Weekly Forex Forecast: Key Insights for Traders on GBP/USD, USD/JPY, Gold, and S&P 500

In the latest Weekly Forex Forecast, we delve into the market movements and trading opportunities for the week of September 22. Adam Lemon, DailyForex's Chief Analyst since 2013, shares his insights based on extensive experience in financial markets, including a notable tenure at Merrill Lynch.

Market Overview

Adam emphasizes the importance of risk management and trend following for retail traders aiming for positive returns. Last week, he identified several trading opportunities:

• USD/JPY Short: Although a daily close below ¥140 was anticipated, this setup did not materialize.
• Gold Long: Gold prices surged, yielding a gain of 1.68%.
• 2-Year US Treasury Yield Short: This position resulted in a loss of 0.25% as yields rose.

Overall, these trades produced a net gain of 1.43%, averaging 0.48% per asset.

Key Economic Events

The week was marked by significant economic announcements:

• US Federal Reserve: The Fed cut rates by 0.50% and hinted at further cuts by the end of 2024, a dovish move that was largely anticipated.
• Bank of Japan: Maintained its interest rate, signaling continued normalization.
• UK Bank Rate: The Bank of England's decision to hold rates steady was slightly more hawkish than expected, boosting the British Pound to new long-term highs.
• Inflation Data: UK CPI met expectations at 2.2%, while Canadian CPI fell short, showing a month-on-month decrease of 0.2%.
• US Retail Sales: Surprising strength with a 0.1% increase against expectations of a decline.

Market Predictions

Looking ahead, the upcoming week appears slower in terms of high-impact data, but includes speeches from central bank leaders. Adam forecasts potential gains for the EUR/USD and anticipates a rebound for the Japanese Yen after a week of selling pressure.

Directional volatility increased last week, with 44% of major currency pairs fluctuating by over 1%. The Australian Dollar emerged as the strongest currency, while the Japanese Yen was the weakest.

Currency Pair Analysis

• USD: The US Dollar Index showed bearish candlestick patterns, indicating indecision and a potential long-term bearish trend. Adam remains cautiously bearish on the Dollar.
• GBP/USD: The pair rose significantly after the Bank of England's decision to maintain interest rates, closing at a new 2.5-year high, making it a favorable buy.
• USD/JPY: Potential support was identified at ¥139.77, with recent price action indicating a strong rejection of this level, leading to a profitable trade opportunity.
• Gold: Continuing its bullish trend, Gold reached new record highs, supported by its correlation with major equity indices.
• S&P 500: After a period of consolidation, the index broke out to new highs, presenting a bullish outlook for trend traders.

Conclusion

For traders looking to capitalize on market movements, Adam identifies the best opportunities this week as:

• Short the 2-Year US Treasury Yield: Aiming for a daily close below 3.55% to enter a short position.

Stay informed and ready to trade with our comprehensive weekly Forex forecast, and explore top Forex brokers for your trading needs.