2023 Market Forecast by SolidECN

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USDJPY: Temporary Pause, but Uptrend Persists

The USDJPY rally has recently hit a pause as it lingers near the firm resistance at the psychological level of 150, not too distant from the 2022 peak of 152. Nonetheless, there is no clear indication of a reversal in the ongoing uptrend. The price action for this month, thus far, can best be described as moving sideways, with the lower boundary finding support around the 200-period moving average, near the early-October low of 147.35.

Considering that USDJPY is currently within the intervention zone observed last year, breaking through the 150.00-152.00 range could be a challenging endeavor. This challenge is further accentuated by the views of some Federal Reserve officials who have suggested that interest rates may have peaked. For a more comprehensive understanding of the fundamental outlook, refer to the article "Japanese Yen Aided by Fed Pause View, Geopolitics; USDJPY, GBPJPY, AUDJPY," which was published on October 11. On the flip side, a drop below the 147.00-147.50 range would confirm a fading of the broader upward pressure. Such a decline could potentially pave the way towards the early-September low of 144.50.​

 

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USDINDEX

In the wake of the escalating conflict in the Middle East, secure assets like gold and the US Dollar have seen a significant rise.

The intensifying conflict in the Middle East has led to a notable increase in the value of secure assets such as gold and the US Dollar. The situation on the Israel-Lebanon border has worsened, resulting in over 2,000 civilian casualties in the Gaza Strip. In an attempt to alleviate the situation, the US has initiated covert negotiations with Iran. However, the possibility of a direct clash between Israel and Iran, a major backer of Hamas, is causing alarm. In tandem with these US-Iran discussions, oil prices have skyrocketed due to fears of impending oil sanctions. According to Bloomberg Economists, this situation could drive oil prices up to $150, potentially pushing the global economy into a recession.

The US Dollar is maintaining its upward trajectory, driven by strong inflation figures from the US. The rising geopolitical unrest in the Middle East has also strengthened the appeal of the greenback as a preferred safe-haven asset. Although the Dollar’s overall trend is subject to potential swings, the forthcoming speech by Fed Chairman Jerome Powell is a significant event to watch.

Currently, the Dollar Index is experiencing an uptrend while it tests the resistance level. However, the MACD indicates a decrease in bullish momentum, and with the RSI at 59, it suggests that the index may undergo a technical correction as the RSI has sharply withdrawn from overbought conditions.

Resistance levels: 106.60, 107.15.
Support levels: 105.65, 104.80.​

 

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EURUSD

The EURUSD pair is currently undergoing a test of the Tenkan-Sen line. The pair is trending downwards, beneath the Ichimoku Cloud, indicating a potential bearish trend. It's anticipated that there will be a test of the Cloud's upper boundary at 1.0565, which will then be followed by a drop to 1.0365. A bounce off the bullish channel's lower boundary will serve as an additional signal to confirm this downward trend. However, if there's a breakout at the Cloud's upper boundary and the price stabilizes above 1.0605, this scenario will be invalidated, suggesting a possible rise to 1.0705.

 

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NZDUSD

The NZDUSD pair, "New Zealand Dollar versus US Dollar", has managed to stay above the indicator's signal lines. The pair is trending downwards as it moves beneath the Ichimoku Cloud. It's anticipated that it will test the Cloud's lower boundary at 0.5935 before falling to 0.5845. A bounce off the bearish channel's upper boundary will serve as an additional signal confirming this downward trend.

However, if the price breaks out and settles above the Cloud's upper boundary at 0.5965, this scenario will be invalidated, indicating a potential rise to 0.6055. On the other hand, a breakout below the bullish channel's lower boundary and a settling price below 0.5905 could confirm the downward trend.​

 

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EURJPY

At the time of this EURJPY market analysis, the EURJPY is navigating a bullish channel, with the RSI indicator maintaining a position above the 50 level. On October 3, the pair managed to stay above the Ichimoku cloud, resulting in the continuation of the EURJPY uptrend. The primary hurdle for the EURJPY bulls is at the 158.64 mark.

