Mixed Dollar flow amidst crosscurrents

Next 24 hours: Euro and Yen weakness stands out

Today’s report: Mixed Dollar flow amidst crosscurrents

FX markets have been all over the place in recent sessions, with multiple crosscurrents playing into the equation. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 1.0998 – 8 October high – Medium
  • R1 1.0874 - 17 October high – Medium
  • S1 1.0792 - 23 October low – Medium
  • S2 1.0778 – 1 August low – Strong

EURUSD – fundamental overview

The Euro has extended post ECB decision declines on the back of downbeat IMF growth outlooks for the Eurozone and Germany, along with dovish comments out of ECB Centeno and Villeroy. Centeno talked about faster rate cuts if the data presented, while Villeroy saw significant downside to growth and inflation. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 1.3175 – 4 October high – Medium
  • R1 1.3103 – 15 October high – Strong
  • S1 1.2945 – 22 October low – Medium
  • S2 1.2928 – 19 August low – Strong

GBPUSD – fundamental overview

The Pound has been contending with setbacks from the latest data which shows the UK deficit overshooting. This makes higher taxes and borrowing a likely feature in the upcoming budget. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. A weekly close back above 150.00 will hint at the start to longer-term uptrend resumption.

  • R2 153.90 – 31 July high – Strong
  • R1 152.00 – Figure – Medium
  • S1 149.08 – 21 October low – Medium
  • S2 147.34 – 8 October low – Medium

USDJPY – fundamental overview

We've seen more weakness in the Yen as confidence falters with respect to PM Ishida being able to pull off a convincing win in this weekend's election. We could see more weakness if the election polls show an increased chance of the LDP losing its majority. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 0.6824 – 29 August high – Strong
  • R2 0.6760 – 11 October high – Medium
  • S1 0.6651 – 22 October low– Medium
  • S2 0.6622 – 11 September low – Strong

AUDUSD – fundamental overview

We've seen a decent amount of support for the Australian Dollar on the back of the IMF forecasts of higher than expected inflation in 2025. The next big data out of Australian will indeed come from an inflation print in the form of Q3 CPI due on the 30th. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 1.3947 – 5 August/2024 high – Strong
  • R1 1.3850 – 21 October high – Medium
  • S1 1.3689 – 10 October low – Medium
  • S2 1.3648 – 19 September high – Strong

USDCAD – fundamental overview

The Canadian Dollar managed to trade mostly sideways on Tuesday after taking in offsetting headlines. On the one side, there was selling from the contraction in industrial product prices. On the other side, there was demand from a healthy rebound in the price of oil. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 0.6379 – 30 September/2024 high – Strong
  • R1 0.6220 – 4 October high – Medium
  • S1 0.6021 – 22 October low – Medium
  • S2 0.5974 – 15 August low – Strong

NZDUSD – fundamental overview

Absence of first tier data has left the Kiwi rate wanting for any directional changes. The market will be looking ahead to the latest words from RBNZ Governor Orr and some Fed speak later in the day. Key standouts on Wednesday’s calendar come from the Bank of Canada policy decision, an ECB Lagarde speech, Eurozone consumer confidence, US existing home sales, Fed speak, and the Fed Beige Book.

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 5900 – Psychological– Medium
  • R1 5891 – 17 October/Record high – Medium
  • S1 5740 – 9 October low – Medium
  • S2 5726 – 2 October low – Strong

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, US election and geopolitical risk in the weeks and 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 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

  • R2 2800 – Psychological– Strong
  • R1 2750 – 23 October/Record high – Medium
  • S1 2602 – 10 October low – Strong
  • S2 2547 – 18 September low – Strong

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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