:30 p.m. UTC. If inflation exceeds expectations, the chances for another rate hike by year's end rise, potentially boosting the U.S. dollar, so the short-term bearish trend in gold might continue. Meanwhile, lower-than-expected figures may push XAUUSD towards 1,950.

Last week, the BTC/USD rate rose to the level of USD 38k per coin on the excitement associated with the expected launch of a spot Bitcoin ETF.

However, as the week begins, bitcoin price performance shows signs that the hype appears to be waning:

• the speed with which the price dropped from the upper boundary of the channel and the high of the year to the middle of the channel (about -USD 1,700 in a few hours) indicates the aggressiveness of sellers;
• the price tried to resume its upward trend, but failed. This can be seen from the downward reversals from the level of 37,500
• the fact that the slopes of trend lines (shown in black) become less sharp is also a sign of weakening bullish sentiment.

It turns out that after a pronounced surge last week, the price has already dropped below the median line of the channel, and the MACD remains in the red zone.

Moreover, JP Morgan analysts point to fundamental reasons why a correction may follow the hype. Among them:

• The fact that spot Bitcoin ETFs are already active in Switzerland and Canada. If they really wanted to, investors could invest in them rather than wait for approval from the US SEC. Therefore, if the regulator gives the go-ahead, this will not mean a sharp influx of capital from buyers.
• That the approval of spot Bitcoin ETFs in the US may already be priced in.
• The assumption that court decisions in favor of crypto companies in disputes with the SEC will do little to clarify the regulation of cryptocurrencies in the United States.

Nevertheless, there is still potential for the price of bitcoin to rise to the psychological level of 40,000, if only because the ascending blue channel has not yet been broken.

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Most Asian shares rose on Tuesday in cautious trading following the mixed performance from Wall Street overnight as investors braced for a key US inflation report. European markets were mixed ahead of the Germany ZEW survey expectations this morning. Looking at currencies, the yen remains stuck near a three-decade low against the dollar despite jumping in the previous session on speculation of government intervention. Sterling received a slight boost after average weekly earnings beat forecasts this morning. Although the dollar remains rangebound, the incoming US inflation data, string of significant economic data this week, speeches by numerous Fed officials, and the threat of a potential US government shutdown could rock the currency.

Dollar on standby ahead of CPI

The October US Consumer Price Index (CPI) report may heavily influence expectations around the Fed's policy outlook beyond 2023.

Headline inflation is expected to have cooled to 3.3% compared to 3.7% in the prior month due to falling global energy prices, with annual core inflation unchanged at 4.1%, its lowest level since September 2021. As of writing, traders are currently pricing in just above a 25% probability of a 25-basis point hike by January 2024 with markets expecting the Fed’s first rate cut in July.

Ultimately, further evidence of cooling inflationary pressures may reinforce the argument around the Fed being done with hikes, despite recent hawkish remarks from central bank officials. However, if inflation prints above forecasts, this could boost speculation around the Fed raising rates in the early part of 2024.

In today's remarks at a central bank conference in Zurich, SNB Chairman Thomas Jordan warned that "price stability may not yet be ensured." He pledged that the central bank "will not hesitate to tighten monetary policy further if necessary."

This statement comes as inflation have dipped and interest rates have risen compared to last year, presenting a challenging environment for policy to balance the risk of tightening too much and too little.

"Given the high uncertainty regarding the economic outlook, there is no clearly mapped-out path for monetary policy in the near future," he remarked.

With SNB's next policy meeting scheduled for December 15, market expectations currently lean towards maintaining policy rate at 1.75%.

Daily Pivots: (S1) 185.42; (P) 185.87; (R1) 186.75; More...

GBP/JPY's rally resumed by breaking through 185.94 and intraday bias is back on the upside. Decisive break of 186.75 resistance will confirm resumption of larger up trend. Next target will be 161.8% projection of 178.02 to 183.79 from 180.74 at 190.07. On the downside, break of 184.61 support is needed to indicate short term topping. Otherwise, further rise will remain in favor in case of retreat.

In the bigger picture, as long as 176.29 support holds, larger up trend from 123.94 (202 low) should still be in progress. Break of 186.75 will target 195.86 (2015 high). Nevertheless, firm break of 176.29 will confirm medium term topping, and bring lengthier and deeper consolidations.

Daily Pivots: (S1) 161.78; (P) 162.08; (R1) 162.61; More....

Intraday bias in EUR/JPY remains on the upside at this point. Current rally should target 163.06 projection level next. Strong resistance could be seen there to limit upside on first attempt. On the downside, below 161.34 minor support will turn intraday bias neutral and bring consolidations first, before staging another rise.

In the bigger picture, rise from 114.42 (2020 low) is in progress. Next target is 100% projection of 124.37 to 148.38 from 139.05 at 163.06. Sustained break there will target 169.96 (2008 high). On the downside, break of 154.32 support is needed to be the first sign of medium term topping. Otherwise, outlook will remain bullish even in case of deep pullback.

Daily Pivots: (S1) 0.8698; (P) 0.8723; (R1) 0.8738; More....

Intraday bias in EUR/GBP is mildly on the downside at this point. Fall from 0.8754 is seen as the third leg of the consolidation pattern from 0.8752, and should target 0.8648. But strong support should be seen around there to complete the consolidation. On the upside, decisive break of 0.8752/4 will resume whole rise from 0.8491 to 0.8874 resistance next.

In the bigger picture, current development suggests that whole down trend from 0.9267 (2022 high) has completed with three down to to 0.8491. Rise from 0.8491 is seen as another leg inside that pattern from 0.9499 (2020 high). Further rally should be seen to 0.8977 resistance and above. This will remain the favored case as long as 0.8614 support holds.