IC Markets Europe Fundamental Forecast | 28 September 2022

IC Markets No Comments

 

What happened in the US session?

The DXY traded higher as hawkish sentiments from the Federal Reserve provided strength to the recovery. The equity markets closed slightly lower overnight as the US dollar climbed higher. 

What does it mean for the Asia Session?

Look for the major currencies to retrace from the early session move, but in the broad trend, continue to lose ground against the Greenback. 

The Dollar Index (DXY)

Key news events today

USD Fed Chair Powell Speaks  

What can we expect from DXY today?

The DXY climbed to a high of 114.50 as the dollar found strength following increasing hawkish sentiment as the Federal Reserve officials look towards further rate hikes to fight inflation. Breaking out of the consolidation from the past 2 days, further upside is anticipated for the DXY, with the 115 resistance level a key target. However, the price is likely to retrace briefly to test 114.30 before a move higher.

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 Bullish 

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

Overnight, Gold traded lower towards the 1625 support level, as the DXY recovered in strength. While further downside can be anticipated, Gold could find strong support at the 1620 price level. Look for the development of price action to indicate the next directional bias. If Gold bounces from the support level, the price could retest 1635 interim resistance level.  

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

No major news events. 

What can we expect from AUD today?

With the strength of the DXY, AUDUSD continued to fall, reinforcing the bearish trend overnight. To add confluence to the bearish market, on the H4, the price is below the Ichimoku cloud which indicates a bear market. Despite better than expected retail sales data, the AUDUSD continues to see weakness near 0.6400 ahead of Fed Powell’s speech. Expect the price to hit the 0.6400 level within the day.

 

Next 24 Hours Bias

Weak Bearish 

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Early in the trading session, the NZDUSD broke below the 0.5625 support level to trad lower towards the 0.5560 interim support level. With the NZDUSD in historic lows, further downside could be likely if the DXY continues to strengthen. If price breaks below the 0.5600 support level, the NZDUSD could reach lower to test the 2020 swing low of 0.5465. 

Central Bank Notes:

  • Cash rate stands at 3.00% 
  • Central bank is likely to continue with the current path of rate adjustment
  • Next meeting on 5 October 2022

Next 24 Hours Bias

Medium Bearish 

The Japanese Yen (JPY)

Key news events today

No Major News Events

What can we expect from JPY today?

Overnight on USDJPY pair, price has tapped onto a key resistance line at 144.7 and seems to be consolidating there. With the price above the Ichimoku cloud, it confirms the bullish momentum. The Yen has thus surrendered nearly 100% of the gains achieved on the back of the Bank of Japan’s (BoJ) FX intervention last week. With no major news for JPY today, we can expect JPY to continue consolidating around the 145 area.

 

Next 24 Hours Bias

Weak Bearish