Most Read: September Jobs Report: Payrolls at 336,000; Gold and US Dollar Go Their Own Way

U.S. stocks sank in the third quarter, hurt by soaring U.S. Treasury yields. During this period, the Nasdaq 100 fell about 2.75% while the S&P 500 plunged approximately 3.40%. Meanwhile, the surge in nominal and real rates propelled the broader U.S. dollar (DXY) to the highest level since November 2022, creating a hostile environment for gold and silver.

The fourth quarter’s trajectory for key financial assets could mirror that of the prior three months, particularly if U.S. yields continue their upward trajectory. As of the first week of October, there’s scant evidence that bond market dynamics will reverse, with the U.S. economy’s remarkable staying power giving Fed officials the leeway to maintain a restrictive position.

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At the latest FOMC meeting, policymakers hinted at the possibility of further tightening in 2023 but stopped short of firm endorsement. For this reason, traders have not entirely priced in another quarter-point hike for this year, but the situation could change if incoming data continues to surprise to the upside, as was the case with the September U.S. employment report.

In the event that interest rate expectations reprice in a more hawkish direction on account of sticky inflation and economic resilience, the U.S. dollar’s upward momentum may persist, exacerbating weakness in the precious metals complex. In such a scenario, equity indices could also come under pressure, paving the way for further losses for the S&P 500 and Nasdaq 100.

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With the U.S. dollar in a dominant position heading into Q4, the euro, British pound, and Japanese yen may find themselves in a vulnerable state, with a possible inclination toward further depreciation. Their prospects, however, could improve if the Fed begins to embrace a softer posture for fear of a potential hard landing. Traders should therefore keep a close eye on policy guidance.

Focusing on the yen now, Bank of Japan’s ultra-dovish will remain a headwind for the Asian currency in the early part of Q4, but the tide may turn in its favor toward the latter part of the year. As we approach 2024, the BoJ may start to signal a policy shift. As investors attempt to front-run the normalization cycle, USD/JPY, EUR/JPY, and GBP/JPY may head lower.

Different market dynamics are poised to unfold in the near term, potentially paving the way for increased volatility and attractive trading setups in major assets. To dive deeper into the catalysts that will affect currencies, commodities (gold, oil, silver) and digital assets (Bitcoin) in the fourth quarter, explore the comprehensive technical and fundamental forecasts put together by DailyFX’s team of experts.

For a complete overview of the euro’s technical and fundamental outlook in the coming months, make sure to grab your complimentary Q4 trading forecast now!

PERFORMANCE OF KEY ASSETS IN THE THIRD QUARTER

Source: TradingView

Q4 TRADING FORECASTS:

The British Pound Q4 Fundamental Forecast – Are We There Yet?

The overarching question for Sterling in Q4 is – Will official data match Governor Bailey’s and the slim majority of MPC members’ confidence?

Australian Dollar Q4 Forecast: AUD Vulnerable as Headwinds Stack Up

The Australian dollar has sold off in 2H with further frailties ahead. AUD/USD threatens to break down while AUD/JPY gears up for a reversal at major resistance.

Bitcoin Q4 Fundamental Outlook: Spot ETF Decisions to be the Driving Force?

Bitcoin prices continued their struggle in Q3 as market uncertainty and low volatility played key roles. Let’s dig a little deeper into some of the key factors that could affect the world’s largest cryptocurrency in Q4.

Euro Q4 Technical Forecast: EUR/USD, EUR/GBP & EUR/JPY at Critical Juncture

This article presents an in-depth analysis of the euro’s technical outlook, covering EUR/USD, EUR/GBP, and EUR/JPY. It provides valuable insights into price action dynamics, highlighting key levels to watch in the fourth quarter.

Oil Fundamental Forecast: Can Q4 Sustain Oil Gains?

Q4 crude oil outlook focused on OPEC+, monetary policy and global economic growth conditions.

Japanese Yen Q4 Technical Forecast: USD/JPY Entrenched Within Bullish Uptrend

This article is dedicated to examining the yen’s technical outlook. It offers an exhaustive price action analysis of the Japanese currency, discussing key levels that could act as support or resistance heading into the fourth quarter.

Gold Q4 Fundamental Forecast: Weakness to Persist as Real Yields Rise Further

Waning demand for the yellow metal amid rising real rates and a stronger US dollar have continued to undermine gold. The scenario seems unlikely to change until the year’s end.

US Equities Technical Outlook: Range-Bound with Downside Potential

The equity selloff the end of Q3 places the major US indices at a crucial level of support. Failure of support with sustained momentum leaves stocks open to further downside.

US Dollar Q4 Fundamental Outlook: How CPI Shelter Lag May Drive Monetary Policy Next

The US Dollar cautiously rose against its major peers in the third quarter as financial markets increased where the terminal Federal Funds Rate will go. Will CPI shelter lag change this view next?

Looking for actionable trading ideas? Download our top trading opportunities guide packed with insightful strategies for the fourth quarter!

Q4 TOP TRADING OPPORTUNITIES

Short USD/JPY: A Reprieve in the DXY Rally and FX Intervention by the BoJ

The USD/JPY has held the high ground for the majority of Q3 with rallies to the downside proving short-lived at this stage. The potential for downside moves however remains in play and with the right fundamental developments.

Short USD/ZAR: Top Trade Opportunities

USD/ZAR in Q4 looks to the US for guidance while keeping a close eye on China and the local landscape.

Q4 Trade Opportunity: EUR/CAD Long-Term Reversal as Oil, Inflation Rise

EUR/CAD primed for a LT reversal upon ‘head and shoulders’ confirmation. Souring fundamentals in Europe combined with rising oil and interest rate expectations in Canada are considered in this article.

The Range Trade is Alive and Well as Markets Ponder Central Bank Rate Strike

Range trading unfolds as several major global central banks may have put the cue back in the rack on rate rises.

Q4 Top Trading Opportunity: Is the US Dollar Rally Coming to An End?

The U.S. dollar has been a one-way trade since the middle of July, rallying in excess of 6% since printing a 99.49 low. Will the Tide Turn in the Last Three Months of 2023?

Crude Oil Prices Might Have Ran Too Far in Q3 Amid a Deteriorating China Outlook

Crude oil prices might have run too far in the third quarter, setting the stage for potential disappointment amid deteriorating economic conditions in China.

— Article Body Written by Diego Colman, Contributing Strategist for DailyFX

— Individual Articles Composed by DailyFX Team Members