Daily Market Analysis By FXOpen

Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar


The US, Japan and the UK may have kept interest rates on hold last week, but with the Federal Reserve indicating that rates will stay higher for longer, there is turmoil in the equity markets. The NASDAQ 100 fell 500 points last week, and with weakness continuing into this morning's trading session, the volatility looks like it will continue throughout the week.

US durable goods orders (15:30 Wednesday) is the first meaningful economic release of the week. After a terrible -5.2% in July, analysts are expecting a modest decline of -0.4% for August. The final reading of US Q2 GDP is expected to show an increase to 2.2% when it is released on Thursday (15:30), as the US economy continues to tick over at a steady rate. This could give the US dollar a further boost.



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Financial Markets Waking Up after a Turbulent Week: Important News


The main event of last week was information from the Fed. Jerome Powell once again demonstrated his determination to maintain a tough political stance, which caused:

→ increase in bond yields. Yields on 10-year securities reached their highest since 2009;
→ the dollar index jumped to its highs of the year;
→ stock markets fell — especially NASDAQ. This increases the belief that the AI boom has run its course. The resilience of the Dow Jones index indicates that investors are preferring more defensive assets;
→ fall of cryptocurrencies. At the same time, the price of bitcoin returned to the flat range in which it was at the end of August. Thus, the wave of positivity associated, among other things, with rumours that the head of the SEC wants to approve applications from funds to launch a crypto ETF, has exhausted itself.



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US Dollar On the Rise Despite Weak PMI Data


EUR/USD

The euro fell against the US dollar on Friday as economic data showed a contraction in economic activity, which could prompt European Central Bank hawks to soften their policy stance. Preliminary data indicates a contraction in economic activity in the eurozone's two largest economies, France and Germany. France's HCOB purchasing managers' index (PMI) for the services sector fell to a 34-month low in September, well below forecast, while Germany's PMI rose to 46.2 but below economists' forecast of 47.2. With inflation still high in the eurozone and at risk of rising, the ECB's next move could be to raise rates before rate cuts are on the agenda, several policymakers said on Thursday. The immediate resistance can be seen at 1.0663, a breakout to the upside could trigger a rise towards 1.0702. Immediate support is seen at 1.0623, a break below could take the pair towards 1.0579.

The previous ascending channel remains. Now, the price is in the middle of the channel and can continue its horizontal movement.



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Rising Bond Yields Are Driving Down Price of Gold


The yield on 10-year bonds exceeded 4.5% per annum – a 16-year high. The demand for them was promoted by:
→ tough statements from the Fed last week that the high base interest rate will remain as long as necessary. Moreover, Minneapolis Fed President Neel Kashkari said he expects another increase;
→ concerns related to the likelihood of a US government shutdown on October 1. At the same time, Moody's issued a stern warning, jeopardizing the country's triple-A rating.

It can be assumed that investors choose bonds when forming a portfolio of protective assets. This puts pressure on the gold, which “loses its shine” in their eyes.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

USD/JPY Analysis: For the First Time This Year, the Rate Exceeds 149 Yen Per Dollar


The reason for the stable trend, as we have repeatedly pointed out, is the difference in the monetary policy of the USA and Japan. Inflation in Japan has been above 2% for more than a year, and the media are increasingly publishing expert opinions that the Bank of Japan will raise short-term interest rates from the current -0.1% at the end of this year. However, today Reuters published the opinion of Mr. Makoto Sakurai, the former head of the Bank of Japan. According to him:

→ the Bank of Japan may delay ending negative interest rates until around April next year;
→ the abolition of negative rates, which have been in place since 2016, will not harm the economy;
→ uncertainty about the economic prospects of the United States and China also gives the Bank of Japan a reason to delay raising rates, Sakurai added.

That is, the existing gap in monetary policy may continue for another six months, which will push the USD/JPY rate higher and higher. And it is not surprising that, as the chart shows, today the rate exceeded 149 yen per US dollar for the first time in a year, further increasing the likelihood of reaching the psychological level of 150 yen.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

US Federal Reserve Contemplates Future Interest Rate Hikes Amid Economic Resilience


In an intriguing turn of events, the US Federal Reserve has hinted at the possibility of yet another interest rate hike in the near future, keeping financial markets on their toes.

During its September 2023 meeting, the Federal Reserve chose to maintain the target range for the federal funds rate at an impressive 5.25%-5.5%, a level not seen in 22 years. This decision was in line with market expectations and followed a 25 basis-point hike in July. What piqued the interest of investors and economists alike, however, was the central bank's signal that another rate increase might be in the cards before the year's end.