For the bullish trend to persist, it’s crucial for the EURJPY bulls to achieve a close above the 158.64 level. Should this occur, the next target for this currency pair would be projected towards the 162.0 area.​

 

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GBPUSD

The British Pound (GBP) against the US Dollar (USD) is showing a decline in the European market on Tuesday. This is undoing some of the 0.65% increase we saw on Monday. The reason for this decline is weaker than expected growth in UK salaries, which is causing concern for those who want another rate hike from the Bank of England (BoE).

Everyone is waiting for the UK's inflation report for September, which will be released on Wednesday. The forecast is 6.5% year-on-year, compared to 6.7% in August, and the core is forecasted at 6.0% compared to 6.2% in August.

If the September figure meets or falls below expectations, it will further discourage a hawkish view on rates and keep the pound on the defensive.

The recent drop in value is putting pressure on the initial support level at 1.2141 (the upward trend line from the 1.2037 low), before a crucial point at 1.2122 (Friday's low). If it falls below this, it could signal further decline and risk retesting the October 4 low at 1.2037.

The converged 10/20 day moving averages at 1.2200/13 are a crucial barrier. If it breaks through this level and stays above it, it could sideline immediate downside threats and pave the way for a new recovery.​

 

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EURUSD​

Last week, the EUR/USD tried to rise above a downward trend channel but didn’t succeed, so the channel is still active. The highest point reached was 1.0640, but it ended the day below the downward trend line, which might mean the trend line is still valid.

If it rises above the trend line, it could face resistance at 1.0620, 1.0640 and 1.0675, which are previous high points. Further up, there could be resistance at an earlier peak of 1.0737, which is currently where the 55-day simple moving average (SMA) is. Beyond that, another earlier high point near 1.0770 could also offer resistance.

A bearish triple moving average (TMA) pattern happens when the price is below the short-term SMA, which is below the medium-term SMA, which is in turn below the long-term SMA. All SMAs also need to be decreasing.

When looking at any combination of the 21-, 34-, 55- and 100-day SMAs, if they meet these conditions, it might suggest that a bearish momentum is developing.

On the downside, support might be found near the low points of early 2023 that were tested at the start of this month, with 1.0480 and 1.0440 as potential important levels.​

 

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EURJPY: Navigating the Fluctuations and Identifying Trading Opportunities

The EURJPY currency pair seems to have returned to its usual fluctuations after resisting a downward trend two weeks ago, which saw it drop to a three-month low at 154.39.

This decline went below the low of September and the 100-day Simple Moving Average (SMA), but managed to close above these levels in the following sessions.

This situation could present opportunities for a range trading strategy. For more insights on range trading, explore our related resources.

In terms of support, it could be found at the breakpoint and a recent low around 156.50. If there’s a continued downward trend, keep an eye on the previous lows and breakpoints at 154.39, 153.45, 151.60, 151.40, and 151.07.

Looking upwards, resistance might be encountered at recent highs and breakpoints near 158.65, 159.50, and 159.75.​

 

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Gold

Gold (XAUUSD) did great last week, reaching a high of 1930/32. It managed to hold a small resistance at 1940/45 all morning before breaking above 1950. This gave another buy signal aiming for 1962/65. We saw the day's high right there, and things still look good even though it's quite overbought. I don't see any reason to sell yet.

If it breaks above 1965, it could aim for 1970/75 & 1980/82, maybe even up to 1986/88. I'll keep an eye out for any sell signals.

There's solid support at 1938/33. If you're going long, you should put your stops below 1928.​

 

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USDJPY​

The currency pair USDJPY, which stands for "US Dollar vs Japanese Yen", is currently in a phase of consolidation. This means that the currency pair is not making significant moves up or down, but is rather staying within a certain range. The specific range in this case is centered around the price of 149.75.

If the price were to break out of this consolidation range on the upside, it could potentially lead to an increase in the value of the USDJPY pair. The target for this potential increase is at 150.13. This means that if the price breaks out upwards from the consolidation range, it could potentially rise to 150.13.

