The EUR/USD currency pair
- Prev Open: 1.0870
- Prev Close: 1.0881
- % chg. over the last day: +0.10 %
The dollar index hit a 1-month high on Wednesday. Wednesday's jump in T-note yields strengthened the interest rate differential and boosted the dollar. The dollar's strength on Wednesday put pressure on the euro. However, EUR/USD recovered most of its losses on comments from ECB President Lagarde and ECB Governing Council representative Knot, which lowered market expectations for an ECB interest rate cut. Swap markets now expect only a 21% probability of an ECB rate cut at the March ECB meeting, down from a 50% probability a week ago. Eurozone's inflation data showed no change as expected.
- Support levels: 1.0869, 1.0851, 1.0827
- Resistance levels: 1.0908, 1.0938, 1.0985, 1.1010, 1.1037, 1.1080, 1.1097, 1.1171.
The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The price reached the support level of 1.0851, where buyers showed a reaction. The price has changed the market structure on the lower time frames, which, taking into account the MACD divergence, increases the probability of a corrective movement. Under such market conditions, consolidation of the price above 1.0908 will open the way to 1.0937. Buying can be looked for from the support level of 1.0869 or 1.0827, but only with confirmation and short targets, as these will be positions against the main price bies. Selling can be considered from 1.0908 or from the moving averages.
Alternative scenario: if the price breaks the resistance level of 1.0969 and consolidates above it, the uptrend will likely resume.
- – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+2);
- – US Building Permits (m/m) at 15:30 (GMT+2);
- – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
- – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
- – Eurozone ECB President Lagarde Speaks at 17:15 (GMT+2);
- – US FOMC Member Bostic Speaks at 18:30 (GMT+2).
The GBP/USD currency pair
- Prev Open: 1.2631
- Prev Close: 1.2675
- % chg. over the last day: +0.35 %
The UK inflation data came as a surprise. Overall inflation rose from 3.9% to 4.0% in annualized terms (the expectation was for a decline to 3.8%). Core inflation (excluding food and energy prices) remained at 5.1% y/y (expected to fall to 4.9%). However, a more detailed report showed that the higher inflation reading for December did not indicate an overall rise in the prices of the components that make up the core index, indicating continued progress in bringing inflation down to 2%. Overall, the situation remains unchanged. The UK is expected to see further progress in the fight against inflation, with services inflation remaining a concern for the Bank of England.
- Support levels: 1.2626, 1.2611, 1.2572, 1.2548, 1.2499
- Resistance levels: 1.2712, 1.2787, 1.2827, 1.2881, 1.2937
From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price declined yesterday to 1.2611, where buyers showed a reaction in the form of a bullish initiative. Similar to the euro, the price has changed the price structure in the lower time frames, and a correction is developing. The MACD indicator became positive. Buying should be looked for from the support level of 1.2626 but with confirmation in the form of buyers' reactions and short stop-losses. Sell deals are best considered from the resistance level of 1.2712. A breakout of this level is undesirable for sellers if they want to maintain their bias.
Alternative scenario: if the price breaks through the resistance level of 1.2764 and consolidates above it, the uptrend will likely resume.
- Prev Open: 147.17
- Prev Close: 148.15
- % chg. over the last day: +0.66 %
- Support levels: 146.80, 146.39, 145.45, 144.33, 143.41, 142.18, 141.12
- Resistance levels: 148.51, 149.38
- – Japan Industrial Production (m/m) at 06:30 (GMT+2).
- Prev Open: 2028
- Prev Close: 2006
- % chg. over the last day: -1.10 %
- Support levels: 1997, 1987, 1973
- Resistance levels: 2019, 2031, 2048, 2064, 2072, 2084, 2090
- – US Building Permits (m/m) at 15:30 (GMT+2);
- – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
- – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
- – US FOMC Member Bostic Speaks at 18:30 (GMT+2).
The USD/JPY currency pair
The strengthening of the US dollar to a one-month-high put pressure on the Japanese currency. As a result, the yen extended losses on Wednesday and hit a 1.5-month low against the dollar. In addition, expectations that tomorrow's inflation data in Japan will point to a decline, as well as expectations that the Bank of Japan will maintain the policy of negative interest rates at next week's meeting. This is also a bearish factor for the yen.
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is growing steadily, but now it has reached the resistance level at 148.51, where the sellers reacted somehow. Moving averages support growth, and the MACD indicator indicates upward momentum, but in higher time frames, a divergence is formed. The probability of correction is increasing. Under such market conditions, buying should be sought from the support level of 146.80 or from the moving average lines. Selling can be considered within the correction from the resistance level of 148.51, but only with intraday confirmation and short targets.
Alternative scenario: if the price consolidates below the support at 144.33, the downtrend will likely resume.
The XAU/USD currency pair (gold)
Wednesday's rally of the dollar index to a one-month high is a bearish factor for metal prices. As a result, gold extended losses and fell to a one-month low. In addition, stronger-than-expected economic news from the US on Wednesday boosted T-note yields and pushed back the likelihood of a Fed rate cut, driving gold prices lower. Also, bearish for gold is the continued liquidation of long positions by funds after long positions in gold ETFs fell to a 4-year low on Tuesday. For a trend reversal in gold, we need to see a shift in probabilities to the upside relative to a rate cut soon. The sooner rates come down, the sooner gold will return to growth.
From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. The price has consolidated below the priority change level and is trading below the moving averages. The MACD indicator is in the negative zone, but the momentum is behind the bulls. Under these market conditions, selling can be considered from 2019, subject to sellers' reactions. With a high probability, the price will make another downward wave. A breakout of 2019 on impulse would indicate that below 2013, a large number of sellers will be locked in, which could lead to a strong rise in price to 2049. But such a move needs a trigger in the form of important news. Today and tomorrow, there are no such events on the economic calendar.
Alternative scenario: if the price breaks through and consolidates above the support level of 2049, the uptrend will likely resume.
by , 2024.01.18
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