Daily Market Analysis By FXOpen

EUR/USD Takes Hit While USD/CHF Surges
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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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AMZN Stock Analysis: 4 Reasons to Doubt the Bullish Outlook
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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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The Yen and European Currencies Headed to New Lows
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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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US Federal Reserve Contemplates Future Interest Rate Hikes Amid Economic Resilience
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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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USD/JPY Analysis: For the First Time This Year, the Rate Exceeds 149 Yen Per Dollar
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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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Rising Bond Yields Are Driving Down Price of Gold
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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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US Dollar On the Rise Despite Weak PMI Data
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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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Financial Markets Waking Up after a Turbulent Week: Important News
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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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Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar
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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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GBP/USD Nosedives While USD/CAD Aims Higher
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GBP/USD is gaining pace below 1.2300. USD/CAD is rising and might aim for a move above the 1.3520 resistance zone.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound started a fresh decline below the 1.2500 support zone.
  
• There is a key bearish trend line forming with resistance near 1.2260 on the hourly chart of GBP/USD at FXOpen.
  
• USD/CAD is showing positive signs above the 1.3400 support zone.
  
• There is a major bullish trend line forming with support near 1.3450 on the hourly chart at FXOpen.
  

GBP/USD Technical Analysis
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On the hourly chart of GBP/USD at FXOpen, the pair started a fresh decline from the 1.2500 zone. The British Pound traded below the 1.2325 support to move into further a bearish zone against the US Dollar, as mentioned in the previous analysis.

The pair even traded below 1.2275 and the 50-hour simple moving average. Finally, the bulls appeared near the 1.2230 level. A low was formed near 1.2230 and the pair is now consolidating losses with bearish signs.

Immediate resistance on the upside is near a key bearish trend line at 1.2260. The first major resistance on the GBP/USD chart is near the 23.6% Fib retracement level of the downward move from the 1.2421 swing high to the 1.2230 low at 1.2275 and the 50-hour simple moving average.

A close above the 1.2275 resistance might spark a decent recovery wave. The next major resistance is near the 50% Fib retracement level of the downward move from the 1.2421 swing high to the 1.2230 low at 1.2325. Any more gains could lead the pair toward the 1.2375 resistance in the near term.

Initial support sits near 1.2230. The next major support sits at 1.2200, below which there is a risk of another sharp decline. In the stated case, the pair could drop toward 1.2120.

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EUR/USD Analysis: Key Support Zone Resists Selling Pressure
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Today, fresh monthly values of the PMI index, which is considered a leading indicator of the state of the economy, have become known:

• France: actual 43.6, expected 46.2. This is the worst economic contraction since the coronavirus.
  
• Germany: actual 39.8, expected 39.5.
  

As a reminder, values below 50 indicate a slowing economy.

Thus, the PMI witnessed the worsening economic problems in the European Union. And not only. The PMI indicator for the UK also published today was 44.2, which, although higher than the previous value 42.5, is still below 50.

The euro immediately reacted to the disappointing news. The exchange rate against the dollar fell to its lowest level in six months. However, then an encouraging recovery followed — apparently, the proximity of the rate to the key support zone had an effect.

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Market Analysis: EUR/USD, GBP/USD, and USD/JPY
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At the US Federal Reserve meeting, officials expectedly kept the interest rate at 5.25–5.50%. According to the head of the regulator, Jerome Powell, tightening monetary policy is still possible if indicators begin to show negative dynamics again. At the same time, the US Federal Reserve aims to implement a program of gradually reducing the rate to 2.90% by 2026. Officials also intend to begin the gradual sale of bonds from their balance sheet, which are currently being purchased in the amount of USD 95.0 billion, of which USD 60.0 billion are government bonds, and another USD 35.0 billion are mortgage debt securities.

EUR/USD

The euro fell on Thursday but recovered slightly at the start of today's session. The US dollar weakened a day after the Federal Reserve signalled that US monetary policy would remain accommodative even longer. The Fed kept interest rates on hold Wednesday, in line with market expectations, but signalling that its officials are increasingly confident that aggressive policies can succeed in reducing inflation without crushing the economy or leading to large job losses. Along with another possible rate hike this year, the Fed's updated forecasts show significantly tighter rates through 2024 than previously expected. The US dollar index, which measures the currency against a basket of peers, was down 0.10% at 105.33 after rising to 105.74, its highest level since March. The immediate resistance of the EUR/USD pair can be seen at 1.0663, a breakout to the upside could trigger a rise towards 1.0702. On the downside, immediate support is seen at 1.0616, a break below could take the pair towards the 1.0584 direction.

