IC Markets Europe Fundamental Forecast | 04 October 2022

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What happened across the Asia session?

The RBA surprised markets by increasing rates by 25bps, instead of 50bps. This led to the AUDUSD trading with significant volatility. 

What does it mean for Europe and US Sessions?

As the DXY weakens through the 111.50 price level, look for the major currencies to continue gaining against the US Dollar. Look for further volatility in the GBPUSD through the Europe and US session. 


The Dollar Index (DXY)

Key news events today

USD JOLTS Job Openings 

What can we expect from DXY today?

The DXY traded lower overnight as it reached the 111.36 price level. Now trading at 111.61, the DXY could consolidate at the current level before another move to the downside. If the price closes strongly below the 111.50 support level, the DXY could trade significantly lower towards the 110-round number support level. Alternatively, if the DXY bounces off the current level, the upside potential could be limited to 112.50, with no significant news releases expected. 

Central Bank Notes:

  • Federal Reserve hikes rates by 75bps taking interest rates to 3.25%
  • Next meeting on 3 November 
  • Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%

 

Next 24 Hours Bias

Weak Bearish 

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Overnight, Gold price climbed steadily to reach a high of 1700 as the DXY weakened and markets grow increasingly wary of a global recession again. While Gold could retrace from the 1700 round number resistance level, moves to the downside could be dependent on the directional bias of the DXY. If the price breaks above 1700, Gold could climb towards the next resistance level of 1735. 

Next 24 Hours Bias

Medium Bullish

The Euro (EUR)

Key news events today

No major news events. 

What can we expect from EUR today?

The EURUSD traded in consolidation between the 0.9750 and 0.9825 price range as the DXY weakened overnight. Currently the EURUSD is trading higher again approaching the key resistant level of 0.9880. If price breaks above the 0.09880 resistance level, the EURUSD could trade higher towards the parity level again. The move higher would depend on continual weakness in the DXY. 

Central Bank Notes:

  • Next meeting on 27 October 2022

 

Next 24 Hours Bias

Weak Bullish

The Swiss Franc (CHF)

Key news events today

No major news events. 

What can we expect from CHF today?

Overnight, the USDCHF traded higher despite the weakness in the DXY. As the CHF CPI data was released at -0.2% (Expected: 0.1%) this indicated an increased likelihood that the SNB could slowdown on further interest rate increase. This caused the USDCHF to rise to test the 0.9950 resistance area. With the price currently at 0.9900, the USDCHF could consolidate briefly before trading lower again. Look for the possibility for price to trade towards the key support level of 0.98.

Central Bank Notes:

  • Next meeting on 15 December 2022

 

Next 24 Hours Bias

Weak Bullish

The Pound (GBP)

Key news events today

No major news events. 

What can we expect from GBP today?

The GBPUSD traded significantly higher as the UK PM Truss reversed on her initial tax cut decisions, by removing tax cuts on highest earners in the UK. This provided significant optimism to the GBPUSD which saw the price rise towards the 1.1350 resistance level. Look for the price to break strongly above the 1.1350 resistance level, with the next key resistance of 1.1440 a possible target level.

Central Bank Notes:

  • Interest rate is currently at 2.25%
  • Peak inflation revised to more than 15% in 2023. 
  • Next meeting on 3 November 2022

Next 24 Hours Bias

Weak Bullish 

The Canadian Dollar (CAD)

Key news events today

No major news events. 

What can we expect from CAD today?

Overnight, as the DXY trades lower, the USDCAD continues to be dragged lower. As the price breaks below the 1.36 support level, the USDCAD could continue trading lower towards the next key support level of 1.34. With no major news events scheduled, the directional bias of the USDCAD is primarily driven by the volatility of the DXY.

Central Bank Notes:

  • Increased interest rates to 3.25%  
  • Indicated further rate increases likely.
  • Next meeting on 26 October 2022

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

Oil prices in Brent and WTI rose overnight, with Brent trading at 90.246 and WTI at 83.100. Oil prices appear to be rising as a result of OPEC+ output cuts of 0.5-1.0 million barrels per day. With no major oil news to report today, Brent is expected to rise to 91.700, while WTI is expected to rise to 84.400.

Next 24 Hours Bias
Weak Bullish