Weekly Technical Outlook – USDJPY, NZDUSD, Oil

USDJPY flirts with August’s high after NFP boost; US CPI figures awaited; NZDUSD 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
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US CPI inflation --> USDJPY  

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 --> NZDUSD

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.

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