The Federal Reserve's projections, as revealed in the dot plot, suggest the likelihood of one more rate hike in the current year, followed by two rate cuts in 2024. This cautious approach is in response to recent economic indicators, which point to robust expansion in economic activity. While job gains have slowed in recent months, they continue to exhibit strength, and the unemployment rate remains impressively low. On the surface, this move may seem counterintuitive, especially when considering that inflation in the United States has been well-contained for over a year and stands at less than half the levels witnessed in certain parts of the European Union.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

The Yen and European Currencies Headed to New Lows


The main currency pairs began the last five-day trading period of September with a new wave of growth for the American currency. Changes in the Fed's point forecast for next year provided powerful support to the dollar, which, in turn, contributed to the search for the bottom in the euro, yen and pound.

The GBP/USD currency pair is testing support at a significant level of 1.2200, the EUR/USD pair is heading towards the January extremes of this year, and the USD/JPY pair has resumed growth in the direction of 150. Apparently, in the coming trading sessions, we can expect another upward impulse on the greenback. At the same time, we must take into account that these pairs are very close to important ranges, the test of which may end in a corrective rollback or reversal.

GBP/USD

The pound turned out to be quite susceptible to the outcome of the recent Bank of England meeting. The regulator left the rate at the same level, while analysts predicted a rate increase of another 0.25%. Add to this a number of weak macroeconomic indicators from the UK, published last week, and we get a stable downward trend for GBP. The price has already dropped below 1.2200, and since there are no reversal combinations, a test of 1.2100-1.2000 may happen.
From the fundamental analysis point of view, today, we are waiting for data on the number of building permits issued in the United States. The US Consumer Confidence Index for September will also be published (17:00 GMT+3).



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AMZN Stock Analysis: 4 Reasons to Doubt the Bullish Outlook


After the Fed signaled last week that rates may be higher for longer than expected, the US stock market has received a strong bearish boost. And among the most vulnerable assets were technology stocks (considered risky). The NASDAQ index has already fallen by about 6% since last Wednesday (when the FOMC meeting took place). And the negative backdrop from the Fed is one of the 4 issues that give reason to doubt the bullish outlook for AMZN stock.

The second reason is that AMZN has fallen 9% in value since last Wednesday. That is, AMZN is falling faster than the overall market. And this problem is not new. Compare the dynamics of the index and Amazon shares on a weekly timeframe and you will see that the shares have been performing weaker than the index since the summer of 2020. That is, the leadership status that was held for many years has been lost.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

EUR/USD Takes Hit While USD/CHF Surges


EUR/USD started a fresh decline below the 1.0615 support. USD/CHF is rising and might aim a move toward the 0.9220 resistance.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

• The Euro struggled to clear the 1.0670 resistance and declined against the US Dollar.
• There is a major bearish trend line forming with resistance near 1.0585 on the hourly chart of EUR/USD at FXOpen.
• USD/CHF is gaining pace above the 0.9135 resistance zone.
• There is a key bullish trend line forming with support near 0.9150 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair failed to clear the 1.0670 resistance. The Euro started a fresh decline below the 1.0615 support against the US Dollar, as mentioned in the previous analysis.

There was a move below the 50-hour simple moving average and 1.0600. The bears were able to push the pair below the 1.0585 pivot level. The pair traded as low as 1.0556 and is currently showing a lot of bearish signs.

Immediate resistance on the upside is near the 23.6% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low. There is also a major bearish trend line forming with resistance near 1.0585 and the 50-hour simple moving average.

The first major resistance is near the 50% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low at 1.0615. An upside break above the 1.0615 level might send the pair toward the 1.0670 resistance. Any more gains might open the doors for a move toward the 1.0720 level.

On the downside, immediate support on the EUR/USD chart is seen near 1.0555. The next major support is near the 1.0540 level. A downside break below the 1.0540 support could send the pair toward the 1.0500 level.



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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Inflation Still Dogs the Economy: What Are the Central Banks Doing About It?


High inflation continues to grip European economies, putting central banks in a tight spot as they grapple with the triple dilemma of slowing growth, persistent inflation, and the impact of unprecedented rate hikes.

In September, we witnessed a shift in tone from central banks across the region, with some hitting the brakes on interest rate hikes after nearly two years of tightening, while others appeared to be approaching peak rates.

This shift has brought the spotlight to a critical question: how long will these rates remain steady in the face of economic challenges?

One common thread among these central banks is the proximity of their interest rates to their presumed peaks, adding complexity to the ongoing balancing act.

The recent surge in oil prices has further complicated the situation. While it has the potential to fuel inflation, it also exerts downward pressure on economic growth, making future interest rate decisions even more uncertain.

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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.