On the other hand, if the price were to break out of the consolidation range on the downside, it could potentially lead to a decrease in the value of the USDJPY pair. However, this decrease could be followed by a correction, which is a short-term move in the opposite direction of the prevailing trend. The target for this potential correction is at 149.00.

After reaching this correction target, it's possible that the price could then rise to 150.75. This means that even if the price breaks out downwards from the consolidation range and reaches the correction target of 149.00, it could then reverse direction and rise to 150.75.​

 

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EURUSD​

Stable Interest Rates and Outlook: The ECB is expected to keep interest rates and its outlook stable in its upcoming meeting. The current interest rate level is seen as contributing substantially to achieving the inflation target.

Impact of Higher Oil Prices: Questions may arise about the impact of higher oil prices due to a potential crisis in the Middle East. The effects could vary, with possible inflation increase on one hand, and loss of purchasing power for households and businesses on the other.

Decline in Inflation Rate: A long-term decline in the inflation rate is expected, with uncertainty about the speed. Factors such as a weak economy could accelerate the decline, while stronger wage increases could slow it down.

Eurozone PMI Data: A flash estimate of Eurozone PMI data will be published next week, with no immediate improvement in sentiment expected for October. However, an increase in growth momentum in the Eurozone is anticipated from the first half of 2024.
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Technical​

The currency pair is currently trending downwards within a bearish channel, and the Relative Strength Index (RSI) is on the verge of dipping below the midpoint of 50. If the bears manage to close below the bullish channel (indicated in blue), we can expect the downward trend to persist, with targets set at Support 1 (S1) and subsequently Support 2 (S2).

On the other hand, Resistance 1 (R1) is set at 1.06. If the currency pair closes above this resistance level on the 4-hour chart, it would indicate a continuation of the bullish trend that began earlier this month.​

 

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EURUSD

The Euro to US Dollar exchange rate is currently below the indicator’s signal lines. It’s moving above something called the Ichimoku Cloud, which usually means the exchange rate might increase.

We expect it to first reach the lower edge of the Cloud at 1.0550, and then rise to 1.0675. Another sign that it might rise is if it bounces off the lower edge of the ‘bullish channel’. However, if it breaks through the lower edge of the Cloud and goes below 1.0525, this could mean it will drop further to 1.0430.​

 

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EURGBP

The EURGBP currency pair has been increasing in value for six consecutive days, reaching its highest point in over five months. This rise is part of a larger upward trend that started on August 23, 2023, when the value was at 0.8492.

This trend has been boosted by weaker than expected retail sales in the UK in September. The value has surpassed a significant level at 0.8735 but may face some resistance as the market is overbought and traders might start taking profits, which could lead to a period of stability.

Despite this, the pair is set to make substantial gains this week, indicating that the upward trend is still strong. Any short-term stability should ideally be above the previous high of September 26 and the 200-day moving average (0.8705 / 0.8695) to maintain the upward momentum.

However, be cautious if the value drops significantly and closes below 0.8678 as this could weaken the upward trend and make further declines more likely.

The resistance levels to watch are: 0.8735; 0.8792; 0.8808; 0.8863. The support levels to watch are: 0.8705; 0.8695; 0.8678; 0.8662.​

 

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GBJPY

GBPJPY is seeing a drop, like it's sliding down a hill after leaving a climbing trail. The Stochastic indicator is hinting that this isn't the time for the value to go up. The GBPJPY isn't rising above 182.9, and it seems pretty determined to stay low, possibly even heading down to 176 next.

But here's something to think about: if the GBPJPY starts to climb unexpectedly and passes a key level (the pivot), this downward slide might just turn around. Those who believe it's going to rise (the optimists!) are hoping it might reach as high as 187.9.​

 

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Gold​

Gold prices have stopped rising just below a five-month high on Monday. The rapid increase in prices slowed down as it got close to the $2000 mark. After a strong push back on Friday, it's clear that the $2000 area is a big hurdle. This has led traders to take some profits from the over 7% increase in the last two weeks.

Daily indicators suggest that this pause was expected, although the slight drop shows that buyers are still interested in pushing the price above $2000.

Due to unrest in the Middle East, traders are looking for safer options. The possibility of conflict escalating increases the demand for gold, which continues to drive up its price.

