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With US GDP data scheduled on Wednesday, markets are forecasting a 3.2% annual growth rate for the world’s largest economy in Q3, up from 3% in Q2. The U.S. GDP report will be released on Wednesday October 30 at 17:30 Dubai Time.
This acceleration suggests resilience despite the Fed’s long campaign of interest rate hikes, which aimed to curb inflation but raised borrowing costs across the board.
Thanks to a strong labor market, consumer spending has held steady, fueling business activity and maintaining economic momentum.
In addition to US GDP, October’s Nonfarm Payrolls, will be closely watched as traders look for signs on the Fed’s next moves.
Markets have priced in a 96.8% likelihood of a 25bps rate cut in November, but strong GDP and job data may challenge these expectations.
Additionally, factors like the US presidential election and Middle East tensions are supporting demand for the US dollar as a safe haven.
Higher-than-expected GDP growth could strengthen the dollar further, while weaker data might favor assets like gold or other currencies over the USD.
Traders should expect high volatility because the ADP jobs data will also be released 15 minutes before the GDP report.
DOLLAR OUTPERFORMS AS GLOBAL CENTRAL BANKS EASE
Since October, the US Dollar has been outperforming other major currencies, driven by strong data and a relatively gradual rate cut cycle compared to other central banks.
While the Federal Reserve has adopted a more conservative rate cut approach, several global banks, including the Bank of Japan (BoJ) aren’t as hawkish, placing pressure on their currencies.
The BoJ is expected to hold its policy rate steady at its October meeting, despite rising inflation pressures and a weakened yen. If this stance continues, the yen may remain under pressure, further enhancing the dollar’s position.
USD/JPY TECHNICAL ANALYSIS
The USDJPY pair remains in a strong uptrend after bouncing from the September 16 low at 140.5, which established a key demand zone and helped push prices higher, surpassing technical levels. Additionally, the price moved above the 100 EMA, reinforcing the trend.
The RSI on the daily chart remains close to the overbought zone, making it important to watch for near-term consolidation or a further pullback before a potential move higher. Price formed a double top with the July 30 high at 153.7, potentially causing price to pull back. If buyers fail to take control, traders will be watching for a retracement back to the support zone around 151.
If buyers can take control, 154 will be an important resistance level to watch, with traders looking to see whether the pair will reclaim ground from July’s swing high.
