AUD/USD holds support after CPI data – Elliott Wave points higher
(Gregor Horvat – Wavetraders)
The market is slow ahead of Powell’s speech today when we will get more decisions about their policy rates. For now, the risk-on is still on the table after China announced that they will allow close contacts of Covid cases to quarantine at home. They also said that they will strengthen vaccinations which sounds positive. AUD CPI data came lower y/y, at 6.9% from the 7.6% expected. Inflation is coming down, which means that RBA can be less hawkish but the AUDUSD pair was still able to hold the support within a triangle. We see a-b-c-d-e sub waves in wave 4 so be aware of a break higher into wave 5. A rise above 0.68 can call 0.69. A drop below 0.6640 can cause a deeper pullback to 0.6550.
GBP/USD Forecast: Buyers refuse to give up as focus shifts to Powell
(Eren Sengezer – FXStreet)
– GBP/USD has regained its traction after dropping to the 1.1950 area.
– FOMC Chairman Powell will speak on the economic outlook and inflation later in the day.
– The near-term technical outlook shows that sellers are struggling to dominate the pair’s action.
GBP/USD has regained its traction and climbed to the 1.2000 area early Wednesday after having declined toward 1.1950 earlier in the day. The pair’s next directional movement could be driven by the market reaction to FOMC Chairman Jerome Powell’s remarks on the policy outlook later in the day.
Bank of England (BoE) Chief Economist Huw Pill said on Wednesday that he is expecting inflation to fall “rapidly” in the second half of 2023. Pill further noted that they have more to do on rates in the coming policy meetings but added that his base case does not involve the policy rate reaching 5.25%. These comments failed to impact the Pound Sterling’s valuation in a noticeable way and the improving market mood allowed GBP/USD to edge higher.
Reflecting the improving market mood, the UK’s FTSE 100 Index is up more than 0.5% and US stock index futures trade modestly higher on the day.
In the late American session, FOMC Chairman Jerome Powell will deliver a prepared speech on the economic outlook, inflation and the labor market. Following the speech, Powell will respond to questions.
This will be Powell’s last chance to deliver a message to markets before the blackout period starts on Saturday, December 3. Bloomberg reported earlier in the week that Powell could open the door for slower rate increases. The CME Group FedWatch Tool shows that markets are pricing in a less than 70% chance of a 50 basis points (bps) Federal Reserve rate hike in December. The market positioning suggests that the US Dollar could come under strong selling pressure in case Powell confirms a 50 bps hike. In that scenario, a risk rally to lift major equity indexes in the US and put additional weight on the safe-haven US Dollar.
On the other hand, GBP/USD could turn south in case Powell pushes back against optimism about inflation having peaked and reminds markets that the terminal rate will be revised significantly higher even if they were to opt for a smaller hike at the last policy meeting of the year.
GBP/USD Technical Analysis
GBP/USD latest action reaffirmed that strong support seems to have formed at 1.1950 (Fibonacci 23.6% retracement of the latest uptrend. On the upside, the 1.2000/1.2010 area (psychological level, 20-period Simple Moving Average (SMA)) aligns as immediate resistance. In case the pair stabilizes above that hurdle, it could target 1.2100 (psychological level, static level) and 1.12150 (end-point of the uptrend).
With a four-hour close below 1.1950, sellers could take action and drag GBP/USD lower toward 1.1900 (psychological level) and 1.1850 (100-period SMA, Fibonacci 38.2% retracement).
Ichimoku cloud analysis: USD/CHF, Brent, EUR/GBP
USD/CHF, “US Dollar vs Swiss Franc”
The currency pair has pushed off the lower border of the Double Bottom reversal pattern. The instrument is going above the Ichimoku Cloud, which suggests an uptrend. A test of the upper border of the Cloud at 0.9460 is expected, followed by growth to 0.9785. An additional signal confirming the growth will be a bounce off the lower border of the bullish channel. The scenario can be canceled by a breakaway of the lower border of the Cloud and securing under 0.9380, which will mean further falling to 0.9285. The growth can be supported by a breakaway of the upper border of the Double Bottom reversal pattern and securing above 0.9645.
Oil is testing the signal lines of the indicator. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the lower border of the Cloud at 86.05 is expected, followed by falling to 75.05. An additional signal confirming the decline will be a bounce off the upper border of the descending channel. The scenario can be canceled by a breakaway of the upper border of the Cloud and securing above 93.05, which will mean further growth to 98.05.
EUR/GBP, “Euro vs Great Britain Pound”
The currency pair is corrected by a Triangle pattern. The instrument is going below the Ichimoku Cloud, which suggests a downtrend. A test of the lower border of the Cloud at 0.8655 is expected, followed by falling to 0.8485. An additional signal confirming the decline will be a bounce off the upper border of the descending channel. The scenario can be canceled by a breakaway of the upper border of the Cloud and securing above 0.8715, which will mean further growth to 0.8805. The decline will be confirmed by a breakaway of the lower border of the Triangle and securing under 0.8575.