Market Analysis: The Dollar Remains Under Pressure

FXOpen

EUR/USD

The EUR/USD pair shows mixed trading dynamics, holding near the 1.0550 mark. Last week, the single currency managed to strengthen slightly despite the fact that the pair updated record lows since December 7, 2022. The reason for the weakening of the American currency was mainly technical factors, while the news background changed slightly. Trading participants are once again discussing the prospects for a possible tightening of monetary policy by the US Federal Reserve, adjusting their forecasts after the publication of a report on the American labour market on Friday. Thus, in September, the national economy created 336.0k new jobs after 227.0k in the previous month, while analysts expected 170.0k, and the unemployment rate remained at 3.8% with a forecast of 3.7%. Average hourly wages added 0.2% in monthly terms, while experts expected 0.3%, and in annual terms, the figure slowed from 4.3% to 4.2% with neutral forecasts.

This week, the market will focus on September statistics on consumer inflation in the US, which will be published on Thursday. Analyst forecasts suggest a slowdown in price growth from 0.6% to 0.3%. Market activity is likely to remain moderate today as US stock exchanges are closed for Columbus Day. In turn, the EU will present August statistics on industrial production in Germany, as well as data on the Eurozone Investor Confidence Index from Sentix for October, which was recorded at -21.5 points a month earlier.

Based on the highs of two days, a new ascending channel has formed. Now, the price has moved away from the upper border of the channel and may continue to move towards the lower border.

GBP/USD

The GBP/USD pair is holding near the 1.2200 mark amid the weekend in the US and Canadian markets. At the same time, trading participants continue to evaluate the September report on the American labour market, published on Friday, trying to predict the vector of the future monetary policy of the US Federal Reserve. After the publication of the data, the market revised its forecasts for a further increase in borrowing costs by the American regulator until the end of this year. Now, about 42.0% of analysts are in favour of adjusting the interest rate by 25 basis points, while on Thursday, the probability of such an outcome was estimated at 35.0%. At the same time, experts also expect that in 2024, the department will launch a rate reduction program somewhat later.

In turn, macroeconomic data from the UK, presented on Friday, had virtually no impact on the dynamics of the pair. Thus, the Halifax housing price index in September decreased by 0.4% after -1.8% a month earlier with a forecast of -0.8%, and in quarterly terms, the indicator decreased by 4.7% after -4.5%.

Based on the highs of two days, a new ascending channel has formed. Now, the price has moved away from the upper border of the channel and may continue to move towards the lower border.

USD/JPY

The USD/JPY pair shows slight growth, remaining close to 149.15. Last week, it showed the development of a moderate correction, retreating from the psychological barrier at 150.00. At the same time, on Friday, the US dollar tried to return to growth, reacting to the publication of the September report on the American labour market.

Meanwhile, macroeconomic statistics from Japan provided minor support to the yen. Thus, the Coincident Index in August rose from 114.2 points to 114.3 points, and the index of leading indicators, from 108.2 points to 109.5 points, exceeding forecasts of 109.0 points. At the same time, household spending in August decreased by 2.5% after -5.0% a month earlier, while analysts expected -4.3%, and the average wage remained at 1.1%, while experts expected 1.5%.

Based on the lows of two days, a new downward channel has formed. Now, the price is near the upper border of the channel, from where it could continue to decline.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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