At the lows of the week, a new downward channel has formed. Now, the price has moved away from the lower border of the channel and may continue to rise.

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USD/JPY Analysis: Rate Reaches Maximum of the Year
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This morning, the Bank of Japan's decision on the interest rate, which has been kept at -0.1% since 2016, became known. The rate size remained unchanged.

Although surprises could occur due to the fact that inflation is still above the central bank's target of 2% for the 17th month in a row. So a tightening of policy is becoming more and more likely. CNBC writes that the Bank of Japan may be prompted to take this step by the weakness of the national currency.

This morning, as the chart shows, the rate has risen very close to the highs of the year. It is possible that it will be updated during the day today.

Bullish arguments:

    The continuing difference in the monetary policies of the United States and Japan contributes to the growth of the exchange rate even higher.
    The border of the current bullish channel has not been reached, the potential for growth remains.
    Rising lows this week indicate stronger demand.
    Even if the yen strengthens, the trend can be supported by both the median and the lower border of the ascending channel.

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AUD/USD and NZD/USD Could Start Fresh Increase
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AUD/USD declined below 0.6430 before it found support. NZD/USD is now recovering and eyeing an upside break above the 0.5950 resistance zone.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar started a fresh decline from well above the 0.6450 level against the US Dollar.
  
• There is a key rising channel forming with resistance near 0.6450 on the hourly chart of AUD/USD at FXOpen.
  
• NZD/USD is attempting a recovery wave above the 0.5920 resistance.
  
• There is a major contracting triangle forming with resistance near 0.5940 on the hourly chart of NZD/USD at FXOpen.
  

AUD/USD Technical Analysis
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On the hourly chart of AUD/USD at FXOpen, the pair recovered above the 0.6450 resistance. However, the Aussie Dollar failed to clear 0.6500 and started a fresh decline against the US Dollar.

The pair declined below the 0.6450 support. It even settled below 0.6430 and the 50-hour simple moving average. Finally, the bulls appeared near the 0.6385 zone. A low was formed near 0.6385 and the pair is now correcting losses.

There was a move above the 23.6% Fib retracement level of the downward move from the 0.6511 swing high to the 0.6385 low. On the upside, an immediate resistance is near the 50-hour simple moving average at 0.6430.

The first major resistance is near a rising channel at 0.6450. It coincides with the 50% Fib retracement level of the downward move from the 0.6511 swing high to the 0.6385 low.

A clear upside break above 0.6450 could send the pair toward 0.6510. The next major resistance on the AUD/USD chart is near 0.6540, above which the price could rise toward 0.6585. Any more gains might send the pair toward 0.6600.

On the downside, initial support is near the channel trend line at 0.6415. The next support could be 0.6385. Any more losses might send the pair toward 0.6350.

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Oil Analysis: Finally, A Bearish Reversal?
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The policy of OPEC+ countries to voluntarily reduce oil production was one of the drivers thanks to which the price of WTI oil increased by approximately 40% from its low in June. In such cases, it is appropriate to use the phrase “correction is overdue.”

So a decline from the week's high above USD 92 to current levels seems natural. Note that the reversal began with the appearance of extremely high trading volumes in oil futures on the NYMEX exchange on Tuesday — but what if capital associated with governments of countries that do not benefit from high oil prices, which are fueling already high inflation, entered the market? If so, then WTI oil prices above 90-91 can be considered a “red line” for them.

Bearish arguments:

→ the price increase B→C is near the Fibonacci level of 31.8% of the decrease A→B, which is acceptable for a natural rollback;
→ the psychological level of USD 90 (above which the rate of price growth has slowed down) can now act as resistance;
→ the price has broken through the median line of the uptrend — now resistance can be expected from it;
→ the level of USD 89 has also been broken by the bears — it is possible that it, in turn, will slow down the bulls’ attempts to win back, if any, occur. The rate of decline is being recorded too rapidly this week.

