GBP/USD Forecast: Halloween Party set to continue thanks to the Fed and Farage Our preference: long positions above 1.2935 with targets at 1.2985 & 1.3005 in extension.Alternative scenario: below 1.2935 look for further downside with 1.2895 & 1.2870 as targets.
GBP/USD has been extending its gains after the Fed’s decision.
Speculation about the UK elections is set to determine the next moves.
Thursday’s technical chart is pointing to further gains.
Trick or treat? Brexiteers may feel tricked on Halloween – which was supposed to be Brexit Day – the third one. GBP/USD is on the rise, but the main driver is the US Federal Reserve rather than any UK event.
The Fed cut interest rates for the third time as expected and signaled a pause.
The US Dollar advanced at first, but then changed course and fell,
as Chair Jerome Powell indicated that the bar for raising rates is high.
The bank would like to see a significant rise in inflation before hiking,
while the threshold for cutting again seems lower.
EUR/USD Further upside in lost traction – UOB
Our preference: short positions below 1.1132 with targets at 1.1107 & 1.1097 in extension.Alternative scenario: above 1.1132 look for further upside with 1.1142 & 1.1157 as targets.
FX Strategists at UOB Group noted the bullish outlook on EUR/USD appears to have lost some momentum
despite a test of 1.1180 still remains on the cards.
24-hour view: “EUR traded in a relatively narrow range between 1.1074 and 1.1107 before ending the day slightly higher at 1.1098 (+0.18%). The quiet price action offers no fresh clues and EUR could continue to trade sideways for today, likely between 1.1080 and 1.1125”.
Next 1-3 weeks: “EUR dipped to 1.1071 on Friday (25 Oct),
just one pip above our ‘strong support’ indicated in our last update on 23 Oct (spot at 1.1130). The prospect for further EUR strength has clearly diminished but there is still a slim chance that EUR could muster one more push high towards last week’s top near 1.1180. However, a break of 1.1070 would suggest EUR could trade sideways for a period”.
USD/CHF trades with modest losses, but holds above 0.9900 handle
Our preference: short positions below 0.9930 with targets at 0.9890 & 0.9880 in extension.Alternative scenario: above 0.9930 look for further upside with 0.9945 & 0.9960 as targets.
The prevalent cautions mood underpinned CHF’s safe-haven demand.
The USD remained on the defensive amid firming Fed rate cut expectations.
The downside remained limited amid a modest uptick in the US bond yields.
The USD/CHF pair edged lower on Friday and eroded a major part of the previous session positive move,
albeit managed to find some support ahead of the 0.9900 handle.
Having climbed to over one-week tops, around the 0.9930 region, the pair witnessed a modest pullback and for now,
seems to have snapped four consecutive days of winning streak. Reviving safe-haven demand, amid a softer mood around equity markets,
underpinned the Swiss Franc and was seen as one of the key factors exerting some downward pressure on the major.
USD/CHF- Murrey Math Lines
Our preference: long positions above 0.9890 with targets at 0.9920 & 0.9935 in extension.Alternative scenario: below 0.9890 look for further downside with 0.9880 & 0.9870 as targets.
SD/CHF, “US Dollar vs Swiss Franc”
As we can see in the H4 chart, USDCHF is consolidating between 5/8 and 3/8. In this case, the price is expected to test 5/8, rebound from it, and then resume falling to reach the support at 3/8. However,
this scenario may no longer be valid if the price breaks 5/8 to the upside. After that, the instrument may continue growing towards 6/8.
USD/CAD trims losses as Canadian TV projects a win for the incumbent government Our preference: short positions below 1.3100 with targets at 1.3065 & 1.3050 in extension.Alternative scenario: above 1.3100 look for further upside with 1.3125 & 1.3145 as targets.
USD/CAD is trimming gains on reports calling a victory for Canada’s PM Trudeau. The CAD may come under pressure if Trudeau forms a minority government with NDP’s support. The USD/CAD pair is recovering losses on reports stating that Canadian Prime Minister Trudeau is likely to win the second term.
The currency pair is currently trading at 1.3085, representing marginal losses on the day, having hit a three-month low of 1.3071 earlier today.
Canadian TV, CBC, is suggesting Canadian Prime Minister Justin Trudeau is set to secure a second term, although it is unclear whether he will be able to command an outright majority or will have to rely on other parties to govern.
A minority government supported by the anti-pipeline New Democratic Party (NDP) would be bad news for Canada’s energy sector.
