Fed rate cut expectations cool…but just a bit

Next 24 hours: Euro runs into some selling pressure

Today’s report: Fed rate cut expectations cool...but just a bit

Fed rate cut expectations cooled off just a bit on Monday, resulting in a minor bout of demand for the US Dollar. The primary catalyst for the move came from less dovish speak out from Fed Chair Powell and Fed Bowman.

Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.1276 – 2023 high – Strong
  • R1 1.1215 - 25 September/2024 high – Medium
  • S1 1.1069 - 19 September low– Medium
  • S2 1.1002 – 11 August low – Strong

EURUSD – fundamental overview

The Euro struggled on the final day of September, contending with month end flow, cooler CPI data out of Germany, and some dovish ECB remarks. ECB President Lagarde said core inflation was on a downward trend. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Any setbacks should be well supported ahead of 1.2500.

  • R2 1.3500 – Psychological – Strong
  • R1 1.3435 – 26 September/2024 high – Medium
  • S1 1.3248 – 23 September low – Medium
  • S2 1.3145 – 18 September low – Strong

GBPUSD – fundamental overview

The Pound was a notable outperformer as the week got going, getting a boost from UK mortgage approvals hitting a 23-month high. The local rate market has eased up on November rate cut expectations, with things moving back down from 50 to 25. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

USDJPY – technical overview

The market has entered a period of correction after extending the uptrend to a multi-year high through 160.00. Critical support comes in around 140.00, with only a monthly close below the barrier to compromise the bullish outlook. A higher low is ideally sought out above 140.00 in favor of a bullish continuation.

  • R2 147.18 – 2 September high – Strong
  • R1 146.50 – 27 September high – Medium
  • S1 142.90 – 25 September low – Medium
  • S2 141.64 – 30 September low – Strong

USDJPY – fundamental overview

The Yen has continued with its weakness against the Buck, most recently on the back of weaker Japan housing and factory numbers and a BOJ Minutes showing no rush for additional rate hikes. Tuesday's as expected Tankan and lower unemployment rate haven't factored into price action. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.7000 – Psychological – Strong
  • R2 0.6943 – 30 September/2024 high – Medium
  • S1 0.6814 – 24 September low– Medium
  • S2 0.6737 – 19 September low – Strong

AUDUSD – fundamental overview

China stimulus measures have already been supporting the Australian Dollar, with the currency getting another boost on Tuesday from the better than expected Aussie retail sales print. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area, with a break to open a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3648 – 19 September high –Strong
  • R1 1.3600 –Figure – Medium
  • S1 1.3420 – 25 September low – Medium
  • S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been a clear underperformer in recent sessions, mostly taking its hit from the drag in the price of oil. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.6400 – Figure – Strong
  • R1 0.6379 – 30 September/2024 high – Medium
  • S1 0.6176 – 17 September low – Medium
  • S2 0.6106 – 11 September low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has extended its run of impressive gains in 2024, getting the latest boost from the ANZ Survey of Business Opinion which spiked to a 10-year high. Key standouts on Tuesday’s calendar come from Eurozone manufacturing PMIs, Eurozone inflation, Canada manufacturing PMIs, US manufacturing PMIs, US JOLTs job openings, US construction spending, US ISM manufacturing, ECB speak, and Fed speak.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5093, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

  • R2 5800 – Psychological– Strong
  • R1 5781 – 26 September/Record high – Medium
  • S1 5596 – 13 September low – Medium
  • S2 5540 – 12 September low – Medium

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. It will however be important to keep an eye on inflation, bigger picture economic data and geopolitical risk in the months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2300 on a monthly close basis.

  • R2 2700 – Psychological– Strong
  • R1 2686 – 26 September/Record high – Medium
  • S1 2547 – 18 September low – Medium
  • S2 2472– 4 September low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.

Peformance chart: 30-Day Performance vs. US dollar (%)

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