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Central Bank Week Shakes Up Gold Market
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Yesterday, the main event of the week took place — the Federal Reserve meeting, which had a noticeable impact on the market of assets denominated in US dollars. But besides the Fed meeting, there are a number of other events this week related to central banks:

→ today at 10:30, a meeting of the Swiss National Bank took place. The interest rate remained at 1.75%, although there was a significant possibility of its increase to 2%.
→ today at 14:00 GMT+3, a decision on the Bank of England interest rate is expected;
→ news from the Central Bank of Japan is planned for tomorrow morning — there may be surprises.

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Will Stagflation Persist in the UK? EUR/GBP Volatility May Be an Indicator
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In recent years, the United Kingdom has found itself mired in a sea of economic uncertainty, prompting widespread speculation about the dreaded 'R-word'—recession.

While the nation has navigated a prolonged cost-of-living crisis marked by noticeable spikes in everyday expenses, mortgage payments, and other essential outlays, it has managed to avert an official recession thus far. However, lurking in the shadows is a different concern: stagflation.

Defining Stagflation

Stagflation, a term often used to describe an economic quagmire characterised by high inflation, low economic growth, and soaring unemployment, has begun to creep into discussions surrounding the UK's economic health. The conflicting signals emanating from the British economic landscape are creating a puzzle that demands careful examination.

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S&P 500 Falls amid News from the Fed
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Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell:

→ The full effect of tightening the monetary policy has yet to be felt.
→ [They] will continue to act cautiously, basing further decisions on incoming statistical data.
→ Inflation is much higher than the target.

Will the Fed tighten monetary policy further? Opinions are divided. JP Morgan analysts believe that the rate hike cycle is over. On the contrary, Vanguard analysts believe that rates will have to be raised again (and even more than once).

Perhaps the Fed's repeated rhetoric no longer looks like a sign of confidence? One way or another, the US stock market fell sharply, making the recession scenario more pressing.

On September 19, we wrote that the market was under bearish pressure ahead of the FOMC meeting. The graph shows that they managed to realize their advantage.

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EUR/USD Faces Hurdles While USD/JPY Eyes Breakout
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EUR/USD started a fresh decline below 1.0715. USD/JPY is rising and might climb further if it clears the 148.00 resistance zone.

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

• The Euro started a fresh decline below the 1.0715 support zone.
  
• There is a key bearish trend line forming with resistance near 1.0715 on the hourly chart of EUR/USD at FXOpen.
  
• USD/JPY climbed higher above the 147.20 and 147.50 levels.
  
• There is a connecting bullish trend line forming with support near 147.70 on the hourly chart at FXOpen.
  

EUR/USD Technical Analysis
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On the hourly chart of EUR/USD at FXOpen, the pair started a fresh decline from the 1.0760 zone. The Euro declined below the 1.0715 support zone against the US Dollar.

The pair even settled below the 1.0680 zone and the 50-hour simple moving average. A low is formed near 1.0632 and the pair is now attempting a recovery wave above the 50% Fib retracement level of the downward move from the 1.0764 swing high to the 1.0632 low.

On the upside, the pair is now facing resistance near 1.0715 and a key bearish trend line. It is close to the 61.8% Fib retracement level of the downward move from the 1.0764 swing high to the 1.0632 low.

The next major resistance is near 1.0760. The main resistance is now near 1.0780. An upside break above 1.0780 could set the pace for another increase. In the stated case, the pair might rise toward 1.0840.

If not, the pair might resume its decline. The first major support on the EUR/USD chart is near 1.0680. The next key support is at 1.0655. If there is a downside break below 1.0655, the pair could drop toward 1.0630. The next support is near 1.0600, below which the pair could start a major decline.

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Yen and European Currencies Retreat from Previously Reached Lows
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Last week, European currencies renewed their recent lows, while the yen and commodity currencies managed to remain in their old ranges. However, this week, everything can change dramatically since the fundamental data of the coming trading sessions is as saturated as possible. Data on the consumer price index in the Eurozone will be released today, and tomorrow, a similar index will be published in the UK. Also, central banks in the US and UK will announce their interest rate decisions on Wednesday and Thursday.

