Weekly technical outlook on USD/JPY, NZD/USD, Oil [Video]

USD/JPY flirts with August’s high after NFP boost; US CPI figures awaited.
NZD/USD takes a breather after freefall; RBNZ to deliver a double rate cut.
WTI Oil futures back on the rise as geopolitics worsen; next resistance at 77.16.

Christina Parthenidou XM

US CPI inflation – USD/JPY

Friday’s nonfarm payrolls report was a strong beat. US jobs growth rose at the fastest pace in six months in September, the unemployment rate fell to 4.1%, and wage growth edged up, leaving investors no option other than to dismiss the case of a bold 50bps rate cut in November.

USDJPY cheered up to 149.11 in the aftermath, extending its rebound furiously above its 50-day simple moving average (SMA). August’s bar of 149.40 and the 200-day exponential moving average (EMA) are currently on track, but breaking the 150.75 resistance level is key for the bulls to indicate a positive trend reversal.

CPI inflation could be the next market move on Thursday. Forecasts point to a weaker headline CPI of 2.3% y/y and a stable core CPI of 3.2% y/y. If the data arrive stronger than expected, investors might doubt the need for consecutive rate cuts in November, activating another bullish wave in USDJPY.

Alternatively, a downside surprise may reflect some caution among consumers and businesses, prompting some selling. Yet only a drop below 145.00 would shift the attention back to the downside.

RBNZ rate decision – NZD/USD

Meanwhile in New Zealand, a 50bps rate cut to 4.75% this week is not a question according to futures markets. The central bank started its easing cycle in August and is expected to speed up the process, with the chances of another aggressive rate reduction in November currently at 67%.

Following its post-NFP freefall from a nine-month high of 0.6377, NZDUSD opened stable on Monday near its 50-day simple moving average (SMA) at 0.6165. If policymakers increase the odds for another rapid cut in November in the face of a faltering economy, the sell-off may stretch towards the 200-day SMA at 0.6100.

Otherwise, uncertainty about November’s rate outcome could allow for some recovery towards the 0.6220-0.6235 constraining zone.

War in the Middle East – WTI Oil futures

Israel marked its first anniversary of Hamas’ October 7 attack that developed into a wider regional conflict in the Middle East.

The latest episode created a threat of strikes against Iran’s oil facilities, but there are still no clear updates on Israel’s next strategic move despite US opposition. As the airstrikes between Israel and Tehran allies continue to escalate, oil traders may remain vigilant for another week.

WTI oil futures are poised to extend their rapid upturn towards the 200-day SMA at 77.16, while an advance above the 2023-2024 resistance trendline at 79.60 could be a bigger achievement for the bulls.

On the downside, sellers may take charge below 72.00-72.50.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.