In this article, we have covered the highlights of global market news about the AUD/USD, EUR/USD, USD/JPY and USD/CAD.
AUD/USD: Near-term gain potential is still there
According to Quek Ser Leang and Peter Chia, senior FX strategists at UOB Group, further rebound in the AUD/USD looks to be in the cards for the time being given recent price action.
“We did not anticipate the sharp increase in AUD that drove it to a high of 0.6412 during the last 24 hours” (we were expecting sideway-trading). The strong gain in the AUD may touch 0.6420 first despite being overbought before the likelihood of a retracement rises. The significant resistance of 0.6460 is not likely to be tested by AUD. Support is located at 0.6365, although simply a break of 0.6340 would signal a reduction in the upward pressure now present.
1-2 weeks from now: “Yesterday (25 October, spot at 0.6330), we noticed that the underlying tone for the Australian dollar appeared to have firmed. We said that before a sustained gain is conceivable, AUD must move and hold above 0.6410. The Australian dollar then increased to 0.6412 before finishing strongly at 0.6394 (+1.28%). The AUD is anticipated to increase in price to the main barrier at 0.6460 as upward momentum has increased. On the downside, a breach of the “strong support” level at 0.6305 (it was at 0.6220 yesterday) would show that the momentum has peaked.
EUR/USD: A break of 1.00 might lead to a very severe short squeeze to 1.02, according to ING.
The EUR/USD currency pair keeps moving up approaching the important parity level. According to ING experts, a breach over this point might lead to a severe short squeeze to 1.02.
The Fed meeting scheduled for next week may provide the currency some further boost.
It has taken a few weeks, but it seems that the EUR/USD is finally reacting to the lower natural gas prices and the better terms of trade situation. Since EUR/USD is now threatening to exit a bearish channel that has been holding back price activity all year, we should proceed with a little caution. Therefore, a breach of 1.00 might start a rather severe short squeeze that would push prices up to 1.02 and, at the very least, decrease the pace (5% per quarter) at which the EUR/USD is falling this year.
The issue is undoubtedly whether the 1.00 level can underpin the EUR/USD pair until tomorrow’s ECB meeting before the Fed meeting next week might provide the dollar some more support.
USD/JPY remains consolidative for the time being – UOB
Senior FX Strategist Peter Chia and Markets Strategist Quek Ser Leang of UOB Group believe that the USD/JPY will likely be locked in the 144.00-152.00 area for the foreseeable future.
“Yesterday, we had the view that US Dollar ‘may continue to move in a turbulent manner, likely between 147.40 and 150.10,'” the 24-hour outlook reads. Following that, the US Dollar traded in a smaller range (147.51/149.09) than anticipated. The USD is projected to go somewhat lower today due to the softening of the underlying tone. Nevertheless, any slide will probably stop at a test of 147.00. Resistance is found at 148.50, then 149.00.
Within the next three weeks, “We remain committed to yesterday’s position” (25 Oct, spot at 148.80). A mixed view is the outcome of the recent erratic price movements, as was mentioned. Further volatility is possible, and for the time being, the USD might move within a broad range of 144.00/152.00.
USD/CAD: If the Bank of Canada raises rates by 75 basis points, the Loonie will profit in the near run, according to Commerzbank.
The rate choice and the Bank of Canada’s forecasts in its most recent monetary policy report are two things the market is likely to pay particular attention to. According to Commerzbank strategists, the loonie might see some gains in the near future if the BoC delivers the anticipated 75 basis point increase.
The loonie is destined to lose further ground if the BoC merely increases by 50 bps.
“We anticipate that CAD will be able to gain in the near term if the BoC increases its key rate by 75 basis points and the market perceives this move as being hawkish. However, a fly in the ointment that would lessen potential benefits would be growing recession worries.
“The loonie is expected to lose further ground versus the US dollar if the BoC does not live up to expectations today and only raises the benchmark rate by 50 basis points. If the BoC then made a dovish announcement, the downside pressure on USD/CAD would worsen.
Please click here for the Market News Updates from 25 October, 2022.