USD/JPY

The dollar/yen currency pair is stuck between 146 and 148. After a sharp rise in early September, the price switched to sideways movement and, apparently, is accumulating strength for growth. If greenback buyers manage to gain a foothold above 147.80, the start of a new upward impulse towards last year's highs at 150.00-151.00 may occur. However, if we see a sharp pullback from the current levels or there is a false breakout at 148.00-150.00, a full-scale downward correction may happen.

The pair's pricing will depend almost entirely on tomorrow's Fed verdict (21:00 GMT+3). If a pause in the hawkish policy of the American regulator is announced, USD/JPY could instantly be at 144.00-145.00. If officials declare the need to further increase the rate, a test at 150 may occur.

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Cryptocurrency Prices Rise on SEC Rumours
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Various media outlets report the opinion that SEC Chairman Gary Gensler expressed in a personal conversation. He allegedly intends to approve applications for the creation of ETFs related to the cryptocurrency spot markets. Such applications were submitted by BlackRock, Invesco, WisdomTree, Valkyrie and other respectable funds. But for now, the SEC's decision on the applications has been delayed.

At the same time, it is reported that by giving the go-ahead to applications, Gary Gensler can thereby gain loyalty from the funds, and after the end of his period as head of the SEC, go to work for one of them.

Against the backdrop of the information mentioned, the crypto markets perked up —  the prices of bitcoin, Ether and other assets rose by approximately 3% in a few hours. However, it is unlikely that such rumors can become a driver for creating a sustainable trend.

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S&P 500 under Pressure ahead of Federal Reserve Meeting
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The decision on the base interest rate will be published tomorrow at 21:00 GMT+3, and Powell will hold a press conference at 21:30. Although most experts, as reported by the media, expect that the current rate will remain, market participants will closely monitor the Federal Reserve's assessment of the current situation, which includes new data on inflation and the labour market. It is possible that there will be another rate increase before the end of the year.

Meanwhile, the S&P 500 chart shows the market under pressure in mid-September, although the overall picture appears balanced.

The balance of supply and demand is indicated by the fact that the movement B→C is approximately 50% of the movement A→B. And the C→D movement is approximately 50% of the B→C movement. That is, fluctuations die out as buyers and sellers converge.

The price is still within the ascending channel (shown in blue), but it is possible that during tomorrow's news announcement from the Federal Reserve there will be an attempt by the bears to break through it.

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Us Dollar Weakens ahead of the Fed Meeting
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EUR/USD

The euro rose against the US dollar on Friday, boosted by hopes that the ECB is ending its cycle of rate hikes and data suggesting China's faltering economy may be regaining some momentum. The ECB raised its key interest rate to a record 4% on Thursday and warned it would remain at that level until inflation above target is resolved. Data on Friday showed Chinese retail sales and industrial production figures for August beat economists' expectations, even as the housing market slump deepened. The euro rose 0.2% to $1.0675, off a low of $1.0632, its weakest since March 20. Immediate resistance can be seen at $1.0710, a break higher could trigger a rise towards $1.0760. On the upside, immediate support is seen at 1.0637, a break below could take the pair towards 1.0592.

Based on last week's lows, a new downward channel has formed. Now, the price is in the middle of the channel and may continue to rise.

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Euro vs Turkish Lira: A Tale of Turbulence and Opportunity
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As the summer holiday season drew to a close approximately two weeks ago, tourists from across the globe bid farewell to Turkey, a nation known for its captivating landscapes, rich history, and hospitality.

For decades, Turkey has been a favoured destination for travellers from Europe, the Caucasus, the Middle East, and Eurasia. Its vibrant tourist industry, catering to package tours and all-inclusive hotels, has consistently offered families and working individuals a few weeks of relaxation at an affordable price. However, beneath this veneer of holiday bliss, Turkey's economy has grappled with a persistent challenge – the devaluation of the Turkish Lira.

The Lira's Downward Spiral

Over the past six years, the Turkish Lira has been on a rocky path, depreciating significantly against major global currencies.

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USD/CAD Analysis: Canadian Dollar Strengthens Ahead of Inflation News
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On September 7, we wrote that the level of 1.365 could serve as resistance, from which the price will form a bearish reversal.

As the USD/CAD chart shows, the rate dropped from this resistance to the psychological level of 1.3500, which served as support.

