The US dollar snapped a losing trend last week, climbing over 1% at one point and ending the week on a high note. The move erased all of September's loss, pushing the key global currency to a potential trend reversal. The main catalyst behind the move was commentary from FED officers, who presented a mildly conflicting approach. Chairman Powell touted a challenging situation, saying that “near-term risks to inflation are tilted to the upside and risks to employment to the downside.”
Meanwhile, newly appointed Governor Stephen Miran called for further cuts, while Vice Chair for Supervision Michelle Bowman noted deteriorating labor market conditions. The PCE data showed 2.9% Y/Y, a point well above the central bank’s 2% target, while the September central bank cut still happened. In turn, this makes the 2% policy questionable, and there is a debate about whether this point will eventually rise to 3%, or a range, such as between 1% and 3%.
The week ahead will mark the end of September and a transition to the next quarter. These conditions often create volatility due to fund managers rebalancing their portfolios. Thus, caution is advised.
Key News
- Tuesday: AUD – Interest rate
- Wednesday: USD – ADP Employment, ISM PMI
- Thursday: CHF – CPI, USD – Unemployment Claims
- Friday: JPY – Governor Ueda Speech, USD – NFP, Unemployment Rate, ISM Services PMI
Pairs In Focus
1.AUD CHF
This pair has been in the ranging limbo for nearly four months, moving not more than 150 pips in either direction. After touching the high of the range, the price has now closed below the 0.52250 key level and might proceed to the lower part of the range – and eventually break it.
The key point here is to understand that the bigger trend is still to the downside; however, the main move is likely to occur only after some key fundamental news, such as the upcoming interest rate decision.
AUD/CHF daily chart, Source: TradingView
2.CAD JPY
CAD / JPY has moved above the former resistance, now turned support, around 107.060. The key resistance to watch is 107.800.
CAD/JPY daily chart, Source: TradingView
If it can close above that level on the daily chart, it has the potential to attempt a significant run higher and challenge the yearly high at 108.950.
Notes
- AUD NZD: Remains in a strong uptrend, making new highs seemingly every week. The key long-term resistance above is at 1.14900.
- AUD CAD: Made a possibly lower high. A break of the support around 0.90800 would confirm this, changing the trend.
- AUD JPY: Remains in the solid uptrend. Key support is the previous resistance at 96.900, while the next resistance lies at 99.180.
- AUD SGD: Failed to retrace above the previous key level of 0.84900. An area around 0.84 could provide for strong resistance.
- CHF JPY: Made yet another fresh all-time high. New support is at 186.070.
- EUR AUD: Closed above the key level of 1.78250. The resistance sits around 1.80240.
- EUR JPY: At the fresh yearly highs. The key resistance from last year sits around 175.400.
- EUR NZD: Continues making new highs seemingly every week. Strong support should be at 2.0018.
- GBP AUD: Found support around 2.036. The key resistance above is around 2.052.
- GBP JPY: Continues the bullish uptrend. The strong support is at 199.05.
- GBP NZD: Made a fresh high, closing the week on a strong note. The key level to watch above is 2.3354.
- NZD JPY: One of the few pairs that is not advancing against the yen. The trend is bearish, with the potential move toward 85.540.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
