Watching the foreign exchange market on October 13: technical analysis of the euro, the pound and the Australian dollar

Currency: EUR/USD



Resistance 2: 1.1640
Resistance 1: 1.1580
Spot price: 1.1539
Support 1: 1.1500
Support 2: 1.144

At midday in the US, the euro/dollar fell below the pre-2021 low and traded near a new low of 1.1524. The U.S. dollar benefited from Fed officials’ claims that quantitative easing will be implemented soon. Fed Vice Chairman Richard Clarida said: "I personally believe that the price stabilization task has broken through the'substantial further progress' standard, and the employment target has almost been achieved," adding that the reduction in quantitative allowances may be in 2022. End of the year. At the same time, the German economic prosperity index fell to 22.3 in October from the previous value of 26.5, which was lower than market expectations and fell for the fifth consecutive month. German economic data was weak, and the euro/dollar remained under pressure. The EUR/USD traded just above the 2021 low and fell for two consecutive days. The technical indicators on the daily chart show that the exchange rate tends to fall further, and the exchange rate is below the steady and bearish moving average. At the same time, the technical indicators remained in the negative zone, and the relative strength indicators resumed their decline, in the oversold area. In the short term, the 4-hour chart shows that the euro/dollar maintains a stable bearish outlook, the kinetic energy indicator is steady downward, in a negative zone, and the relative strength indicator is finishing the decline and is near 32. The current support of 1.1525 is more critical. If it falls below, there is almost no strong support level below, and the initial target is 1.1440. At the top, only 1.1620 is penetrated, or a decent rebound in the market can be seen.

Currency: GBP/USD



Resistance 2: 1.3722
Resistance 1: 1.3663
Spot price: 1.3595
Support 1: 1.3530
Support 2: 1.3412

On Tuesday (October 12), the U.S. dollar index hit a high of 94.57, surpassing the one-year high of 94.50 reached at the end of September, as traders placed positions for the Federal Reserve’s announcement in November to gradually reduce the large-scale bond purchase program. The main driving factor of this trend is the further rise in US Treasury yields, so this is a fairly simple story of spreads widening, which increases the attractiveness of carry trades. However, data on Tuesday showed that the number of employees in British companies increased by 207,000 from August, a record high. Another official data on Tuesday showed that in the three months ending in August, the unemployment rate fell from 4.6% in May to July to 4.5%, in line with expectations. These data allow the Bank of England to keep the possibility of raising interest rates before the end of the year. For this reason, the pound has been quite resilient. From a technical point of view, the pound against the dollar currently maintains sideways fluctuations. If it breaks below the 1.3585 support level where the 200-hour moving average is located, it will trigger a lot of technical selling and pave the way for further downside. On the other hand, the daily high of 1.3637 area now seems to have become an initial resistance level. Then came the resistance near 1.3663 and the 1.3700 mark. If it can continue to strengthen and break through the above resistance level, it will offset any short-term bearish bias and push the pound to further break through the 1.3700 mark against the dollar, which will help the bulls move toward a higher level.

Currency: AUD/USD



Resistance level 2: 0.7425
Resistance 1: 0.7365
Spot price: 0.7338
Support 1: 0.7280
Support 2: 0.7200

The Australian dollar fell back in the US session on Tuesday and returned to the 0.7360 area after hitting a new high of 0.7385. The recent rebound in the Australian dollar is mainly due to the rise in commodity prices. Among them, iron ore is one of Australia’s main export products. Due to the increasing demand for iron ore in China, the price of iron ore has soared, which has pushed the Australian dollar to rise across the board. In addition, in Sydney, Australia's most populous city (which has gone through a four-month lockdown), the restrictions on the new crown epidemic have been relaxed, and the market has increased optimism that the Australian economy will recover after the new crown virus pandemic. At the same time, the Australian government has accelerated the new crown. The pace of virus vaccination. The resistance of AUD/USD on the daily chart is currently at 0.7365, and the RSI is turning down in the oversold zone. If it cannot break through 0.7365 and 0.74, the market outlook is still difficult to expect the Australian dollar to continue its strong rebound. Once the AUD/USD encounters resistance and declines, the first support below is at 0.7291/87. If the AUD/USD breaks below this level, it will retest the low of 0.7179/70.

Wang Gang, Bank of China Guangdong Branch

Source: Bank of China official website

Original title: Forex Market Watching on October 13, 2021