Wherein:

→ The bullish trend (shown by the blue channel) is broken. Facing resistance at 1.365, the bulls failed to reach the upper boundary of the channel, which was a sign of weakening uptrend. One could also observe bearish divergences on a number of indicators.

→ The price at the beginning of the week is in a downward trend, which is shown by the red channel.

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GBP/USD Extends Losses While EUR/GBP Gains Strength
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GBP/USD extended losses and traded below the 1.2465 support. EUR/GBP is rising and might climb above the 0.8615 resistance.

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

• The British Pound is showing bearish signs below 1.2420.
  
• There is a key bearish trend line forming with resistance near 1.2465 on the hourly chart of GBP/USD at FXOpen.
  
• EUR/GBP is rising and trading above the 0.8600 zone.
  
• There was a break above a connecting bearish trend line with resistance near 0.8600 on the hourly chart at FXOpen.
  

GBP/USD Technical Analysis
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On the hourly chart of GBP/USD at FXOpen, the pair attempted a fresh increase above 1.2500. However, the British Pound failed above 1.2540 and started a fresh decline against the US Dollar.

There was a clear move below the 1.2465 support and the 50-hour simple moving average. The pair even tested the 1.2380 support zone. A low was formed near 1.2378 and the pair is now consolidating losses.

On the upside, the GBP/USD chart indicates that the pair is facing resistance near the 23.6% Fib retracement level of the downward move from the 1.2548 swing high to the 1.2378 low at 1.2420 and the 50-hour simple moving average.

The next major resistance is near a bearish trend line at 1.2465. It is close to the 50% Fib retracement level of the downward move from the 1.2548 swing high to the 1.2378 low.

A close above the 1.2465 resistance zone could open the doors for a move toward 1.2510. Any more gains might send GBP/USD toward 1.2545. On the downside, there is a key support forming near 1.2380. If there is a downside break below the 1.2380 support, the pair could accelerate lower.

The next major support is near the 1.2320 zone, below which the pair could test 1.2250. Any more losses could lead the pair toward the 1.2200 support.

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Market Analysis: The US Dollar Rises on Strong Data
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Investors are assessing the August report on consumer prices in the US, which was published the day before and caused a muted market reaction. Thus, the index increased by 0.6% over the month after 0.2% in the previous period, which resulted in an increase in the annual indicator to 3.7% from 3.2% previously. The benchmark index, which US Federal Reserve officials rely on when setting monetary policy, adjusted to 4.3% from 4.7% previously, the lowest reading since October 2021, when it first reached 4.0%. Against this background, experts’ confidence in maintaining the interest rate at 5.25–5.50% at the US Federal Reserve meeting on September 19-20 even increased and, according to the FedWatch Tool indicator from the Chicago Mercantile Exchange (CME), now amounts to more than 97.0 %.

EUR/USD

The European currency fell against the US dollar on Thursday as the euro came under pressure after the European Central Bank signaled an end to its rate hike cycle. The ECB raised interest rates at its 10th straight meeting on Thursday to combat persistent inflation but signaled it was likely to ease policy. The central bank of the 20 countries that use the euro raised its deposit rate to 4% from 3.75%, bringing it to a record high level. Markets and economists expect policy tightening to be the ECB's final move and now expect a long pause followed by rate cuts in the second half of next year. The euro fell 0.89% to 1.0635 after falling to 1.0629, its weakest since March 17 and on pace for its biggest one-day percentage drop since July 27. Immediate resistance can be seen at 1.0711, a breakout to the upside could trigger a rally to 1.0740. On the downside, immediate support is seen at 1.0630, a break below could take the pair towards 1.0594.

Over the past week, a price range has formed with boundaries of $1.0685 and $1.0748. Now the price has moved to the upper half of the range and may continue to rise.

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Yuan Retreats from Multi-year Highs on Strong Economic Data
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The US dollar index hit its highest level since early March this week, but the yuan is one of the few currencies to rise against the USD over the period.

This was facilitated, among other things, by strong economic data published today:
→ Industrial production growth in August amounted to +4.5% in annual terms (expected +3.9). This is the strongest progress in 1 month since autumn 2022.
→ Retail sales in August increased by 4.6% year on year (expected +3.0%).

