GBP/USD Rises to 1.2970 as Weaker Dollar Supports Bullish Momentum

EURUSD

Forecast: Potential for Further Gains

Fundamental Analysis:

EUR/USD has shown a gradual recovery from recent lows, trading near 1.0880 in early Asian hours on Monday. This uptrend is primarily driven by a weaker U.S. Dollar, which was affected by underwhelming October Nonfarm Payrolls data. The pair recorded its fourth consecutive daily increase last Thursday, approaching the significant 200-day Simple Moving Average (SMA) at approximately 1.0870 and edging toward the 1.0900 level. The Dollar Index, reflecting the dollar’s performance against other major currencies, has declined for the fourth day, dipping below 104.00, as the momentum behind the dollar rally wanes.

Contributing to the euro's strength are the falling U.S. Treasury yields and a slight retreat in the 10-year German bund yields. Market expectations for a 25-basis-point rate cut from the Federal Reserve in the coming month are rising, while the European Central Bank (ECB) maintains a more cautious stance as discussions continue over future policy direction. The near-term direction of EUR/USD will largely depend on evolving economic conditions and central bank strategies.

Technical Analysis:

If EUR/USD continues its upward movement, it may reach the weekly high of 1.0887, with resistance points at the 100-day and 55-day SMAs, positioned around 1.0935 and 1.1019, respectively. The 2024 peak at 1.1214 and 2023 high of 1.1275 are additional resistance levels to monitor.

On the downside, initial support rests at the October low of 1.0760, followed by the psychological level at 1.0700, and the June low at 1.0666. Sustaining levels above the 200-day SMA would improve the pair's outlook. In the four-hour chart, EUR/USD shows signs of a rebound, with critical resistance at 1.0887 and key support at 1.0760, while the Relative Strength Index (RSI) hovers near 60, indicating momentum still favors a bullish trend.

XAUUSD

Prediction: Decrease

Fundamental Analysis:

Gold prices are experiencing modest gains early in Monday’s Asian session, rebounding slightly near $2,740 after a two-day decline. Market uncertainty tied to the U.S. presidential election and escalating tensions in the Middle East could enhance the appeal of safe-haven assets like gold. However, gold faced significant selling pressure after Wall Street opened, pulling prices down sharply from recent record highs to around $2,731.45.

The cautious tone in financial markets follows strong U.S. economic data, which has tempered expectations of imminent interest rate cuts. The Federal Reserve's upcoming monetary policy announcement on November 7 holds a 94.5% probability of a 25 basis point cut, while the Bank of Japan recently left its rate steady at 0.25%, adding support to the U.S. Dollar. Recent economic releases, including a dip in Initial Jobless Claims to 216K and a 2.1% year-over-year rise in the September PCE inflation rate, have further anchored investor focus on the U.S. Nonfarm Payrolls report due Friday. This report is expected to show 113K new jobs, with the unemployment rate steady at 4.1%.

Technical Analysis:

On the daily chart, XAU/USD has relinquished much of its weekly gains, and the technical outlook suggests the decline may extend, though it has not yet turned fully bearish. Technical indicators have retreated from overbought conditions and are trending downward but remain above their midlines. The pair still trades above all major moving averages, with an upward trend, and support is noted at the 20 Simple Moving Average around $2,696.00.

In the short term, the 4-hour chart reflects a downside bias. XAU/USD has slipped below its 20 SMA, losing some of its recent bullish momentum. Although the 100 and 200 SMAs remain in an upward trajectory below the current price, technical indicators have entered negative territory, suggesting the potential for further declines.

GBPUSD

Forecast: Anticipated Upside Amid Mixed Data

Fundamental Analysis:

The GBP/USD pair rose to around 1.2970 during early Asian trading on Monday, bolstered by a weaker U.S. Dollar after underwhelming Nonfarm Payrolls data for October. This data has added selling pressure on the Dollar, providing some support to the GBP/USD pair.

By Friday morning, GBP/USD was trading narrowly near 1.2900 following a significant dip on Thursday. The pair continues to exhibit a bearish technical outlook as investors await further U.S. labor market data. Mixed economic signals have dampened the Dollar’s strength, with safe-haven flows dominating market sentiment on Thursday.

Meanwhile, the UK budget focuses on fiscal stability, although British Prime Minister Keir Starmer’s spokesperson avoided commenting on specific market impacts. Looking ahead, the U.S. employment report is projected to show an increase of 113,000 jobs. A weaker outcome may strengthen expectations for rate cuts, potentially benefiting GBP/USD, while a robust figure could support the Dollar, keeping the pair under downward pressure.

Technical Analysis:

The 4-hour chart's Relative Strength Index (RSI) is hovering around 40, suggesting that while GBP/USD remains bearish, short-term momentum is limited. Key support levels are identified at 1.2850, 1.2800, and 1.2760. Should GBP/USD manage to hold above 1.2900, potential resistance is seen at 1.2960, with further upside targets at 1.2980 and 1.3000.

USDJPY

Prediction: Anticipated Decrease

Fundamental Analysis: 

The Japanese Yen experienced a decline following the release of the Manufacturing PMI on Friday. The Jibun Bank Japan Manufacturing PMI dropped to 49.2 in October from 49.7 in September. In contrast, U.S. Nonfarm Payrolls are projected to rise by 113,000 jobs in October, a decrease from the previous figure of 254,000.

The Yen corrected some of its recent gains after the PMI announcement; however, the USD/JPY pair saw a decline as the Yen appreciated following remarks from Bank of Japan Governor Kazuo Ueda, which heightened expectations for a potential interest rate hike in December. Additionally, Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated that the Bank of Japan would collaborate closely with the government to ensure effective monetary policy implementation.

Technical Analysis: 

As of Friday, the USD/JPY pair is trading around 152.40. Analyzing the daily chart indicates a potential weakening of the bullish trend, as the pair has fallen below its ascending channel. Nevertheless, the 14-day Relative Strength Index remains above 50, suggesting that bullish momentum persists.

Resistance is identified at the lower boundary of the ascending channel, approximately at 152.50. If the pair manages to regain this channel, it could target the upper boundary near 158.30. On the downside, support is anticipated around the 14-day Exponential Moving Average at about 151.50, with further support at the psychological level of 150.00.

 

 

 

 

 

 

 

 

 

 

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