Forex

October saw a little increase in U.S. business output as the manufacturing sector recovered from a five-month decline thanks to an increase in fresh orders. Also, the service activity rose slightly as inflationary pressures appeared to be abating.

The dollar gained against a group of other currencies as numerous new economic reports demonstrated how robust the US economy is this month compared to the UK and the EU.

It was the most recent indication that the US economy is enduring the interest rate spike that was sparked by the Federal Reserve's effort to contain inflation.



The dollar index, which gauges the strength of the currency relative to a group of six competitors, increased by 0.6% to 106.27. Earlier in the day, the index had fallen to the monthly low of 105.35.

Technically, the dynamics of the USD price generate possibilities for short-term trading with the GBP/USD pair. In addition, traders will be guided by the general risk attitude, which tends to fuel demand for the safe-haven US dollar.

The British pound last traded at $1.2161, down 0.72%. According to polls released on October 24th, Britain's businesses revealed a further reduction in activity this month, and cost pressures also decreased, highlighting the possibility of a recession.

According to the EUR/USD daily chart, the pair decisively broke through the upper part of a falling trend channel in October. It then proceeded to rise, momentarily breaking over small resistance levels close to 1.0680 to reach a high of 1.0695.

The 55-day Simple Moving Average is currently close to the most recent peak on the topside, and 1.0700 may represent the start of a resistance zone.

The following possible resistance levels are located ahead of a collective zone containing possible resistance in the 1.1070–1.1100 region at the breakpoints with prior highs around 1.0740, 1.0770, 1.0835, and 1.0945.

With the dollar up 0.1% above 149.91 yen, traders are still uneasy about potential government support for the Japanese yen. USD/JPY is currently testing the 21-EMA support. If this support is broken, we may see the pair retest the long-term support near 148.28.

For AUD/USD, a break of 0.6269 will cause the price to drop more sharply from 0.7156 to 100% of the predicted 0.7155 to 0.6455 from 0.6893 at 0.6190, or very near to the medium-term support level of 0.6170. In the wider context, the decline from the peak of 0.8000 (2021) may still be ongoing.

Commodities

Gold price (XAU/USD) broke beyond the psychological $2,000 threshold in late October, reaching a peak not seen since May 16 and posting a third consecutive weekly increase. The Israel-Hamas crisis is intensifying, which encourages safe-haven purchases and supports the price of precious metals.

The horizontal resistance breakpoint between $1,986 and $1,985 is likely to provide strong support for any significant corrective downturn.

The aforementioned regions ought to serve as a turning point. The price of gold might decline more quickly in the direction of the $1,972 support level. On the other hand, a move to the next significant barrier close to the $2,022 level will be made possible by some follow-through purchasing above the $2,005 region, which is the multi-month top touched on October 27th.

Meanwhile, the Silver downtrend may continue to the $22.00 round-figure barrier and the $21.70 zone, which represents the 23.6% Fibo level. If there is some follow-through selling, the XAG/USD might be vulnerable to a further decline towards the $21.00 level and ultimately fall to the $20.70–$20.65 zone, which is the lowest price point since March, reached earlier in October.

Brent crude futures declined below $90 per barrel at the end of October as investors were cautious prior to a busy week that included the US Federal Reserve's interest rate announcement and Chinese industrial activity data.

As the two biggest oil consumers in the world, analysts are focusing on the likelihood of a recession in the US economy and indications of additional economic stability in China.

Indices

The Federal Reserve's drive to combat inflation has caused interest rates to rise, but the US economy is enduring it. The dollar index, which gauges the strength of the currency relative to a group of six competitors, increased by 0.6% to 106.27. Earlier in the day, the index had fallen to the monthly low of 105.35

Following declines of 4.87% in September, the S&P 500 dropped 3.98% in October and has formally entered correction territory. The S&P 500 saw its largest October decline of the year in 2018, falling 6.94%.

That October decline was really the preamble to the main event, which may result in a 15% intra-month decline in December. around order for a more positive view to materialize, the S&P 500 must retake the 200-day Simple Moving Average at 4264 and consistently hold support around the 4300 region.

Following a significant selloff throughout the first two weeks of the month the Nasdaq 100 made a little recovery on October 27th. The tech index bounced off cluster support around the 14,150/13,930 zone, driven upward by Amazon's incredible rise following the company's quarterly reports.

For Dow Jones, the possibility of a false break against the current uptrend has increased with the horizontal trendline's inability to maintain above-significant resistance since mid-2022. The scenario would be confirmed with a break below the 200-MA, which is close to the March low of 31430.

Such a pause would support the wider sideways trend that has been in place since the beginning of 2022. A decline below 31430 might pave the way for the 28715 bottom at the end of 2023.

Market Events

The US ISM Manufacturing PMI was revealed as 49.0 on October 2nd, which is 1.84% up compared to the expectation of 48.9. On October 3rd, the Reserve Bank of Australia (RBA) announced the Australian dollar cash rate will remain the same (4.10%) as the earlier month.

The ADP Non-Farm Employment Change of the US fell 49.44% (89K) compared to the September data (180K). However, The US Non-Farm Employment Change published on October 6th was 48% higher (336K) than the 227K of September.

On October 19th, the Australian Bureau of Statistics reported a 2.70% decline in the unemployment rate (3.6%) against the September report (3.7%). In the meantime, the UK announced its retail sales is -0.9% compared to the expectation of -0.3%.

The Canadian GDP and the US Employment Cost Index are to be published on 31st October, which may heavily impact the monthly close of major forex pairs and commodityprices.