Forex Market Overview: A Fresh Perspective

Today marks the end of an extremely eventful trading week, packed with important publications and events.

Attention in the market is shifting towards the 12:30 PM (GMT) release of the U.S. Department of Labor’s report with data for October. An increase of +180,000 new non-farm jobs is expected (after 336,000 in September), with the unemployment rate remaining at the previous level of 3.8% and a slowdown in the annual average hourly earnings growth rate from 4.2% to 4.0%.

These are moderately positive figures for the dollar: unemployment remains at historically low levels, American wages continue to rise, exerting pressure on consumer inflation, and the economy has created a large number of new jobs, exceeding the minimum level of +150,000 monthly growth, which economists calculate is sufficient to maintain stability in the American labor market.

Nevertheless, dollar buyers are not rushing to increase their long positions, considering the weekly data published the day before, which showed an increased number of unemployment benefits claims in the U.S., the Automatic Data Processing (ADP) report that was weaker than the forecasted growth of +150,000 new jobs in the private sector (in reality, +113,000), and the conclusion of the Federal Reserve’s meeting last Wednesday.

As is known, the leaders of the American Central Bank left the key rate in the range of 5.25% – 5.50%, justifying this decision as necessary to combat inflation, which still significantly exceeds the target indicator of 2%.

Subsequently, statements by Fed Chairman Jerome Powell were ambiguous, and the Fed’s position regarding the need for further tightening of monetary conditions was considered cautious by market participants.

As a result, yesterday the DXY dollar index fell by 74 points from the closing price of Wednesday’s trading day, and today it continued to decline, remaining near the mark of 105.87 at the time of publication of this article.

EUR/USD

The Euro Dollar currency pair EUR/USD continues to move within the development of a strong bullish correction and the formation of a “Triangle” pattern. Moving averages indicate the presence of a short-term bearish trend for the pair. Prices have broken through the area between the signal lines upwards, which indicates pressure from buyers of the European currency and the potential continuation of the asset pair’s quote growth from current levels. At the time of the forecast publication, the Euro to US Dollar rate is 1.0618. Within the Forex forecast for November 3, 2023, we should expect an attempt to develop a bullish price correction and a test of the resistance level, which is located near the area of 1.0655 for the EUR/USD pair. Next, a rebound in prices downwards and a continuation of the fall of the Euro Dollar currency pair. The potential target for such movement on FOREX is the area below the level of 1.0415.

An additional signal in favor of the development of a bearish scenario for the EUR/USD currency pair tomorrow will be a rebound from the upper boundary of the “Triangle” pattern. The second signal in favor of this option will be a rebound from the resistance line on the Relative Strength Index (RSI).

The cancellation of the option for a decrease in the quotes of the Euro Dollar currency pair will be a strong growth and a breakout of the 1.0755 level. This will indicate a breakout of the upper boundary of the model and a continuation of growth into the area at the level of 1.0965. Confirmation of the fall for the EUR/USD currency pair should be expected with the breakout of the support level and closing of the price below the 1.0495 level, which will indicate a breakout of the lower boundary of the “Triangle” model and the start of working out the pattern with targets below.

GBP/USD

The Pound Dollar currency pair GBP/USD continues to move within the development of a correction and the formation of a “Triangle” pattern. At the time of the forecast publication, the Forex rate of the Pound to the US Dollar is 1.2186. Moving averages indicate the presence of a short-term bearish trend. Prices have broken through the area between the signal lines upwards, which suggests pressure from buyers of the currency pair and the potential continuation of the instrument’s growth.

At this point, we should expect an attempt to develop a minor bullish correction of the British Pound against the US Dollar and a test of the resistance area near the level of 1.2225. From there, a rebound of the pair’s quotes downwards and a continuation of the fall of the British Pound against the US Dollar is anticipated. The target for the pair’s decline, within the Forex forecast, is the area at the level of 1.1685.

An additional signal in favor of the currency pair’s decline will be a test of the resistance line on the Relative Strength Index (RSI). The second signal in favor of a decrease will be a rebound from the upper boundary of the “Triangle” pattern. The cancellation of the Pound Dollar pair’s fall option will be a strong growth and a breakout of the resistance area with the price fixing above the level of 1.2385.

This will indicate a breakout of the resistance level and the continuation of the Pound Dollar pair’s growth into the area at the level of 1.2485. Confirmation of the pair’s fall should be expected with the breakout of the support area and closing of the price below the level of 1.2025, which will indicate a breakout of the lower boundary of the “Triangle” model and the beginning of the pattern’s execution with targets below.

USD/JPY

The quotes of the Dollar Yen currency pair USD/JPY continue to move within the development of a correction and a bullish channel. At the time of the forecast publication, the US Dollar to Japanese Yen rate is 150.24. Moving averages indicate the presence of a short-term bullish trend for the pair.

Prices are once again testing the area between the signal lines, which suggests pressure from US Dollar buyers and the potential continuation of price growth from current levels. Within the forecast for the Japanese Yen rate on November 3, 2023, we should expect an attempt to develop a price correction and a test of the support area near the level of 149.85. Following this, a rebound in price upwards and a continuation of the growth of the USD/JPY pair into the area above the level of 152.65 is anticipated.

An additional signal in favor of the growth of the USD/JPY currency pair will be a test of the support line on the Relative Strength Index. The second signal will be a rebound from the upper boundary of the bearish channel. The cancellation of the growth option for the Dollar Yen currency pair will be a fall and a breakout of the 148.25 level.

This will indicate a breakout of the support area and a continuation of the fall of the Dollar Yen currency pair. In this case, we should expect the continuation of the pair’s decline into the area below the level of 146.25. Confirmation of the price growth should be expected with the breakout of the resistance level and the price fixing above the area of 151.75.

Recap

Absolutely, monitoring market news is crucial for defining trading strategies and timely position entries. It’s essential to stay informed about economic events, policy decisions by central banks, and other financial news that can impact currency movements. 

And indeed, setting Stop Loss orders is a fundamental risk management tool to prevent significant losses in volatile markets. Always trade with a clear plan and risk management strategy in place.