The chart shows that after a multi-year high (B) of about USD 7.36 per yuan set on September 8, the rate has retreated sharply. That is, sales of dollars (B→C) for yuan increased. And the sharp increase in A→B is completely leveled out. This is a bearish sign, indicating that the bulls have completely retreated.

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Market Reaction to the ECB's Decision to Raise Rates to 4.5%
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According to the ECB report, published yesterday:

→ Inflation in Europe continues to decline, but will remain too high for too long.
→ Average inflation is forecast at 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025. This is an upward revision for 2023 and 2024, which mainly reflects rising energy prices.
→ The eurozone economy is forecast to grow by 0.7% in 2023, 1.0% in 2024 and 1.5% in 2025.

In order to combat inflation, the ECB decided to raise the key interest rate by 25 basis points to 4.5%, which was a surprise, since it was expected to remain at 4.25%. At the same time, the deposit rate reached a historical maximum.

Importantly, the ECB noted that "interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target” — this was perceived by market participants as a signal that the growth cycle (10 rate increases in a row) is completed.

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Gold Price Eyes Recovery While Crude Oil Price Surges
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Gold price is eyeing a fresh increase above the $1,915 resistance level. Crude oil price is surging, and it could climb further higher toward the $92 resistance.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a recovery wave from the $1,900 zone against the US Dollar.
  
• It broke a major bearish trend line with resistance near $1,908 on the hourly chart of gold at FXOpen.
  
• Crude oil prices rallied above the $88 and $90 resistance levels.
  
• There is a key bullish trend line forming with support near $89.00 on the hourly chart of XTI/USD at FXOpen.
  

Gold Price Technical Analysis
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On the hourly chart of Gold at FXOpen, the price found support near the $1,900 zone. The price traded as low as $1,900.93 and recently started a recovery wave.

There was a decent move above the 50-hour simple moving average. The bulls pushed the price above a major bearish trend line with resistance near $1,908. It is now testing the 50% Fib retracement level of the downward move from the $1,930 swing high to the $1,900 low.

The RSI is back above 50 and the price could aim for more gains. Immediate resistance is near the $1,915 level. The next major resistance is near the $1,924 level.

The 76.4% Fib retracement level of the downward move from the $1,930 swing high to the $1,900 low also sits at $1,925. An upside break above the $1,924 resistance could send Gold price toward $1,930. Any more gains may perhaps set the pace for an increase toward the $1,950 level.

Initial support on the downside is near the 50-hour simple moving average or $1,908. The first major support is $1,900. The main support is $1,888. If there is a downside break below the $1,888 support, the price might decline further. In the stated case, the price might drop toward the $1,865 support.

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Dollar Trying to Resume Upward Movement After Rise in Core CPI
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Yesterday's inflation data in the US turned out to be higher than analysts expected. Thus, in general, the level of consumer prices increased by 3.7% year on year, while on a monthly basis, prices increased by 0.6%. Such data indicate that the Fed's hawkish policy has not yet produced the expected results in the fight against inflation, and, most likely, the rate will be raised again at the September meeting. However, the major currency pairs reacted rather subduedly to yesterday's fundamentals. The euro/US dollar, the pound/US dollar and the US dollar/yen managed to remain in the previously formed flat corridors.

EUR/USD
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Buyers of the single European currency once again defended support at 1.0700. The development of an upward correction has not yet been observed, as investors are waiting for today's statement from the ECB. At 15:15 GMT+3, the decision on the base interest rate will be announced, and a press conference with Christine Lagarde will take place a little later. If the head of the ECB announces a possible pause in the rate hike, the pair could instantly find itself at 1.0600-1.0500. Conversely, the hawkish tone of officials could contribute to a rise to 1.1000.

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EUR/AUD Approaches Important Support Zone
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Euro currency traders are focused on the ECB meeting, the decision of which will be published today at 15:15 GMT+3. There will be a press conference at 3:45 p.m.

According to Reuters, the probability of a rate hike is about 60%. The figure stood at 50% at the start of the week as the ECB's updated forecasts expect inflation to remain above 3% next year, well above its 2% target.

At the same time, Australian dollar traders experienced a spike in volatility this morning following the release of strong labor market data in Australia. Last month, the number of employed people increased by almost 65,000 people — the second highest figure in 2023.

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