USD continues to be on the rise in the FX market

Peter Iosif, ACA, MBA IronFX

USD continues its rally in the FX market

The USD, in maybe the most a characteristic move, continued to rise in the FX market as market expectations for the Fed to tighten its monetary policy at a faster pace have been enhanced. No major financial releases are expected from the US, yet a high number of Fed policymakers are scheduled to speak, thus we may see fundamentals leading the way for the greenback. Should we see Fed Policymakers stressing the need for interest rate hikes, we may see the USD gaining and vice versa. Especially Kansas Fed President Schmid may sound particularly hawkish.

US stock markets rise as market worries ease

US stock markets edged higher yesterday. US equities shrug off market expectations for the Fed to tighten its monetary policy at a faster pace. Market worries for possible excessive investments in AI technology tended to subside and it’s characteristic that the Volatility index (VIX) dropped. A possible further improvement of the market sentiment could support US stock markets. Meanwhile, NVIDIA’s share price stabilised yesterday, yet we may see it tumbling again should the company’s board of directors to oust CEO and co founder Huang.

Oil prices edge higher as oil tanker burn in the Gulf region

Oil prices were on the rise given that, fundamentally market worries about tensions in the Gulf region tended to be enhanced as oil tankers continue to be attacked. At the same time, market hopes for a diplomatic breakthrough seem to ease. Should we see the oil market’s worries about a possible escalation of tensions in the region being enhanced, we may see oil prices gaining and the contrary.

Gold’s price continues to slip lower

Gold’s price continued to slip lower yesterday and during today’s Asian session as market expectations for the Fed to tighten its monetary policy at a faster level were amplified. Also, the rise of oil prices may have contributed to the bearish tendencies of gold’s price, while the negative correlation of the USD and gold’s price seems to have been reactivated as well.

Other highlights for today

In today’s American session, we get the weekly US initial jobless claims figure and the weekly EIA crude oil inventories figure, while Fed’s Hammack, Barr, Goolsbee, Daly and Schmid are scheduled to speak. Tomorrow, we note that the Fed’s Williams and Jefferson as well as ECB’s Schnabel are speaking while we get France’s October HICP rates and Euro Zone’s GDP rate for Q3.

Charts to keep an eye out

USD/CHF moved decisively higher aiming for the 0.8360 (R1) resistance line. Also the RSI indicator moved higher breaking above the reading of 50, implying a strengthening bullish market sentiment for the pair. Despite recognising the bullish tendencies of the pair we are not quite convinced for a bullish outlook of USD/CHF yet. For a bullish outlook to emerge we would require USD/CHF to break the 0.8360 (R1) resistance line and start aiming for the 0.8470 (R2) resistance level. For a bearish outlook to emerge, we would require the pair to break the 0.8215 (S1) support line and start aiming if not even break the 0.8125 (S2) support level.

XAU/USD’s price action, continued to slip lower yesterday, yet continues to be well within the boundaries set by the 3960 (S1) support line and the 4275 (R1) resistance level. We maintain yesterday’s sideways motion bias yet the RSI indicator has dipped below the reading of 50, implying and enhancement of the bearish market sentiment for the precious metal’s price. Should the bulls take over we may see gold’s price breaking the 4275 (R1) resistance line and start aiming for the 4550 (R2) base. Should the bears take over, gold’s price may drop below the 3960 (S1) support line and start aiming for the 3600 (S2) support level.

USD/CHF cash daily chart

Support: 0.8215 (S1), 0.8125 (S2), 0.8010 (S3).
Resistance: 0.8360 (R1), 0.8470 (R2), 0.8330 (R3).

XAU/USD daily chart

Support: 3960 (S1), 3600 (S2), 3250 (S3).
Resistance: 4275 (R1), 4550 (R2), 4890 (R3).

Author

Peter Iosif, ACA, MBA

IronFX

Mr. Iosif joined IronFX in 2017 as part of the sales force. His high level of competence and expertise enabled him to climb up the company ladder quickly and move to the IronFX Strategy team as a Research Analyst. Mr.

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