FX Weekly

FX Weekly Update – October 23rd, 2023

Posted Under: Weekly updates

The dollar has held up throughout the last two weeks. It remains well “bid” against most currencies. This week, there are several economic data releases, with PCE and Durable Goods leading the headlines. The ECB and the BoC will announce their policy decisions. In both cases, the market expects “no change.” The currency market and other markets are focused on the Middle East. There will be little volatility until the next steps of the war are taken.

EUR (1.0575): Last week the single-currency tested the 1.0620 level without follow-through. The trading range has been tight without a hint of how the market is positioned. The ECB does have its interest meeting this week and there are no expectations of any change to rates. The technical levels to keep an eye on are 1.0620/1.0640. The support levels are 1.0485 and 1.0450.

GBP (1.2155): The pound has remained flat week over week and we are moving within tight ranges, making no new ground. The short-term technical patterns indicate a test of 1.2300, which may be short-term. Support at 1.2090 and 1.2035 should contain any move lower.

JPY (149.90): The yen remains within the tightest range. 150.00 is the “line in the sand.” The market continues to buy dollars and sell yen, but the fear of the BoJ intervening or checking rates has kept the currency pair blowing through toward 153.00. There is little reason this activity will change anytime soon.

CAD (1.3715): USD/CAD has not been impacted by commodity prices as it usually is. The BoC will announce its interest rate decision this week, but no change is expected. The developing technical pattern is a triangle with a measuring objective of 1.4000.

MXN (18.2300): This currency pair has rallied back to the 18.5000 high from a few weeks back. Will this dollar rally run out of steam and head back to 17.7500 or head to 19.0000? This type of market calls for discipline and picking levels to buy or sell pesos.

CNH (7.3275): The Chinese currency has changed less than other currencies. If 7.4000 trades, that would be three attempts of a sustained rally for the US dollar. USD/CNH failed at that level twice in the last several months. A third time would signal a triple top, leading to a move toward 7.2200.