Forex Market Forecast for November 2023

The conflict in the Middle East resulted in a surge for safe haven currencies during October, with the US dollar and Swiss franc the primary beneficiaries. As we look to November, the near-term uncertainty should see that trend continue. However, any notion of tension cooling could see risk-associated currencies such as the GBP rally. Another aspect to keep an eye on is yields, once again:

• “Will yields continue to rise?” We wrote that statement at the start of October, and it continues to hold true, with US 10-year yields at their highest since July 2007.
• Geopolitical uncertainty will be another key theme to watch this month, with the Middle East conflict heightening global uncertainty.
• Volatility ramped up during October, and as it is yet to cool, this will need to be reflected in your trading/investing strategies.

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US Dollar

It was another month of US dollar gains in October, with the global uncertainty pushing investors to safe haven currencies. We stated last month that “if the current macro environment persists, then expect to see further strength” in the greenback. It not only persisted but got worse during October. Looking ahead to November, the near-term direction suggests further USD strength. However, if we can hopefully see tensions cool, the USD rally will ease. Elsewhere, keep your eye on US treasury yields, which have surged. In addition, Federal Reserve Chair Powell said inflation is still too high, so there is the potential for further rate increases.

Key Levels

• EURUSD: Higher – 1.0670, Lower – 1.0460
• GBPUSD: Higher -1.2450, Lower – 1.2250
• USDJPY: Higher – 151.94, Lower – 147.40

Euro

Euro zone business activity surprisingly dipped in October, increasing fears the bloc could slip into a recession. Germany, its largest economy, which is already in a recession, saw business activity contract for a fourth straight month. The ECB is expected to hold rates steady. From a technical perspective, the EURUSD downtrend will likely continue in the near term, with the 1.05 level a potential target over the next week or so.

Key Levels

• EURUSD: Higher – 1.0670, Lower – 1.0460
• EURGBP: Higher – 0.8800, Lower – 0.8680

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British Pound

The GBP downtrend took a slight pause in October, but given the uncertainty, it looks like it is aiming to push lower. The BoE held rates steady, and many believe UK interest rates peaked. When it comes to technicals, the GBPUSD daily chart suggests the October move was a bear flag formation forming. Combined with the current macroeconomic and geopolitical outlook, another leg lower looks like a real possibility for the GBPUSD pair.

Key Levels

• EURGBP: Higher – 0.8800, Lower – 0.8680
• GBPUSD: Higher -1.2450, Lower – 1.2250

Japanese Yen

A sudden surge in the Japanese yen a few weeks ago resulted in lots of talk about a potential Bank of Japan intervention. However, many after the event believe that was not the case. Nevertheless, as the USDJPY trades above 150.00 once again, approaching the high of October 2022, the risk of a potential intervention has increased. In addition, to stop the rise, the BoJ may be forced to change policy. Regardless, the risks in trading the pair mean extreme caution should be taken if you take a position over the next few weeks.

Key Levels

• USDJPY: Higher – 151.94, Lower – 147.40
• EURJPY: Higher – 159.79, Lower – 157.00

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People Also Read:

• Market Report – 23rd October 2023
• Market Report – 16th October 2023
• Market Report – 9th October 2023
• Market Report – 2nd October 2023

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