IC Markets Europe Fundamental Forecast | 05 October 2022

IC Markets No Comments

 

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 ADP Non-Farm Employment Change

USD ISM Services PMI

What can we expect from DXY today?

The DXY continued to slide overnight as price fell towards the 110 key support level. Despite a lack of significant key news events, the move lower on the DXY is likely to be driven by a technical retracement to the downside and the recovery of strength on the EURUSD and the GBPUSD. If the DXY is likely to consolidate at this strong support level. However, if the price breaks strongly below 110, the next key support level is at 109. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 3.25%
  • Next meeting on 3 November 2022
  • 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?

As the DXY weakened towards the key support level, Gold climbed steadily, breaking through several resistance levels to approach the 1735 resistance area. Gold is likely to retrace briefly from this level to test the 1700 round number support level. However, with the recent upward trend, if Gold breaks above 1735, the next key resistance level is at 1763. 

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

EUR Services PMI  

What can we expect from EUR today?

The EURUSD is trading at 0.9967 now,  after yesterday’s bullish trend, the price is showing a reverse signal now.  As the EUR Final Services PMI will be released today, if the actual data is higher than expected, we can expect the price continue with the ascending trend and hit the next resistance level at 1.0047, where the previous swing high is. Otherwise, the price may pullback and test the support at 0.9907 level.

Central Bank Notes:

  • Main Refinancing Rate is currently at 1.25%
  • Significant rate hike expected for October meeting
  • 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 lower as the DXY continues to weaken. With the price currently trading at the support area of 0.9800, the USDCHF could consolidate briefly before trading lower again. Look for the possibility for price to trade towards the key support level of 0.9755. However, if the DXY recovers in strength, the USDCHF could trade higher from the support level, towards the resistance level of 0.9860.

 

Central Bank Notes:

  • Current policy rate is at 0.50%
  • 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 reached a high of 1.1490 as markets grew more optimistic with the UK PM Truss reversing on her initial tax cut decisions, by removing tax cuts on highest earners in the UK. With the GBPUSD currently trading at 1.1435 where the overlap resistance sits, look for the price to break strongly above this resistance level to see potential bullish momentum continue, bringing price to the next resistance level of 1.16.

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

Medium Bullish 

The Canadian Dollar (CAD)

Key news events today

No major news events. 

What can we expect from CAD today?

The USDCAD traded lower overnight as the DXY continues to weaken. Overall directional bias of the USDCAD is still driven by the volatility of the DXY. As the USDCAD trades at the 1.35 support level, look for the development of the price action to signal the next directional move. If the DXY continues to weaken, the USDCAD drop below the 1.35 price level towards the next key support level at 1.33. 

Central Bank Notes:

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

Next 24 Hours Bias

Weak Bullish 

Oil

Key news events today

No Major News Events 

What can we expect from Oil today?

Overnight, both Brent and WTI oil prices increased, with Brent currently trading at 92.461 and WTI at 85.314. The 0.5–1.0 million barrel per day reduction in OPEC+ supply appears to be driving up oil prices. Since there are no significant oil-related news items to report today, Brent is anticipated to increase to 93.500 and WTI to 86.480.

Next 24 Hours Bias
Weak Bullish