The robustness of the U.S. economy continues to be evident, as nonfarm payrolls increased by 336,000 in September, exceeding expectations. This accomplishment was further emphasized by a notable upward revision of 119,000 to the data from the two months prior.
Last week, the global financial markets were subjected to persistent pressure primarily caused by a decline in risk assets. The enduring strength of the U.S. economy and the Federal Reserve's tendency toward a more hawkish posture are responsible for this trend.
The significant rise in yields on U.S. Treasury securities is attributed to anticipations of significant Treasury issuance in the coming months. This development is expected to affect private-sector debtors, increasing borrowing costs.
Congress and the president effectively agreed last week to prevent the October 1 government shutdown through a last-minute maneuver. The political climate in Washington, D.C., took a turn this week with the removal of former House Speaker Kevin McCarthy by a faction of House Republicans and House Democrats.
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Forex Technical Outlook for 09 October 2023 to 13 October 2023
Let’s see the list of events to look at this week:
- The US Core PPI m/m on Wednesday
- FOMC Meeting Minutes on Wednesday
- The UK GDP m/m on Thursday
- The US CPI on Thursday
- BOE Gov Bailey Speaks on Friday
- Prelim UoM Consumer Sentiment on Friday
Let’s see the market outlook from the weekly forecast:
In the previous weekly forecast, EUR/USD bullish failed to grab investors' attention, but the post-NFP sentiment could relieve some pressure on bulls. However, investors should wait for a valid breakout before anticipating a trend change.
The EUR/USD price showed strong bearish pressure after breaking below the 1.1275 level in the middle of July. As a result, the pair moved extremely oversold, which pushed the price to the sell-side liquidity zone. However, the bullish reversal needs additional confirmation before following the market trend.
The weekly price moved below the 100-week SMA for the 4th consecutive week, while the 20-week SMA showed downward traction. Moreover, other technical indicators moved south, indicating a bearish exhaustion.
The daily price shows a strong bearish trend within a descending channel, which indicates a sellers dominance. Meanwhile, the 20-day EMA is the immediate resistance below the 1.0700 level, which could be a primary barrier to bulls.
On the bullish side, a stable upside pressure could come after breaking above the 1.0700 level with a stable daily candle. Moreover, the upside pressure could extend toward the 1.0840 level. However, a downside pressure with a D1 candle below the 1.0447 level could test the 1.0320 support level in the coming days.
The US Dollar Index lost momentum from the Yield curve trend change. As a result, the Sterling bulls grabbed investors' attention, which could result in a minor upside recovery for the GBPUSD price.
In the GBP/USD weekly chart, the last weekly candle closed bullish after six consecutive weeks, which could be the primary sign of a bullish correction. However, the Weekly RSI is also at the bearish zone, while the 20 EMA is still above the current price.
GBP/USD continued pushing below the falling wedge pattern last Thursday, but a bullish reversal above the 1.2180 wedge resistance could indicate a trend change.
On the other hand, the 14-day Relative Strength Index (RSI) is below the 50.00 neutral line, while the latest high volume level since the July 2023 peak is above the near-term resistance level.
On the bullish side, the daily candle close above the 1.2200 level is the primary indication of a trend change, which could increase the price toward the 1.2548 resistance level. On the other hand, a downside continuation with a daily candle below the 1.2098 level could lower the price toward the 1.2000 level.
The trend change in the US treasury yield reversed the market sentiment, creating pressure on the US Dollar Index. However, the bullish reversal in the AUDUSD price needs proper validation, depending on the future price action.
The weekly AUD/USD price shows a strong sell-side liquidity sweep after the Non-farm payroll release, while the MACD Histogram starts to lose the bearish momentum. However, the dynamic 20-week EMA is above the current price, indicating a pending bullish correction.
The dynamic 20-day EMA is the immediate resistance in the daily price, where the post-farm payroll sentiment failed to overcome it. However, the buying possibility is supported by the MACD Divergence, where the current Histogram is at the neutral zone.
In the volume structure, the most active level from the latest swing is at the 0.6426 level, which could be a strong barrier for bulls.
Based on the current AUD/USD outlook, a bullish daily candle above the 0.6500 swing high could indicate a strong bullish possibility with a V-shape recovery. In that case, the ultimate target is the 0.6900 double top level, a strong liquidity zone.
On the bearish side, a downside reversal below the Friday low could be a bearish continuation, where the main aim is to test the 0.6200 psychological level.
Despite the downside recovery, USD/JPY bulls remain intact despite a long bearish spike during the latest week.
As per the above image, the USD/JPY weekly outlook seems bullish as the last weekly candle failed to close below the last candle’s low. Moreover, the 20-week EMA is working as a support level, while the MACD Histogram remains bullish.
On the daily price, the latest high volume level indicates a buyer's re-accumulation in the market. Moreover, a bullish spike is visible from the 20-day EMA, while the overall market remains within an ascending channel.
Based on the overall market structure, a bullish daily candle above the 149.90 static level could increase the price toward the 152.00 channel resistance. However, a bearish correction is possible in the 147.00 to 145.90 area from where another bullish attempt could come. However, a daily candle below the 145.00 level could indicate a bearish reversal, targeting the 142.00 level.
The XAU/USD price showed strong bullish pressure during the post-FOMC time, but investors should wait for an additional clue before anticipating a trend change.
In the coming days, US investors will enjoy a three-day weekend before the Fed minutes on Wednesday, which could influence bulls to extend the momentum.
In the daily XAU/USD price, the 14-day Relative Strength Index (RSI) moved below the 35.00 level, indicating a strong sellers’ presence in the market.
In the weekly chart, the price reached the 1809.22 key support level from where an intraday buying pressure came. However, the weekly candle closed bearish with a strong gap with the dynamic 20-week EMA.
In the daily chart, the 1840.00 level is a crucial price, which is the 50% Fibonacci Retracement level for the long-term uptrend, which could be a key reversal point.
Based on the weekly market outlook, a bullish daily candle above the 1840.00 level could indicate a market reversal, targeting the 1890.00 resistance level.
On the bearish side, the near-term support level is at the 1815.00 area, which could be the primary barrier before reaching the 1800.00 support level.
The employment data from the previous month provided a substantial shock to the economy. In September, the Bureau of Labor Statistics reported a substantial increase of 336,000 jobs, exceeding economists' projections of 170,000. In addition, the 187,000 positions initially reported as having been added in August were revised upward to 227,000.
Investors and market participants are intently observing any developments concerning Bitcoin spot ETFs. Introducing these financial instruments could potentially unleash a surge of institutional capital into the cryptocurrency market, thereby radically altering the market dynamics.
Major cryptocurrency exchanges, including Binance, are experiencing stability issues. Binance is facing legal issues, the departure of crucial personnel, and allegations. These obstacles highlight regulators' significant concerns regarding major crypto platforms, and negative developments concerning Binance could substantially affect the BTC price.
In the BTC/USD daily chart, the trend line breakout initiated the bullish reversal, which can extend the momentum toward the 29,600.00 level in the coming days.
The dynamic 20 DMA and RSI support the buying pressure, while the trend line support could be a confluence level. In that case, an upside pressure is valid as long as the price trades above the 26,000.00 level. A bearish daily candle below 25500.00 could eliminate the bullish possibility anytime.