Watching the foreign exchange market on October 15: technical analysis of the euro, the pound sterling and the Australian dollar

Currency: EUR/USD



Resistance 2: 1.1680

Resistance 1: 1.1620

Spot price: 1.1591

Support 1: 1.1525

Support 2: 1.144

On Thursday, the euro retreated from Wednesday’s high. On Wednesday, the US Bureau of Labor Statistics (BLS) announced inflation data. The consumer price index rose by 5.4% in September, higher than the 5.3% expected by analysts, indicating that US residents are struggling to cope with price increases. In addition, the core consumer price index, which excludes food and energy costs, rose 4%, the same as the previous value. Following the release of the US inflation data, the US dollar initially strengthened, but it seems that the market has already digested the rise in prices, and then the US dollar fell, boosting the euro. On technical graphics, the daily EUR/USD is trading far below the daily moving average and is still in a downward trend, but the technical indicators are seriously oversold. On Wednesday, the euro/dollar constructed a bearish engulfing K line, indicating that the exchange rate may remain upward, but it needs to break through the strong resistance of the psychological barrier of 1.1600. In addition, the October 4th high of 1.1639 became a strong resistance for the bulls. If the EUR/USD daily line closes above 1.1600, the first test level will be the above 1.1639. If the exchange rate breaks through this level, it may test the 50-day moving average at 1.1719. On the downside, with the support of relative strength indicators and other momentum indicators, the exchange rate still maintains a downward trend. The relative strength indicator is below the midline 50. If the exchange rate falls below 1.1600, it will test the 2021 low of 1.1524.

Currency: GBP/USD



Resistance level 2: 1.3800

Resistance 1: 1.3722

Spot price: 1.3676

Support 1: 1.3570

Support 2: 1.3530

After the pound against the US dollar hit a two-week high of 1.3735 in early European trading on Thursday, profit-taking fell back to around 1.3670 in late trading. Recently, news of the British pound, which seems to be favorable, has appeared frequently. The easing of the confrontation between the UK and the European Union on the Northern Ireland Agreement has eased people’s concerns, and the pound has also gained some support for this. The European Union said on Wednesday that it will reduce customs inspections and paperwork for British products used in Northern Ireland. Earlier, the Bank of England officials signaled that interest rates are about to be raised, which greatly promoted the recent sharp rebound in the pound. On the 4-hour and daily chart, the GBP/USD exchange rate has broken the 20 moving average, and various technical indicators have developed upward, indicating that the rebound potential from 1.3412 at the end of September has not yet exhausted. If the exchange rate stays above 1.36, the targets that are expected to attack from the top will aim at water levels such as 1.37 and 1.38 respectively. The key support below is at 1.3570. If it falls below, it will indicate the end of this round of pound rebound.

Currency: AUD/USD



Resistance level 2: 0.7478

Resistance 1: 0.7425

Spot price: 0.7416

Support 1: 0.7330

Support 2: 0.7280

AUD/USD traded near 0.7410 after hitting a one-month high of 0.7426. The Australian economic data fell short of market expectations, but the stock market rose and gold prices strengthened to boost the Australian dollar. The Australian data released on Thursday morning was generally weak. Consumer inflation expectations in October were 3.6%, which was lower than the previous value of 4.4% and also lower than the expected value of 3.8%. In addition, Australia issued a report saying that it lost 138,000 jobs in September, which was weaker than expected. The unemployment rate fell to 4.6%, better than expected, but the employment participation rate shrank to 64.5%. Australia's weak economic data shows that the basic factors supporting the rise of the Australian dollar are not so solid. Looking at the short-term technical outlook of the AUD/USD, the daily chart shows that the AUD/USD remains bullish, the exchange rate continues to break through the 20 moving average, and the technical indicators are facing upwards and are in a positive zone. AUD/USD is currently converging at the continuously bearish 100 moving average. If the AUD/USD breaks through this level, the exchange rate is expected to hit the 100% retracement level and rise to the September high of 0.7477. However, on the short-term hourly chart, the technical indicators have all entered an overbought state, and care must be taken to prevent the risk of weekend profit pullbacks in the day.

Only personal views, not representative of the views of the organization

Source: Bank of China's official website, Bank of China Guangdong Branch Wang Gang, original title: "Foreign Exchange Market Watch October 15, 2021"