The U.S. economy displayed unexpected vigour in the third quarter, with real GDP expanding at a robust annualised rate of 4.9%. Despite higher interest rates and tighter credit conditions, various economic indicators, such as consumer spending, durable goods, initial claims, and new home sales, continued to display remarkable resilience.
During last week's most recent monetary policy meeting, several major G10 central banks decided to keep their present interest rates in place. The Bank of Canada decided to maintain its policy rate at 5.00%, alluding to the fact that previous rate rises have begun to dampen economic activity and alleviate inflationary pressures, while leaving the door open for future tightening.
Similarly, the European Central Bank maintained the Deposit rate at 4.00% and expressed confidence that the current interest rate levels will ultimately return inflation to the target, despite acknowledging signs of economic weakness throughout the Eurozone.
Notably, earlier this month, Patrick Harker, president of the Federal Reserve Bank of Philadelphia and a typically dovish voter on the Federal Open Market Committee (FOMC), drew considerable attention by recommending that the Fed refrain from pursing additional rate hikes. Also, the trade agreement between the European Union and the United States has been the subject of months of negotiations between European Union and American trade officials. The EU is advocating for an end to U.S. tariffs imposed during the Trump administration and seeking relief from recent U.S. green subsidies that have impacted the EU.
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Forex Technical Outlook for 30 October 2023 to 03 November 2023
Let’s see the list of events to look at this week:
- German Prelim CPI m/m on Monday
- Spanish Flash CPI y/y on Monday
- BOJ Policy Rate & Rate outlook on Tuesday
- CNY Manufacturing PMI on Tuesday
- CAD GDP m/m on Tuesday
- CB Consumer Confidence on Tuesday
- NZD Unemployment Rate on Wednesday
- Federal Funds Rate & Rate Statement on Wednesday
- BoE Official Bank Rate & Rate Outlook on Wednesday
- US Non-farm Payroll on Friday
Let’s see the market outlook from the weekly forecast:
The EUR/USD price trades within a bearish trend, where the recent price formed a corrective momentum. In that case, the ideal approach for this pair has become to look for a short-term bearish breakout, expecting the trend continuation.
In the weekly EUR/USD price, the recent price did not confirm the bottom yet as the price showed a rebound after testing the 100 day Simple Moving Average Level (SMA). Meanwhile, other technical indicators suggest a flat market pressure below the midline.
In the daily EUR/USD chart, the technical outlook is neutral as several indecisions were seen in the candlestick chart. However, the dynamic 20 EMA works as a crucial resistance, while the 100 and 20 EMA level showed a convergence at the 1.0810 static level. Meanwhile, other technical indicators remained stuck to the midline, suggesting an absence of a clear direction.
The October 12 high at 1.0639 would be a crucial resistance to look at as breaking above the this area could open room for reaching the 1.0700 level. As the existing market momentum is bearish, a trend continuation could lower the price towards the 1.0520 level, before reaching the 1.0447 level.
The GBP/USD closed the week with a downside pressure as the safe-haven US Dollar showed its important during the war time. Also the recent price action is supportive to bears, where a sharp fall from the pennant pattern is visible.
In the short-term GBP/USD outlook, the bearish possibility is intact as long as the price trades below the dynamic 20 EMA level.
The bearish Pennant formation was supported by a death cross, which could work as a strong bearish trend continuation possibility. However, a strong bearish weekly close below the pennant support and static 1.2122 could be a strong signal for sellers.
In case of the bearish breakout, investors might expect the price to reach the 1.2037 support level, which could be a strong area for GBPUSD bulls. Below this level, the next support level is at the 1.1900 psychological level, above the March low of 1.1803.
On the bullish side, a sharp bullish daily candle above the 20 day EMA could be a strong bullish signal for this pair aiming for the 1.2335 static level.
AUD/USD closed sideways while the broader market direction is bearish. In that case, investors might expect a strong upward pressure in this pair, depending on the upcoming price action.
In the daily AUD/USD price prediction, an extreme corrective price action is seen within a falling wedge pattern. As a result, a strong bullish trend might come after a proper wedge breakout and a sufficient correction.
In the weekly timeframe, the consolidation is seen from the last three weeks, while an emerging trend line resistance is working as a barrier to bulls. Moreover, the weekly RSI starts to move higher but is still below the 50.00 level.
Based on the current market structure, a valid upside pressure might come after violating the Fixed Range high volume level with a daily close. In that case, the upward pressure could extend towards the 0.6736 resistance level.
On the bearish side, the 0.6266 level would be a strong barrier, as a daily close below this level could extend the current trend towards the 0.6100 area.
The USD/JPY moved beyond the 150.00 psychological level but failed to hold the momentum above it. As a result, a strong bearish D1 candle came on last Friday while the overall market direction remained bullish.
In the weekly chart, a Shooting Start candlestick has formed at a critical weekly supply zone, which could work as a strong bearish signal for this pair. However, the weekly 20 EMA is still below the current price, while the RSI has reached the overbought 70.00 level.
In the daily chart, a RSI divergence has formed, which could work as a primary bearish signal for this pair. However, more confirmations are needed before aiming for a bearish possibility as the 20 day EMA is the immediate support.
On the bearish side, a sharp downside pressure below the static 148.77 level would be a strong short opportunity, targeting the 146.27 support level.
The alternative approach is to seek long opportunities after having a stable price above the 150.00 level. In that case, the bullish momentum could extend towards the 152.03 level.
XAU/USD remained vulnerable due to geopolitical uncertainties. The Safe haven nature of the yellow metal is clear as the weekly price breached the 2000.00 psychological level.
The XAU/USD price dipped before reaching the 2000.00 psychological level, which is considered as a crucial resistance level. Meanwhile, the 14-day Relative Strength Index shows a bullish overextension as it moved beyond the 70.00 level.
Based on the weekly XAU/USD outlook, a bullish trend continuation is potent as long as the price trades above the 2000.00 level, which could increase the price towards the 2048.00 resistance level.
On the bearish side, the 23.6% Fibonacci retracement level is at 1960.0 level, which would be a significant support level. In that case, bearish daily close below this level is crucial before aiming for the 1935.00 level, where the 200 day EMA is located.
The Bitcoin (BTC) price rally in 2023 remains robust due to the pattern of higher highs and higher lows. Although BTC bulls faltered in September, resulting in a lower weekly high, a substantial surge in bullish momentum soon followed, resulting in a new weekly high this week.
The recent rally was predominantly driven by the listing of BlackRock's spot ETF ticker on the DTCC website; however, it is important to note that this information has been available on the website since August. This may dilute the significance of the recent rally, prompting investors with a lower risk tolerance to take profits.
Santiment's Network Realised Profit/Loss (NPL) index reached a five-month high on October 24, bolstering the argument for a potential Bitcoin price correction. The last time NPL reached these levels, Bitcoin's price was at $30,000, and it experienced a local peak and subsequent correction.
The 30-day Market Value to Realised Value (MVRV) metric from Santiment assesses the average profit or loss of BTC buyers over the past month. Currently, this index has decreased from nearly 15% to 13%, indicating that a smaller proportion of BTC holders are profitable over the past month.
In addition, the whale transaction count metric for Santiment increased significantly on October 24, bringing the index to nearly 15,000. When this indicator experienced a comparable increase in the past, Bitcoin's price underwent a correction.
In light of these on-chain metrics and technical signals indicating a possible end to the uptrend and the start of a correction, investors should be prepared. A correction that maintains levels above $25,836.00 would provide the opportunity for the 2023 rally to extend beyond 40,000.00 area.