2023 October

The Australian dollar has rallied during the course of the week to reach toward the 0.64 level, an area that’s been important more than once. If you look at the daily chart, it’s also where the 50-Day EMA is currently hanging about, so it all comes together. The resulting candlestick for the week is an inverted hammer, which could be a very negative turn of events, but if we do break above the top of it, extensively the 0.64 level, then you have the possibility of moving to the 0.65 level, and then eventually the 0.66 level where the 50-Week EMA currently resides. (The 200-Day EMA currently resides on the daily chart as well.)

If we break down below the lows of the last couple of weeks, it opens up the possibility of the move down to the 0.62 level, and then after that the potential move of the Aussie down to the 0.60 level. Keep in mind that the market is very sensitive to risk appetite, as the Australian dollar is not only a commodity currency, but it’s also a currency that banks on growth in Asia and the globe in general.

Ultimately, I do expect to see a lot of noisy trading, but you still have to assume that the downside is the best way to go. Picking up “cheap US dollars” will continue to be the way most traders are paying attention to, and therefore I think you’ve got a situation where the market is going to continue to see significantly downward momentum, and eventually something will probably break. It is not until we break above the 0.66 level that I would consider buying.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

EUR/USD FORECAST – TECHNICAL ANALYSIS
EUR/USD rebounded on Thursday after a subdued performance during the previous trading session, but gains were capped by soaring U.S. Treasury rates, a hostile market environment that appears to have prevented the pair from clearing technical resistance around the 1.0600 handle.

With U.S. yields on a bullish tear and geopolitical tensions in the Middle East on the rise, the euro will struggle to maintain a sustained upward course. This means that the direction of travel is likely to be lower for the exchange rate.

In terms of technical analysis, if EUR/USD fails to push higher and resumes its decline, we could see a move towards trendline support at 1.0500. This floor could provide stability and ease the selling pressure, but if it caves in, prices could be on their way to the 2023 lows at 1.0448. On further weakness, the focus shifts to 1.0350.

Conversely, if sentiment shifts in favor of the bulls and EUR/USD takes out overhead resistance at 1.0600/1.0625, buyers may regain control of price action, paving the way for a rally towards 1.0765, the 38.2% Fibonacci retracement of the July/October slump.

Eager to gain insights into the euro’s future direction and the fundamental drivers that will shape the outlook in the months ahead? Explore the details in our free Q4 trading forecast!

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EUR/USD TECHNICAL CHART
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EUR/USD Chart Created Using TradingView

USD/JPY FORECAST – TECHNICAL ANALYSIS
USD/JPY lacked directional conviction on Thursday, despite the surge in U.S. rates. While rising U.S. Treasury yields offered support to the U.S. dollar, the yen experienced heightened demand due to escalating geopolitical tensions in the Middle East. This juxtaposition created a neutral trading environment for the exchange rate. Although both the yen and the U.S. dollar are commonly perceived as safe-haven assets, the yen tends to be favored during periods of elevated market uncertainty.

From a technical analysis perspective, USD/JPY remains firmly entrenched in a robust uptrend, although it appears to be undergoing a phase of consolidation at the moment. In any case, caution is warranted given the pair’s proximity to the critical 150.00 level. In 2022 and 2023, the Japanese government took steps to defend the country’s currency against further depreciation when this threshold was breached.

In the event that Tokyo decides not to intervene for now and USD/JPY breaks above 150.00 decisively, upward momentum could gather pace, setting the stage for a rally towards the 2022 highs at 151.95. On further strength, the bulls may muster the impetus to challenge channel resistance near 152.30.

On the other hand, if prices get rejected lower and initiate a pullback, initial support is found within the range of 149.25 to 148.90. Clearing this floor might attract fresh sellers to the market, creating favorable conditions for a potential descent toward 147.30, followed by 146.00.

From Diego Coleman