The Canadian Dollar, therefore, may come under pressure if Trudeau ends up forming a minority government with NDP’s support.
NZD/USD reclaims 0.6400 handle, over one-month tops
Our preference: the upside prevails as long as 0.6392 is support.
Alternative scenario: below 0.6392, expect 0.6372 and 0.6360.
The prevalent USD selling bias helped regain positive traction on Monday.
The recent optimism over a partial US-China trade deal remains supportive.
The NZD/USD pair climbed to over one-month tops in the last hour,
with bulls now looking to extend the momentum further beyond the 0.6400 handle.
The pair added to its recent goodish recovery move from multi-year lows and continued gaining positive traction for the third consecutive session on Monday in the wake of some follow-through selling around the US Dollar.
Persistent USD selling remained supportiveDespite a goodish intraday pickup in the US Treasury bond yields, supported by improving global risk sentiment,
the USD bulls remained on the defensive amid expectations that the Fed will cut interest rates again in October.
This coupled with recent optimism over phase one deal between the world’s two largest economies remained supportive of the bid tone surrounding perceived riskier currencies – including the New Zealand Dollar.
In absence of any major market-moving economic releases from the US, it will not be interesting to see if bulls are able to maintain their dominant position or opt to take some profits off the table on the first day of a new trading week.
In light of the recent price action, NZD/USD is now posed for some consolidation,
suggested FX Strategists at UOB Group.
24-hour view: “Expectation for NZD to trade sideways was incorrect as it dropped to 0.6241 before rebounding strongly.
Downward pressure has dissipated and the 0.6241 low is not expected to come into the picture for today. That said, a sustained rise in NZD is not expected as it is more likely to consolidate and trade sideways, likely between 0.6260 and 0.6305”.
Next 1-3 weeks: “Our expectation for NZD to “edge higher to 0.6375” from Monday (14 Oct, spot at 0.6330) was incorrect as NZD dropped below the strong 0.6270 support yesterday (low of 0.6259).
The current price action is viewed as part of an on-going sideway-trading phase and NZD could trade in an ‘undecided’ manner and within a 0.6235/0.6355 range for a period”.
USD/CAD Murrey Math Lines
Our preference: long positions above 1.3190 with targets at 1.3240 & 1.3260 in extension.Alternative scenario: below 1.3190 look for further downside with 1.3165 & 1.3145 as targets.
USD/CAD, “US Dollar vs Canadian Dollar”
As we can see in the H4 chart, USDCAD has rebounded from the strong support at 0/8. In this case, the pair is expected to resume growing to reach the resistance at 3/8. However, this scenario may no longer be valid if the price breaks 0/8. After that, the instrument may continue falling towards the support at -2/8.
NZD/JPY giving back ground in holiday thin markets
Our preference: the downside prevails as long as 68.22 is resistance.Alternative scenario: the upside breakout of 68.22, would call for 68.42 and 68.54.
NZD/JPY profit-taking ensures at the start of a busy event week.Less committed risk-takers prefer to wait and see how the trade deal unfolds.
NZD/JPY has started out the week on the back foot, falling from a high of 68.72 to a low of 68.22, -0.66%.
The cross is suffering on what is potential profit-taking and a dial back in optimism surrounding the ‘phase-1’
trade agreement between the US and China within illiquid markets while Japan and the U.S. are out on holiday. The Chinese press has somewhat invalidated the trade agreement between the US and China by highlighting that only a ‘partial deal’ has yet to be inked, thus leaving the door open for scrutiny and prying the implications of a possible reneging from either side on aspects of the agreement
AUD/JPY Trade Headline Hype Sees Risk Spike – SPX
Our preference: the upside prevails as long as 72.47 is support.
Alternative scenario: below 72.47, expect 72.25 and 72.12.
China has “lowered expectations” for progress from this week’s trade talks. That shouldn’t come as too much of a surprise, given the US added 28 Chinese companies to their blacklist yesterday.
There’s also reports that China would cut the scheduled 2-day trade talks early by one day. On the upside, reports suggest that the Trump administration may allow US companies to supply non-sensitive goods to Huawei,
and that the US may delay next week’s tariff hike. And today,
the US is reconsidering currency pact which would ensure China don’t engage in competitive devaluation of the Yuan. Personally, I do not see China agreeing to this. Yet markets took it as a positive step and saw risk assets such as E-mini SP500 futures and AUD/JPY spike higher.