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Daily Technical Insights 18 October 2022


EURUSD (4-Hour Chart)

The EUR/USD pair surged higher on Monday, reversing Friday’s pullback from a one-week high and refreshing its daily high above 0.9820 level amid an improved market sentiment. The pair is now trading at 0.9844, posting a 1.29% gain daily. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the haven greenback is losing ground and retreated to the 112.0 area amid an absence of major data/events. Moreover, the newly appointed British Finance Minister also announced the U-turn on the mini-Budget Tax cuts, which provided a strong boost to investors’ mood. For the Euro, the European Central Bank (ECB) Vice President Luis de Guindos said on Monday that he expects the US dollar to stabilize in the coming months and Eurozone inflation to start easing in 2023. But the tussle with Russia, over Ukraine, might limit the recovery of the shared currency.

For the technical aspect, RSI indicator 64 as of writing, suggests that the pair is preserving its bullish momentum as the RSI climbs towards 70. As for the Bollinger Bands, the price gains upward strength and moves out of the upper band, so a strong trend continuation can be expected. In conclusion, we think the market will be bullish as the pair is testing the 0.9836 resistance. The rising RSI also reflects bull signals.

Resistance:  0.9836, 0.9921, 0.9986

Support: 0.9666, 0.9551

GBPUSD (4-Hour Chart)

The GBP/USD pair advanced sharply on Monday, gaining positive traction and recovered strongly towards the 1.1420 mark as investors assess UK Chancellor Hunt’s fiscal statement. At the time of writing, the cable stays in positive territory with a 1.97% gain for the day. The modest pullback in the US Treasury bond yields and the risk-on mood both exerted some downward pressure on the safe-haven greenback, meanwhile lifting the GBP/USD pair higher. For the British pound, the new Chancellor of the Exchequer Jeremy Hunt is making an emergency statement this Monday on the mini-budget, which aimed to stabilize financial markets and restore investors’ confidence. He said that almost all tax measures announced in Sept 23 growth plan will be reversed, which eased fears of the UK market’s collapse. However, the bleak outlook for the UK economy should keep weighing on the cable amid the BoE’s prediction of a recession this year.

For the technical aspect, RSI indicator 67 as of writing, suggests that the upside is more favoured as the RSI rises towards the overbought zone. As for the Bollinger Bands, the price witnessed consistent buying and climbed towards the upper band, therefore a continuation of the bullish trend can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 1.1476 resistance. Sustained strength beyond that level could pave the way for a further near-term appreciating move.

Resistance: 1.1476, 1.1566, 1.1714

Support: 1.1162, 1.0797, 1.0968, 1.0392

XAUUSD (4-Hour Chart)

XAUUSD attracts some buying on the first day of a new week and reverses a major part of Friday’s downfall to over a two-week-low. The gold has stuck to its intraday gains since the first half of the European session and was currently priced at $1,663 as of writing. The US dollar struggles to capitalize on Friday’s strong intraday positive move and meets with a fresh supply on Monday amid a modest pullback in the US Treasury bond yields. A weaker greenback offers some support to the dollar-denominated gold, though a combination of factors could act as a headwind and warrants caution for bullish traders. The markets have priced in a nearly 100% chance for another supersized 75 bps Fed rate hike move for the fourth consecutive meeting in November. The aforementioned fundamental backdrop suggests that the path of least resistance for gold is to the downside.

From the technical perspective, in the four-hour scale, the RSI 50 as of writing, supplying that the price turned out to be relatively stable. As for Bollinger Bands, the gap between upper and lower bands remains unchanged, and the yellow metal price was hovering around the 20-period moving average, indicating a mild move in the near term could be expected.

Resistance: 1680, 1712, 1725

Support: 1640, 1620, 1600