Spreads
Spreads
Spreads
Spreads
Spreads
EURUSD (4-Hour Chart)
The EURUSD has managed to stage a rebound after having touched its lowest level in two weeks at 0.9730 earlier in the day, however, as the US dollar preserved its strength following the latest data releases, the pair stays in negative territory and was priced at 0.9775 as of writing. The US central bank raised the interest rate as expected by 75 bps, while the accompanying statement signalled a potential pivot in the monetary policy. Nevertheless, Federal Reserve Chair Jerome Powell came out with relatively hawkish messages, which made investors change their minds and rush to price in another 75 bps coming in December. Moreover, Powell also implied that the ultimate level of rates would be higher than previously expected. Another side, the Bank of England also pulled the trigger for 75 bps as anticipated, but downwardly revised the growth forecast, expecting the recession will continue. Policymakers now expect the UK economy to contract by 1% in 2024, compared to 0.25% in the previous meeting. In domestic, ECB President Christine Lagarde was on the wires and noted that a recession would not be sufficient to tame runaway inflation.
From the technical perspective, the four-hour scale RSI indicator slightly rebound from 30 to 32 figured as of writing, suggesting that the pair was surrounded by heavy bearish traction. As for Bollinger Bands, the EURUSD was wandering around the lower band and the gap between upper and lower bands get larger, which is a signal that the downward trend would persist in the near term. As a result, we think the pair would further decline and aim to monthly-low around 0.9664 level.
Resistance: 0.9861, 1.0000, 1.0094
Support: 0.9664, 0.9536
GBPUSD (4-Hour Chart)
The GBPUSD was pricing at the 1.1185 level as of writing and trying to stabilise above 1.1200 after having slumped to the 1.1150 area earlier in the day, with broad-based dollar strength continuing to weigh on the pair. FOMC Chair Jerome Powell’s hawkish remarks during the press conference provided a boost to the US dollar on Wednesday and forced GBPUSD to close in negative territory. Powell said that he expected the terminal rate to be revised higher than previously expected and noted that it was very premature to even think about pausing rate increases, which caused the surge of the US dollar index and dealt with negative traction on the cables. Apart from Fed, the Bank of England also raised its policy rate by 75bps as expected but noted that the peak rate was likely to be lower than 5.2% priced in markets, triggering a Sterling selloff. Moreover, BoE policymakers also downwardly revised the growth forecast, which the UK economy will contract by 1% in 2024, compared to 0.25% in the previous meeting. This indicated that the recession will last for a longer future and deepened investors’ fears about the UK economic situation.
From the technical perspective, the four-hour scale RSI indicator fell sharply below 30 figures as of writing, suggesting the strong negative traction further deepen, but a rebound could be expected due to RSI having entered the oversold zone. As for Bollinger Bands, the pounds were pricing below the lower band and the size between upper and lower bands became larger, signalling the overall downside tendency would continue for a while. Therefore, we think the downside path was more favoured after a slight rebound in the near term.
Resistance: 1.1432, 1.1629
Support: 1.0953, 1.0632, 1.0392
XAUUSD (4-Hour Chart)
Gold managed to regather some strength and was priced at $1632 at the moment after having touched the 2022 low of $1614 during the European session, as the US demand was affected by post-Fed strength and mixed US data. XAUUSD declined following the hawkish commentary of Federal Reserve Chairman Jerome Powell, saying that the “ultimate level of rates would be higher than previously expected,” spurring a jump in US Treasury bond yields. The yield on the 2-year Treasury note peaked at 4.745%, its highest since 2007, while that on the 10-year note hit an intraday high of 4.22% after Powell noted any discussion on rate hike pausing would be premature, which underpinned the safe-haven greenback and undermined the non-yielding yellow metal. However, data from the United States flashed that business activity continues to expand while the labour market remains tight. The Institute for Supply Management (ISM) reported its Service PMI, which decelerated to 54.4 from 56.7 in September, below estimates of 55.5. Even though the index remained in expansion territory, it’s decelerating, signal Fed officials are looking for.
From the technical perspective, the four-hour scale RSI indicator rebounded from the critical oversold level of 30 to 41 figured as of writing, suggesting the strong downside momentum slowdown. As for Bollinger Bands, the gold was pricing back to the lower area and the size between upper and lower bands became larger, which is a signal the pair would move with relatively large volatility. Hence, we think the yellow metal will hover in a wide range from the $1615 mark to $1660 in the near term.
Resistance: 1675, 1700, 1725
Support: 1632, 1615, 1600
