The euro continues to drop as inflation in the Eurozone slowed, adding pressure on the currency. Similarly, the British pound shows slight gains, though economic uncertainty and the BoE’s cautious stance affect momentum. The Japanese yen weakens as Fed Chair Powell’s cautious approach to rate cuts bolsters the U.S. dollar, while Japan’s new prime minister shifts tone on monetary policy. Meanwhile, gold sees some buying support but remains below recent highs due to Fed-driven dollar strength, though ongoing geopolitical risks and China’s demand outlook provide bullish prospects for the precious metal.

1. EUR/USD

• Eurozone CPI: Inflation dropped to 1.8% y/y, below the ECB target, which could lead to further rate cuts. Market expectations for the ECB to remain on hold in October but possibly cut rates in December.
• US Federal Reserve: Fed Chair Powell’s hawkish stance reduces expectations for aggressive rate cuts, supporting USD strength against the euro.
• Outlook: Bearish in the short term as lower Eurozone inflation, weak data, and hawkish Fed tone put pressure on the euro.
• Support Levels:
  • 1.1058 (immediate)
  • 1.1001 (key level)
• Resistance Levels:
  • 1.1153 (initial)
  • 1.1191 (higher)
  Forecast: Expect EUR/USD to test lower support levels, with potential downward momentum toward 1.1001 if US data continues to outperform.

2. GBP/USD

• UK Economic Outlook: Economic growth has slowed slightly, and the BoE has paused rate hikes, reflecting a cautious monetary policy approach.
• US Data Influence: The pound remains sensitive to US economic data and Fed policy, and strong US stats could lead to more downside for GBP/USD.
• Outlook: The pair remains in a bullish structure for now but risks a deeper pullback if US data outperforms.
• Support Levels:
  • 1.3300 (initial)
  • 1.3274 (key)
• Resistance Levels:
  • 1.3427 (short-term)
  • 1.3455 (higher)
  Forecast: Short-term upside potential with resistance at 1.3427. A break below 1.3300 would signal bearish continuation.

3. USD/JPY

• Japanese Yen: The yen has weakened as the new Prime Minister Ishiba leans dovish on monetary policy, despite previous tightening comments.
• Fed Policy Impact: Powell’s comments supporting smaller rate cuts have provided strength to USD, keeping USD/JPY supported.
• Outlook: Bullish bias in the short term, but some pullback could occur if the pair approaches overbought conditions near resistance levels.
• Support Levels:
  • 143.07 (immediate)
  • 142.21 (key level)
• Resistance Levels:
  • 144.08 (initial)
  • 145.34 (higher)
  Forecast: Likely to test resistance at 144.08 and potentially move towards 145.34 if USD remains strong. Watch for possible retracements to support at 143.07.

4. Gold (XAU/USD)

• Gold Drivers: Hawkish Fed commentary has limited the upside for gold, but geopolitical risks and Chinese demand are supporting the metal in the short term. If inflation eases further, gold could see renewed demand.
• Outlook: A technical bounce is underway, but resistance around $2,656 could limit further gains. A breakdown below key support could signal more downside.
• Support Levels:
  • 2,624 (immediate)
  • 2,600 (psychological)
• Resistance Levels:
  • 2,656 (initial)
  • 2,685 (higher)
  Forecast: Short-term bearish bias below $2,656. If gold consolidates above this level, it could target $2,685, but failure to break higher might lead to a decline toward $2,600.

General Forecast Summary:

Gold: Bearish below $2,656, with potential for a drop to $2,600.

EUR/USD: Bearish, targeting lower support near 1.1001.

GBP/USD: Mixed, with possible upside to 1.3427 but downside risk if support at 1.3300 breaks.

USD/JPY: Bullish, targeting resistance at 144.08 and possibly higher to 145.34.