Forex Market Outlook: 6 October 2022

Updated October 6, 2022

Dollar index pared recent gains to trade at around 111 after investors scaled back on the extent of Fed interest rates hikes. Narrowing interest rates differentials between the Fed and major central banks, who are following in the Fed’s footsteps in tightening their monetary policies to rein in inflation also contributed to the Dollar’s recent decline. On the data front, ISM Services PMI data stood at 56.7 in September, easing from a 56.9 reading in August but still pointed to strong domestic growth. Business surveys conducted also highlighted improvements in supply chain efficiency, operating capacity, and materials availability while employment remained resilient amid the macro headwinds. ADP jobs reports surpassed market expectations as private sector employment grew by 208K, ahead of 200K expectations, suggesting that we could be seeing a modest uptick in employment for Friday’s Non-Farm payroll data.

Elsewhere, Aussie could not hold its gains against the greenback as RBA disappointed with a smaller-than-expected interest rate hike. RBA raised interest rates by 25 basis points, short of market expectations of a 50 basis point hike. Meanwhile, domestic growth remained robust in Australia as retail sales grew 0.6% in August from July, suggesting that shoppers are resilient to rising price pressures. Elsewhere, oil prices rallied to a three-week high of around $88 per barrel on Thursday after OPEC+ announced an output reduction of 2 million barrels per day, accounting for 2% of the global supply, in response to higher interest rates and a weaker global demand outlook. Falling oil inventories, with EIA data showing a decrease of 1.356 million barrels last week, the largest decline in five weeks alongside a halt in Russia’s oil output following a price cap in Russian oil also added more upside pressure to oil prices.

Trade ideas that played out on Tuesday: 4 October 2022

XAUUSD H4: Bullish outlook seen, limited upside above 1675.50

On the H4 time frame, prices broke above the descending trend line and a throwback to the support zone at 1675.50, in line with the 38.2% Fibonacci retracement could present an opportunity to play the bounce to the next resistance zone at 1727.50. The 1727.50 resistance zone is a graphical support-turned-resistance zone which also coincides with the 61.8% Fibonacci retracement. Prices are holding above the Ichimoku cloud as well, supporting the bullish bias.

Before:

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/XAUUSD/ODPm3k1g-XAUUSD-H4-Bullish-outlook-seen-limited-upside-above-1675-50/

After:

Today’s trade ideas: 6 October 2022

GBPUSD H4: Bearish outlook seen, further downside below 1.1480

On the H4 time frame, prices are facing bearish pressure from the resistance zone at 1.1480 which coincides with the graphical support-turned-resistance level, 78.6% Fibonacci retracement and 61.8% Fibonacci extension levels. We could see further downside below the resistance zone at 1.1480 to the next support zone at 1.0880. This support zone is in line with the 50% Fibonacci retracement. Stochastic is testing resistance at 93.45 as well with more downsides seen, supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/GBPUSD/celn7UOL-GBPUSD-H4-Bearish-outlook-seen-further-downside-below-1-1480/

USDCHF H4: Bullish outlook seen, further upside above 0.9780

On the H4 time frame, prices are approaching the support zone at 0.9780 which coincides with the Fibonacci confluence levels and ascending trend line. A throwback to this 0.9780 support zone presents an opportunity to play the bounce to the next resistance zone at 0.9550. This resistance zone lines up with the graphical swing high resistance and 61.8% Fibonacci extension. Stochastic is showing room for more downside before it reaches support at 3.81, in line with prices.

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/USDCHF/2IBmrXAy-USDCHF-H4-Bullish-outlook-seen-further-upside-above-0-9780/

NZDUSD H1: Bearish outlook seen, further downside below 0.5810

On the H4 time frame, prices are approaching the resistance zone at 0.5810, in line with the 38.2% Fibonacci retracement and 61.8% Fibonacci extension. This resistance zone is also a graphical support-turned-resistance zone that has been respected multiple times. A pullback to this resistance zone at 0.5810 presents an opportunity to play the drop to the next support zone at 0.5680. This support zone is also the graphical swing low that coincides with Fibonacci confluence levels. Stochastic is approaching resistance as well, in line with prices.

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/NZDUSD/8qAMs6Yf-NZDUSD-H1-Bearish-outlook-seen-further-downside-below-0-5810/

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)

Disclaimer
Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

Latest Releases

Latest Releases

See All Articles >