The recent fluctuations in major currencies reflect varying economic pressures and market expectations. The Euro has faced significant downward movement ahead of the ECB meeting, signaling a likely continuation of rate cuts amid weak inflation and economic data. Meanwhile, the British Pound has been under pressure due to a drop in inflation, raising expectations for further rate cuts by the Bank of England. The Japanese Yen remains vulnerable as Japan reports a trade deficit, affecting its stability. In contrast, the Australian Dollar has seen temporary support from positive labor data, although concerns about inflation and global economic conditions persist. Gold prices, often viewed as a safe haven, are influenced by these currency dynamics, reflecting ongoing uncertainty in the markets.
Euro (EUR/USD)
Current Situation:
The EUR/USD pair is currently under significant pressure, with a notable decline of 3.3% from its September 25 high of 1.1214, hitting an intraday low of 1.0849. The European Central Bank (ECB) has cut rates by 25 basis points, bringing the key deposit rate to 3.25%, as inflation has slowed to 1.7% year-on-year. Market expectations suggest another rate cut may occur in December. This environment has created a bearish outlook for the Euro against the U.S. dollar.
Technical Analysis:
- Support Levels: 1.0780, 1.0750, 1.0620
- Resistance Levels: 1.0950, 1.0979, 1.1013
The daily RSI indicates the EUR/USD is in an oversold condition, suggesting a possible mean reversion. If the pair holds above the key support level of 1.0780/0750, a potential rebound towards the resistance at 1.0950 is feasible. However, a break below 1.0750 could lead to a further decline towards 1.0620.
Forecast:
With the ECB meeting today, dovish guidance may reinforce the downward momentum. Conversely, any surprise in maintaining the rate could provide short-term strength to the Euro, at least towards the 1.0950 resistance. In the medium term, as economic conditions in the Eurozone weaken, the Euro is likely to remain vulnerable, with potential further declines expected.
British Pound (GBP/USD)
Current Situation:
The GBP/USD pair has faced downward pressure, falling below $1.30, with the latest inflation data coming in at 1.7% — the lowest since April 2021. This has led to increased expectations for rate cuts by the Bank of England (BoE), potentially by 45 basis points by year-end.
Technical Analysis:
- Support Levels: 1.2977, 1.2932
- Resistance Levels: 1.3001, 1.3071, 1.3101
The recent failure to hold above 1.3000 indicates a bearish trend. The technical indicators suggest that a rebound is possible if buyers manage to sustain above the support at 1.2977, targeting 1.3001 initially. A break below this level could see further declines.
Forecast:
Short-term, the pound may face volatility surrounding upcoming economic data, particularly U.S. retail sales. Should data be weaker than expected, a recovery towards 1.3000 could occur. However, bearish sentiment is likely to prevail given the ongoing dovish outlook from the BoE.
Japanese Yen (USD/JPY)
Current Situation:
The USD/JPY pair has experienced limited movement, fluctuating around 149.63. Japan’s trade data indicates a trade deficit, while the Bank of Japan (BoJ) is cautious about normalizing monetary policy too quickly.
Technical Analysis:
- Support Levels: 149.37, 148.91
- Resistance Levels: 150.06, 151.03
The bullish trend remains intact as long as prices stay above 149.73. A breach below 149.44 would lead to increased selling pressure, targeting support at 148.91. If the pair breaks above 150.06, it could extend gains towards 151.03.
Forecast:
Given the current volatility and economic indicators, the Yen may remain under pressure against the USD, particularly if U.S. economic data surpasses expectations. Conversely, if risk appetite decreases, the Yen may strengthen as a safe haven.
Australian Dollar (AUD/USD)
Current Situation:
The Australian dollar has shown some resilience, rebounding to around 0.6713 after a strong labor market report. However, broader bearish sentiment persists due to uncertainty regarding the Reserve Bank of Australia (RBA) stance and external pressures from China’s economic performance.
Technical Analysis:
- Support Levels: 0.6640, 0.6590
- Resistance Levels: 0.6777, 0.6800
Despite the recent upward correction, the overall downtrend remains strong. The upcoming release of Chinese GDP data may have a substantial impact. Should the data disappoint, the AUD may return to test lower support levels around 0.6640.
Forecast:
While a short-term bounce is possible, sustained growth appears unlikely without robust inflation data. The outlook for the Australian dollar remains bearish in the medium term, particularly given the potential for RBA rate cuts.
Gold
Current Situation:
Gold prices have been influenced by the strengthening U.S. dollar and rising interest rate expectations. As the Federal Reserve continues its hawkish stance, demand for non-yielding assets like gold has waned.
Technical Analysis:
- Support Levels: $1,850, $1,800
- Resistance Levels: $1,950, $2,000
Gold has recently tested support around $1,850. A sustained break below this level could lead to further declines towards $1,800. Conversely, a rebound above $1,950 would signal a potential recovery.
Forecast:
With the Federal Reserve likely to maintain its current interest rate policy, gold prices are expected to face headwinds. However, any geopolitical tensions or economic instability could lead to a flight to safety, supporting gold prices.
