The EUR/USD currency pair
- Prev Open: 1.0825
- Prev Close: 1.0845
- % chg. over the last day: -0.18 %
The dollar index declined by 0.19% on Tuesday amid some liquidation of long positions ahead of the results of the 2-day FOMC meeting on Wednesday. In addition, a strengthening euro pressured the dollar amid stronger-than-expected economic news from the Eurozone. Eurozone Q4 GDP was revised upward to an unchanged q/q figure from the previously reported negative 0.1%. Spain's Consumer Price Index for January (EU harmonized) unexpectedly rose to 3.5% y/y from 3.3% y/y in December, stronger than expectations of a decline to 3.0% y/y.
- Support levels: 1.0807, 1.0774
- Resistance levels: 1.0831, 1.0849, 1.0877, 1.0915, 1.0931, 1.0985, 1.1010, 1.1037.
The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Yesterday, the price tested liquidity above 1.0849, followed by a reversal. Price declined sharply in the Asian session and is now moving towards the 1.0807 support level. It was important for buyers to hold the level of 1.0807, but it did not happen, so the pressure of sellers prevails again. For sales, we can consider the level of 1.0831, but only with confirmation. Targets to the nearest support level 1.0807. A breakdown of 1.0807 will open the way for the price to 1.0774.
Alternative scenario: if the price breaks the resistance level of 1.0885 and consolidates above it, the uptrend will likely resume.
- – German Retail Sales at 09:00 (GMT+2);
- – German Unemployment Rate (m/m) at 10:55 (GMT+2);
- – German Consumer Price Index (m/m) at 15:00 (GMT+2);
- – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
- – US Chicago PMI (m/m) at 16:45 (GMT+2);
- – US FOMC Statement at 21:00 (GMT+2);
- – US Fed Interest Rate Decision at 21:00 (GMT+2);
- – US FOMC Press Conference at 21:30 (GMT+2).
The GBP/USD currency pair
- Prev Open: 1.2698
- Prev Close: 1.2697
- % chg. over the last day: -0.01 %
The British pound has been in a clear trading range against the US dollar since mid-December. The US Federal Reserve will hold its meeting today, and the Bank of England will make its interest rate decision tomorrow. Neither central bank is expected to change their policy settings, but it will be important for markets to see how willing they are to do so later this year. So far, the US Central Bank has been more successful in taming inflation than the Bank of England, and the US economy looks more confident than the UK economy. The main focus for traders now is that both central banks may disappoint in their willingness to ease rates. As soon as one of the banks gives a dovish sign, it will put instant pressure on the national currency.
- Support levels: 1.2638, 1.2611, 1.2572, 1.2548, 1.2499
- Resistance levels: 1.2684, 1.2728, 1.2764, 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 Pound Sterling tested the liquidity below 1.2648 yesterday, after which the price bounced sharply, forming a false breakdown to the downside. However, buyers failed to break any resistance level, which increases the probability of another decline. Buy trades should be expected from the support level of 1.2638 but are subject to buyers' reactions. Selling can be sought intraday from the resistance level of 1.2684, but also with confirmation.
Alternative scenario: if the price breaks the resistance level at 1.2764 and consolidates above it, the uptrend will likely resume.
- Prev Open: 147.45
- Prev Close: 147.59
- % chg. over the last day: +0.09 %
- Support levels: 147.62, 146.97, 146.39, 145.45, 144.33, 143.41, 142.18
- Resistance levels: 148.41, 148.81, 149.33.
- – Japan Retail Sales (m/m) at 01:50 (GMT+2).
- Prev Open: 2032
- Prev Close: 2036
- % chg. over the last day: +0.19 %
- Support levels: 2028, 2019, 1997, 1987, 1973
- Resistance levels: 2044, 2064, 2072, 2084, 2090.
- – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
- – US Chicago PMI (m/m) at 16:45 (GMT+2);
- – US FOMC Statement at 21:00 (GMT+2);
- – US Fed Interest Rate Decision at 21:00 (GMT+2);
- – US FOMC Press Conference at 21:30 (GMT+2).
The USD/JPY currency pair
Yesterday, the yen initially rose on signs of a stronger Japanese economy after the Japanese unemployment rate unexpectedly fell to an 11-month low in December. But the yen then came under pressure amid stronger-than-expected economic reports from the US. Swaps estimate the odds of a 10 bps BoJ rate hike at 27% at the next meeting on March 19 and 75% at the April 26 meeting.
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday, buyers unexpectedly took the initiative and regained the priority intraday. Now, the price is trading above the moving averages. The support level at 147.62 can be considered for buying, with a selling zone formed above it, which may become a stumbling block for buyers. A price move above 147.80 will bring back the bullish rally. But if the support level at 147.62 does not hold the price, a sharp wave of sell-off with targets below 147 may occur.
Alternative scenario: if the price consolidates below the support at 144.92, the downtrend will likely resume.
The XAU/USD currency pair (gold)
Gold posted a 2-week high yesterday. The weakening of the dollar on Tuesday supported precious metals. Geopolitical risks also boosted demand for precious metals amid concerns over escalating conflict in the Middle East. Today, the US central bank will hold its first meeting of the year on Wednesday. The FOMC is expected to leave the rate at 5.5% at the current meeting, so investors' focus will be on Fed Chairman Jerome Powell's speech at the press conference following the meeting. Markets will react to any changes in the tone of the FOMC statement. A more dovish tone of the statement will put pressure on government bonds and the US dollar, giving confidence to indices and gold.
From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend, but all conditions for a change of priority are forming. Yesterday, gold tested liquidity above 2044, but there was a sharp reversal. In traders' circles, this reaction is called "rejection." Now, the price is forming a narrow flat, and probably, there will be no significant shifts until the FOMC meeting. Buying can be sought intraday from the support level of 2028 but with confirmation. The minimum profit target is 2044, but there are all prerequisites for growth above it. Price moves below 2028 will open the way for a decline to 2019-2021, and the price will be wide flat again.
Alternative scenario: if the price breaks through and consolidates above the support level of 2049, the uptrend will likely resume.
by , 2024.01.31
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