Relief rallies few and far between

Next 24 hours: Fed enters blackout period ahead of November meeting

Today’s report: Relief rallies few and far between

We haven’t seen much of a relief rally in risk assets as the new week gets going, despite geopolitical tension remaining relatively contained over the weekend. Ultimately, investors understand that geopolitical risk is quite real right now and capable of re-escalating at any moment.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

Any additional setbacks should be well supported on dips below 1.0500 in favor of the start to the next major upside extension. Ultimately, only a monthly close back below 1.0500 would give reason for concern. Back above 1.0618 will take the immediate pressure off the downside.

  • R2 1.0737 – 20 September high – Strong
  • R1 1.0640 - 12 October high – Medium
  • S1 1.0495 - 13 October low– Medium
  • S2 1.0448 – 3 October/2023 low –Strong

EURUSD – fundamental overview

Not much activity in the Euro in recent sessions. German producer prices moderated to -0.2% month over month from 0.3% previous and 0.4% forecast. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

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 November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.3143.

  • R2 1.2425 – 19 September high – Strong
  • R1 1.2338 – 11 October high – Medium
  • S1 1.2090 – 19 October low – Medium
  • S2 1.2037 – 4 October low – Strong

GBPUSD – fundamental overview

UK consumer confidence sunk to -30 from -21 previous and -20 forecast, the sharpest decline since the onset of Covid. UK retail sales were also weaker than expected. Meanwhile, BOE Governor Bailey suggested pay growth is still too strong for the BOE target and that UK inflation is likely to 'keep coming down' with expectations for a marked fall. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

USDJPY – technical overview

At this stage, it looks like the market is wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported on dips.

  • R2 150.17 – 3 October/2023 high – Strong
  • R1 150.00 –  Psychological – Medium
  • S1 148.53 – 29 September low – Medium
  • S2 147.31 – 3 October low – Strong

USDJPY – fundamental overview

BOJ Governor Suzuki said it's important FX moves are stable and reflect fundamentals. BoJ Governor Ueda said that the central bank will continue easing to their 2% price goal and stated that uncertainty surrounding the economy and prices remains high. The BOJ announced it would conduct 5-year funds supply operations on October 24 with the aim of keeping yields from surging. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

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 0.6300 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.

  • R1 0.6501– 29 September high – Strong
  • R2 0.6445 – 11 October high – Medium
  • S1 0.6300 – Figure – Medium
  • S2 0.6285 – 3 October/2023 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has been struggling in recent sessions, taking its hits from broad US Dollar demand, risk off flow, and softer than expected Aussie employment data. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

USDCAD – technical overview

Above 1.3000 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. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3786 – 5 October high – Strong
  • R1 1.3741 – 19 October high – Medium
  • S1 1.3569 – 10 October low – Medium
  • S2 1.3552 – 2 October low – Medium

USDCAD – fundamental overview

Canadian August retail sales came in as expected at -0.1% month over month versus 0.3% prior with the ex-auto figure at 0.1% from 1.0% prior and better than the -0.1% expected. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6049 would be required to take the immediate pressure off the downside. A monthly close below 0.5800 would intensify bearish price action.

  • R2 0.6049 – 29 September high – Strong
  • R1 0.6056 – 11 October high – Medium
  • S1 0.5815 – 19 October/2023 low – Medium
  • S2 0.5800 – Figure – Strong

NZDUSD – fundamental overview

It's been a difficult period for the New Zealand Dollar, which has extended declines to fresh yearly lows. The currency has been contending with softer inflation data, a wave of risk off flow in global markets, and this latest widening of the New Zealand trade deficit as exports fell more than imports. Monday's economic calendar is exceptionally thin with no first tier data on the docket.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4200.

  • R2 4398 – 12 October high – Strong
  • R1 4279 – 20 October high – Medium
  • S1 4219 – 20 October low – Medium
  • S2 4201 – 4 October low – Strong

US SPX 500 – fundamental overview

Investors continue to struggle with the reality of a higher for longer Fed policy track in the face of ongoing worry around inflation, while also contending with an escalation in geopolitical risk. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite market expectations that would argue otherwise.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.

  • R2 2000 – Psychological – Strong
  • R1 1998 – 20 October high – Medium
  • S1 1908 – 16 October low – Medium
  • S2 1868 – 12 October low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

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

Suggested reading

Daily Reports Global FX Insights   joelkruger  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.