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Daily Technical Insights 3 November 2022


EURUSD (4-Hour Chart)

The EURUSD keeps hovering eventually in a range from 0.9850 to 0.9950 level as investors stay on the sidelines while preparing for the Fed’s policy announcements. The central bank is expected to raise interest rates by 75bps for the fourth consecutive meeting and prepare market players for a slower pace of quantitative tightening sometime shortly. With the mounting speculations that this would be the last 75 bps hike, and the December meeting will bring a 50 bps move, the US data showed a different opinion. The US inflation is still stubbornly high, while growth has probed resilient. Furthermore, employment-related data released these days has shown the sector is strong enough to bear with QT. The US ADP survey just released showed that the private sector added 239K new job positions in October, beating expectations of 195K, which shows the central bank could easily maintain its aggressive path for a couple more meetings. Investors need to keep eye on what Chair Jerome Powell’s stance is, which would highly change the direction of the equity market and the US Dollar.

From the technical perspective, the four-hour scale RSI indicator fell sharply to 41 as of writing, suggesting that the EURUSD was surrounded by heavy selling pressure during the first half of the US trading session. As for the Bollinger Bands, the pair was capped by a 20-period moving average and U-turned to below 0.9870 level. Therefore, we think the pair was more favoured to the downside path in the near term to challenge the lower band support around the 0.9844 level.

Resistance:  1.0000, 1.0092

Support: 0.9751, 0.9664, 0.9548

GBPUSD (4-Hour Chart)

The GBPUSD has continued to extend losses after having dropped below 1.1500 in the second half of the day on Wednesday, as US Dollar managed to regather upside momentum ahead of Federal Reserve’s policy announcement, forcing the pair to stay under modest bearish pressure. The Fed is on track to raise 75 basis points once again in November. However, the decision itself is unlikely to trigger a significant reaction as investors stay focused on the US central bank’s communique on the December policy step. Heightened expectations about a smaller 50 bps Fed rate hike in December made it difficult for the greenback to extend its rally in the past couple of weeks. In case FOMC chairman Jerome Powell notes that a 50 bps rate hike will be on the table at the last policy meeting of the year, Wall Street’s main indices could rise dramatically and trigger a US Dollar selloff in the late US trading session. Earlier, the pound was struggling to make a decisive move in either direction as FTSE 100 index and US stock index futures traded virtually unchanged on the day, reflecting a cautious market stance.

From the technical perspective, the four-hour scale RSI indicator dropped to 43 as of writing, suggesting that GBPUSD is amid strong downside traction. As for the Bollinger Bands, the pair was falling from a 20-period moving average to the 1.1460 level at the time of writing. As a result, we think the downside trend of the pound would persist unless breaking through the 1.1634 resistance.

Resistance: 1.1633, 1.1738

Support: 1.1281, 1.1114, 1.0955

XAUUSD (4-Hour Chart)

Gold has lost its bullish traction and retreated below the $1650 mark after having climbed toward $1660 earlier in the day, as investors may have decided to book their profits while gearing up for the Fed’s rate decision. Although the main event will be the release of the monetary policy statement, the market has already priced in a 75 basis points hike. ll eyes now remain on the expected 75 bps Fed rate hike decision, with Chair Jerome Powell’s press conference to grab the limelight, as investors eagerly await any hints of a smaller rate increase from December. The speculation about a signal to softer hikes from December has been increasing over the last weeks, and the market is split about the size of the next move. With extremely sensitive about the Fed’s forward guidance, any hint might trigger a significant deal of volatility. Meanwhile, the benchmark US 10-year T-bond yields hold a steady high level above 4%, which weighs on the non-yielding yellow metal.

From the technical perspective, the four-hour scale RSI indicator remained at 50 as of writing, suggesting that gold has no clear direction with investors staying cautious. As for the Bollinger Bands,  the yellow metal rebounded from the 20-period moving average, $1645 level, and was moving with little volatility ahead of Fed’s decision, which is a signal that gold has no clear path in the near term. Hence, we think investors need to focus on the following Fed’s conference to look for clues about the future direction.

Resistance: 1675, 1700, 1725

Support: 1632, 1615, 1600