The slight drop in price has stabilized above the rising 5-day moving average ($1960). Any further drops are expected to stay above $1945 (the halfway point between $2080 and $1810), indicating a normal correction and keeping the overall upward trend intact.​

 

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EURUSD

The eurusd graph indicates a sharp decline, potentially in five distinct stages. We're currently experiencing a temporary rise in the fourth stage. The third stage seems finished, and now we're in a phase of slight recovery.

The price is moving along a track at 1.07, corresponding to a key financial marker known as the 38.2 Fibonacci level. Our hope is for prices to adhere to this boundary and then plummet swiftly to round off the fifth stage. We anticipate the price might settle around 1.03000 when the fifth stage ends. Our projection is that the euro will become more robust as 2023 progresses.

Inflation rates in Europe are dipping, and the prediction is that the European Central Bank (ECB) will maintain the current interest rates throughout 2023. Expenses, especially for fuel, are surging due to turmoil in the Middle East. If these expenses stabilize, the euro is likely to fortify against other currencies.

Upcoming crucial updates this week: On EURO 23rd October, we expect news on French and German manufacturing and services. October 25th will bring insights into the German business climate and a speech from ECB President Lagarde. October 26th will feature announcements on interest rates, the ECB's financial strategy, and a major press event.

Potential high points: 1.07; 1.07580; 1.083
Potential low points: 1.04; 1.036; 1.03​

 

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Gold​

The price of gold has retreated from the $2,000 mark and is currently testing the $1,949 support level. This decline was anticipated as the RSI and Stochastic indicators were in the overbought zone.

A closer look at the 4-hour chart provides a clearer picture of gold’s price action. The precious metal formed a hammer candlestick pattern at the pivot point ($1,962), and the stochastic oscillator is nearing the overbought zone, indicating a potential exit from this area. The RSI indicator remains above 50.

Considering current market data, technical indicators, and key levels, if the price can maintain above $1,949, it’s likely that the XAUUSD price will rise to R3 ($2,025).

Conversely, if bears manage to push the price below $1,949, we could see a continued decline towards the upper line of the bearish channel around $1,900.​

 

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EURUSD​

The EURUSD currency pair is currently testing a crucial pivot point at 1.057, with the Relative Strength Index (RSI) indicating a potential bearish shift. For the downward trend to persist, it’s essential for the pair to close below this pivot point.

Bullish Scenario

Please note that the resistance for this week is situated at 1.064. Following a breakout from the bearish channel, it’s critical for the bulls to secure a close above this level to confirm the breakout and potentially trigger further price increases.

This analysis provides key insights for forex traders monitoring the EURUSD pair, helping them make informed decisions based on pivot points and RSI indicators.​

 

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EURAUD​

For the past four months, the EURAUD has been trading within a range between 1.6200 and 1.7100, suggesting that it might currently be in a range trading mode. This week, the price faced difficulty surpassing recent peaks just below 1.6900, reaching a high of 1.6845 on Monday. These levels could pose resistance if tested again, before reaching the 2-year high at 1.7065. On Wednesday, the price dipped but didn't reach the 100-day Simple Moving Averages (SMA) near 1.6550, which could provide support in case of another sell-off.

Looking further down, potential support levels could be found at previous lows of 1.6445 and 1.6320, followed by a potential support zone between 1.6235 and 1.6265. The close grouping of the 10-, 21-, 34-, 55- and 100-day Simple Moving Averages (SMA) between 1.6550 and 1.6710 further supports the perspective of range trading.​

 

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Silver

The price of silver is currently testing the pivot point at 23.14, with the Relative Strength Index (RSI) maintaining a position above the 50 level. The XAGUSD's inability to close below the S1 support level of 22.59 suggests that the price movement range since October 23 is likely a correction to the upward trend that began earlier this month.

The pivot point serves as a hurdle for the bulls. To drive the price towards R1 (23.9), they must ensure a close above the pivot point.

Conversely, the S1 level (22.5) acts as a safeguard against further price decline. If this level is breached, the bears could potentially target S2 (21.8) next.​