Week ahead forecast: USD/JPY, Nasdaq and gold

In the final trading days of October, both the S&P 500 and Nasdaq entered correction territory, marking their worst October performance since 2018. Meanwhile, in the APAC region, Hong Kong's Hang Seng Index hit a yearly low in October and recorded its third consecutive month of decline.

Despite the recent wave of stimulus measures, China’s economic recovery remains challenging. China's Manufacturing PMI returned to the contraction zone in October, while the service sector grew at its slowest pace in ten months.

Meanwhile, on Tuesday, the Bank of Japan (BoJ) kept its key short-term interest rate unchanged, amid speculation about the a potential relax in yield curve control, following Japan's 10-year bond yield surging to a new decade-high.

Rolling into the penultimate month of the year, investors cautiously await the Federal Reserve's decision on the first day of November. Although it’s widely anticipated the US Federal Reserve will not adjust its interest rates this time, attention is now focused on how the US central bank intends to address the challenge of sticky inflation against the backdrop of growing recession concerns.

This week, we focus on the following:

USD/JPY

The outlook for this pair is filled with a high level of uncertainty surrounding both the US dollar and the Japanese yen.

On one hand, this week's FOMC meeting is likely to lead traders to factor in the possibility of a December rate hike, potentially boosting the greenback if the chances are viewed as high.

On the other hand, both the Japanese central bank and the Japanese government have recently attempted to signal intervention warnings to strengthen the yen over the past few weeks. Considering this, the possibility of the Japanese yen rallying in the event of FX intervention materializing in the days ahead can't be ruled out.

From a technical perspective, the near-term support for USD/JPY is at 148.8, where the 50-day moving average is located. Immediate resistance is expected in the range of 149.9 to 150.7.

Nasdaq

As mentioned earlier, the tech-heavy Nasdaq has officially entered the correction zone. The current pullback is leaving the range between 14,200 and 14,363 in focus. Looking ahead, the stance of the Fed in the November FOMC meeting as well as Apple's earnings results are poised to profoundly influence the Nasdaq's outlook.

In the event that both of these developments further exacerbate investors' concerns, the Nasdaq could keep navigating the area below 14,200, with the support from June low no longer holding.

On the other hand, there is a possibility of retesting the 200-day moving average and the upper limit of the October trajectory, within the range of 14,340 to 14,500, should the risk-aversion sentiment ease this week.

Gold

The price of gold is hovering around $2,000 per ounce at the beginning of the week, marking its highest level since May.

The momentum, if continues, will push the price of yellow metal to retest its mid-May high above 2021 while on the other hand, near term support can be found from July peak above 1987.