As risk appetite remains upbeat and while commodity prices continue to rise, the US Dollar has somewhat lost some of its allure, losing out to major currencies across the board, but excluding the Japanese Yen. That said, with the US Dollar ending its streak of five consecutive weekly gains, markets appear to still buying dollars, which in turn lifts the risk of greater unwind heading into next week.
Inflation data will take over the headlines for another week as more countries publish their CPI numbers but concerns about global growth will also concern investors’ minds as China reports its GDP estimate for the third quarter and flash PMI figures for October are released.
With the biggest central banks preparing to pull back their pandemic-era stimulus just as supply restrictions are adding to businesses’ pain, there is increased sensitivity in the markets about the growing threat of relentlessly high inflation.
Looking into next week, with little on the economic calendar besides flash PMIs, risk appetite will likely dictate the position of play across the Forex space.
Major Currencies Performance and Signals
EUR/USD
There are still no apparent reasons to hope for a recovery in the Euro as the Eurozone, and the European Union more generally, are hit by supply hold-ups, soaring energy prices, weak economic data and a dovish central bank. We remain bearish
FORECAST: SELL
Resistance: 1.1600, 1.1650, 1.1700,
Support: 1.1550, 1.1500, 1.1450,
GBP/USD
The Cable has surged this Friday and looks set for the most substantial weekly jump in 5 months. The boost for the Pound has come from increasing expectations of a possible rate hike by the Bank of England in its December meeting. We remain bullish on the pair.
FORECAST: BUY
Resistance: 1.3750, 1.3800, 1.3850
Support: 1.3700, 1.3650, 1.3600
AUD/USD
The Australian dollar has rallied for the fifth consecutive day on Friday, extending its rebound from 0.7170 lows in late September, to five-week highs at 0.7440. We remain bullish on the pair.
FORECAST: BUY
Resistance: 0.7450, 0.7500, 0.7550,
Support: 0.7400, 0.7350, 0.7300
USD/JPY
The US dollar has climb sharply against the Japanese yen during the course of the week, going absolutely parabolic. At this point, a pullback is desperately needed and this week we remain neutral.
FORECAST: NEUTRAL
Resistance: 114.50, 115.00, 115.50
Support: 114.00, 113.50, 113.00
USD/CAD
The Loonie trims some weekly losses amid broad US dollar strength across the board. Risk-on market mood, depicted by US stock indexes, hurts safe-haven currencies, except for the US Dollar. The Loonie falls, despite rising crude oil prices.
FORECAST: SELL
Resistance: 1.2400, 1.2450, 1.2500
Support: 1.2350, 1.2300, 1.2250
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