EUR/USD: The results of the Fed meeting left unanswered questions about the future policy of the regulator
The EUR/USD currency pair shows fluctuations within the horizontal channel of 1.0650–1.0498. The previous trading day brought a short-term drop in the exchange rate to a value of 1.0515, followed by a recovery to the original positions.
The foreign exchange market remains in a state of uncertainty due to the recent meeting of the US Federal Reserve System, the results of which did not shed light on the future policy of the regulator. The decision to leave the main interest rate at 5.25–5.50% was predictable, taking into account the stable economic status quo, the strength of the labor market and the inflation rate exceeding the target. The attached Federal Reserve communique emphasizes that the agency continues to assess the need for further tightening of monetary policy. The speech of the Chairman of the US Federal Reserve Jerome Powell also did not bring clarity, confirming the readiness to raise rates in the event of a resumption of inflation, but at the same time pointed to the possible independent regulation of the economy through changes in government bond yields and mortgage interest rates, which may remove the need for additional tightening from the regulator.
- Resistance levels: 1.0650, 1.0742, 1.0864.
- Support levels: 1.0498, 1.0376, 1.0275.
AUD/USD: The Australian dollar shows a noticeable increase in the foreign exchange market
The Australian dollar continues to show an uptrend, strengthening against the US dollar and creating a noticeable "bullish" trend against the background of the previous trading session. The AUD/USD currency pair is striving to overcome the 0.6430 level, thereby updating the highs since October 11 and actively developing an ascendant trajectory based on current economic reporting and anticipation of the upcoming October review of the US labor market.
Reliance on data from Australia and China in the previous period was not sufficient to strengthen the Australian dollar. The Caixin manufacturing business activity index in China showed a decrease from 50.6 to 49.5 points in October, which is at odds with analysts' forecasts, which predicted an indicator of 50.8 points. In Australia, there was a drop in the number of construction permits issued in September by 4.6%, which is a significant decrease compared to the growth of 8.1% in the previous month and contradicts the forecast of 1.3%. In this context, the experts of the International Monetary Fund strongly advise the Reserve Bank of Australia to continue tightening monetary policy, given that the rate of reduction of inflation remains insufficient, and its base level shows resistance to the measures already introduced. An additional increase in the cost of lending is recommended, which should help return inflation to the target range of 2.0–3.0% and prevent the strengthening of high inflation expectations among the population.
- Resistance levels: 0.6450, 0.6472, 0.6500, 0.6521.
- Support levels: 0.6425, 0.6400, 0.6379, 0.6356.
Silver price analysis
The measures taken by the US financial authorities in the field of monetary policy weaken the investment attractiveness of the US dollar, which stimulates the rise in silver prices to the level of 22.90.
The previous day, the decision of the US Federal Reserve System was to keep the key rate at 5.50%. Fed Chairman Jerome Powell stressed the approach to the final stage of the cycle of increasing the cost of credit resources and expressed the need for a prudent approach to future economic manipulation, while not ruling out the possibility of resorting to strict regulatory policy if necessary. In reaction to such statements, the US dollar lost ground, dropping to the level of 106.460 in the USD Index and continuing to fall to 106.200 at the current auction. These events favor the strengthening of the upward trend in the value of silver, whose quotes have successfully overcome the bar at 22.92 and are on the way to further strengthening.
- Resistance levels: 23.60, 24.35.
- Support levels: 22.55, 22.15, 21.62.
Crude Oil market analysis
During the Asian trading session, prices for Brent Crude Oil show moderate growth, reflecting the correction after the previous decline this week, and are at the level of $85 per barrel.
In the latest October report "Overview of commodity markets. Under the influence of geopolitical tensions," World Bank analysts predicted a rise in the value of Brent Crude Oil above the $155 figure and pointed to potential changes in global food stability. The situation may worsen given the possible expansion of the conflict between Israel and Hamas due to the accession of new actors, in particular the armed Lebanese group Hezbollah. Experts have identified three possible outcomes of events: in the first case, there may be a significant reduction in global oil supply by 6-8 million barrels per day and, accordingly, a 56-75% increase in prices above the baseline forecast of $90 per barrel; in the second scenario, the supply may decrease by 3-5 million barrels, which may provoke an increase in value to $108.9-$121.5 per barrel (an increase of 21-35%); and the third scenario assumes a reduction of 0.5-2 million barrels, which could lead to prices at the level of 92.7-101.7 dollars per barrel.
In addition, investors took note of the latest data from the US Energy Information Administration (EIA), which note an increase in hydrocarbon consumption to the highest level since August 2019. Nevertheless, the volume of oil reserves increased by only 0.774 million barrels in the week ended October 27, after an increase of 1.371 million in the previous period, which was lower than the expected forecasts of 1.261 million barrels.
- Resistance levels: 85.52, 86.00, 87.00, 87.70.
- Support levels: 84.64, 83.89, 83.12, 82.27.