Forex Analysis – September 30, 2022
Our previous Forex analysis can be viewed here…
Technical Analysis
FOREX ANALYSIS: AUDUSD – Down-trending. End of the trend?
As suggested in yesterday’s Forex analysis, the AUDUSD has been moving sideways.
Price is down-trending but is currently moving sideways, signalling market indecision. The moving averages confirm the market indecision – they are tightening and are moving sideways. Price action has formed a higher swing and a potential inverted head and shoulder price pattern, so AUDUSD may start up-trending. The downtrend may becoming to an end.
Trading opportunities could exist around the moving averages and around any of the horizontal levels at 0.6365, 0.6440, 0.6525, 0.6580 and 0.6670.
FOREX ANALYSIS: EURGBP – Potential downtrend?
The EURGBP closed below the range support area and has since been bearish, as suggested in yesterday’s analysis.
Price action has formed a short series of lower swing highs and lower swing lows, so EURGBP could start down-trending. The moving averages confirm the potential downside – they have crossed bearish. Price is looking indecisive on higher time-frames.
Opportunities to go short may exist around the dynamic resistance of the moving averages, around the diagonal resistance area and around the horizontal levels at 0.8885, 0.9040 and 0.9195. A bearish move could stall or reverse around any of the horizontal support levels at 0.8780, 0.8715, 0.8690 and 0.8655.
FOREX ANALYSIS: EURUSD – Possible upside?
As suggested in our previous chart analysis, price has failed to swing lower.
The EURUSD was down-trending but price action has formed a series of higher swing highs and higher swing lows, suggesting that price may start up-trending. The moving averages confirm the possible upside – they are bullish and widening. EURUSD is down-trending on higher time-frames, so price may become bearish again.
Opportunities to go long could exist around the moving averages and around any of the horizontal levels at 0.9745, 0.9650 and 0.9540. A bullish move may find resistance around 0.9880, 0.9955, 0.9970 and 1.0035.
FOREX ANALYSIS: GBPUSD – Potential uptrend?
Price closed above the range resistance area and has since been bullish, as suggested in our previous analysis.
The GBPUSD was recently strongly bearish, then indecisive, but is now bullish. Price action has formed higher swing highs and lows and has also formed a bullish channel, so price could start up-trending. The moving averages have crossed bullish – confirming the potential trend. GBPUSD continues to downtrend on higher time-frames.
Long opportunities may exist around the dynamic support of the moving averages, around the bullish channel support area and around the horizontal levels at 1.0900 and 1.0580. A bullish move could be rejected or reverse around the bullish channel resistance area and around any of the horizontal levels at 1.1220, 1.1355 and 1.1460.
FOREX ANALYSIS: USDCAD – Up-trending. End of the trend?
As suggested in our last Forex chart analysis, USDCAD has been moving sideways.
Price was up-trending but recent price action has been indecisive. The USDCAD may start ranging between 1.3605 and 1.3800. The moving averages confirm the market indecision – they are tightening and are moving sideways. Price continues to uptrend on higher time-frames, so USDCAD may become bullish.
Trading opportunities could exist around the support and resistance areas of the range and if price moves out of the range (break-out trade). A break to the downside may find support around 1.3540, 1.3425 and 1.3320. A break to the upside may find resistance around the previous support area of the bullish channel.
FOREX ANALYSIS: USDCHF – Indecision?
USDCHF has been moving sideways, as suggested in our last analysis.
Price was up-trending but is now looking indecisive. The moving averages have crossed bearish and are widening, so USDCHF could become bearish.
Trading opportunities may exist around the moving averages and around any of the horizontal levels at 0.9620, 0.9685, 0.9755, 0.9850 and 0.9965.
FOREX ANALYSIS: USDJPY – Indecision
As suggested in yesterday’s analysis, price has been moving sideways.
USDJPY is indecisive and is ranging between 143.95 and 144.85. The moving averages are tight and moving sideways – confirming the market indecision. USDJPY is also indecisive on higher time-frames.
Trading opportunities could exist around the support and resistance areas of the range and if price moves out of the range (break-out trade). A break to the upside may find resistance around 145.75. A break to the downside may find support around 143.70, 142.75 and 142.60.
METAL ANALYSIS: XAUUSD – Down-trending. End of the trend?
Price has been bullish off the moving averages, as suggested in yesterday’s Forex analysis.
GOLD is down-trending and is currently in a strong retrace move. The moving averages have crossed bullish and price is above the moving averages, so XAUUSD could struggle to swing lower – the downtrend could becoming to an end.
Trading opportunities may exist around the moving averages and around the horizontal levels at 1616, 1622, 1642 and 1686.
Fundamental Analysis
Key Analysis
Global inflation, a European energy crisis, the war in Ukraine and the possibility of a 2023 global recession are driving the markets.
Recent European government interventions with energy prices may help to reduce rising inflation.
Ukraine has taken significant ground from Russia.
The BOJ has started intervening in the FX markets, in an attempt to strengthen the Yen.
The Dollar continues to be king.
GBP crashes to record lows
Today’s Major Scheduled News
1230 UTC – USD – PCE price index
Interest Rate Analysis
A summary of recent central bank rate changes and statements…
Australia (AUD)
The Reserve Bank of Australia (RBA) has increased rates again, by another 0.50% to 2.35% – the third consecutive 50-bps hike. The rate increases throughout 2022 have been to tackle rising inflation. The RBA have stated that the economic outlook is cloudy, due to inflation, the war in Ukraine and China’s anti-COVID measures, so the RBA will respond when necessary to tackle inflation and stabilise the Australian economy.
The RBA recently mentioned that there may be no more need for large rate hikes, so future rate hikes could be much lower (5-15 bps).
Canada (CAD)
The Bank of Canada (BOC) has raised it’s interest rate by 75bps, increasing the official bank rate to 2.5% – it’s fifth consecutive rate hike. The BOC have announced that further hikes are expected to tackle rising inflation. Short-term inflation expectations are still high.
Euro Area (EUR)
The European Central Bank (ECB) has increased it’s rates by 75bps, bringing the official rate to 1.25%. Further rate hikes are expecting in coming meetings but no large rate hikes are expected.
Japan (JPY)
The Bank of Japan (BOJ) continues to keep interest rates at the record low of -0.10%. The Japanese economy is making a steady but moderate recovery from the COVID crisis but not as great as initially thought – inflation and a resurgence of COVID cases are weighing on the Japanese economy. The BOJ will intervene in the FX markets in order to strengthen the Yen.
Switzerland (CHF)
The Swiss National Bank (SNB) have hiked rates by 75bps, bringing the official rate to 0.5% – interest rates being positive for the first time in over a decade. The SNB did not rule out further rate hikes in future or the possibility of intervening in foreign exchange markets. The rate increase is to tackle rising prices.
United Kingdom (GBP)
The Bank of England (BOE) have increased it’s official bank rate again. This time by 75bps. The official rate is now set to 2.25%. This is the 7th consecutive rate hike by the BOE. Further rate hikes are expected. The BOE has started purchasing government bonds to tackle the rapid decline of currency and bond prices.
United States (USD)
The Federal Reserve has raised the official funds rate by an additional 75bps% – it’s fifth rate hike in 2022. The rate is currently now set at 3.25%. The increase in rates is to tackle rising inflation. The Fed currently plan to increase rates further – economists expecting a rate of around 4.00-5.00% by the end of 2022.
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