Forex Market Outlook: 20 September 2022

Updated September 20, 2022

Dollar maintained its strength on Tuesday, closing to 20-year high levels of 110, buoyed by expectations of a greater interest rate tightening cycle. Markets expect the Fed to deliver another supersized hike of 75bps for the third time at the coming FOMC meeting on Wednesday to tame the higher-than-expected inflation numbers. Investors remain optimistic about the dollar’s resilience amidst the aggressive rate hikes by Europe and the UK, as well as the declining global outlook.

Elsewhere, Euro maintained at the $1 level against the greenback. ECB’s Vice-President de Guindos statement emphasised the need for further rate hikes to bring down interest rates, despite the weakening European economy. Together with the extended energy crisis, markets expect a contraction in the economy to occur, with a recession being unavoidable. The Pound similarly maintained at the 1.14 level, ahead of the BoE’s meeting on Thursday. On the data front, UK August Retail Sales fell by 1.6%, below its expectations of a 0.5% fall and still vastly different from July’s 0.4% rise. High inflation rates of 9.9% continue to pressure BoE in hiking interest rates by 75 bps this coming week.

Today’s trade ideas: 20 September 2022

EURUSD H1: Bearish outlook seen, further downside below 1.004

On the H1 timeframe, prices are testing a key resistance zone at 1.004, in line with the 38.2% Fibonacci extension, presenting an opportunity to play the drop to the next support target at 0.986, coinciding with the 78.6% Fibonacci retracement. Stochastic is also approaching a resistance at 101.63, where we could see a reversal, in line with our bearish bias.

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/EURUSD/4WpJISKg-Bearish-outlook-on-EURUSD-20-September-2022/  

GBPUSD H1: Bullish outlook seen, further upside 1.145

On the H1 timeframe, prices are facing bullish pressure from the support zone at 1.134, in line with the 38.2% Fibonacci extension. This provides an opportunity to play the bounce, to the next resistance level at 1.159, in line with the 61.8%% Fibonacci retracement. A break above the upside confirmation level at 1.145 could provide bullish acceleration to the 1.159 resistance zone. Prices are also holding above the Ichimoku Cloud, supporting our bullish bias.

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/GBPUSD/IfnIRIuY-Bullish-outlook-on-GBPUSD-20-September-2022/  

XAUUSDH1: Bearish outlook seen, further downside below 1693

On the H1 timeframe, prices are testing a key resistance level at 1693, in line with the 50% Fibonacci retracement. A pullback to the resistance zone provides and opportunity to play the drop to the next support zone at 1618, in line with the 78.6% Fibonacci extension. A break below our downside confirmation level of 1654 could provide bearish acceleration to the 1618 support zone. Stochastic is testing resistance as well, supporting the bearish bias.

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/XAUUSD/nVRWMDAl-Bearish-outlook-on-XAUUSD-20-September-2022/  

Past performance is no indication of future performance. This report is provided by Zeta Labs, a specialized Forex Fintech Consultant and Technical Advisor who provides white-label solutions for FX Market Analysis, trading insights and education webinars. The team has a wealth of industry experience, with our analyst being part of the team recognised by The Technical Analyst Awards as Finalist for the Best FX Research for 4 consecutive years (2019, 2020, 2021, 2022). 

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