. Daily FX Analysis - BOJ Sparks USD/JPY Turmoil, EUR/USD Eyes 2024 Cuts.

Daily FX Analysis – BOJ Sparks USD/JPY Turmoil, EUR/USD Eyes 2024 Cuts.

Daily FX Analysis – BOJ Sparks USD/JPY Turmoil, EUR/USD Eyes 2024 Cuts.

19 Dec 2023

Introduction

In today’s market overview, we delve into the recent movements and technical outlooks of key currency pairs, shedding light on their reactions to central bank decisions and economic signals. From the USD/JPY responding to the Bank of Japan’s policy stance to the GBP/USD gearing up for the November inflation report, we dissect critical data and technical indicators to provide insights into potential market directions. Additionally, we explore the resilience of AUD/USD amidst resistance and the EUR/USD’s response to signals from major central banks. Join us as we navigate the intricate landscape of the forex market, where each pair tells a unique story of economic shifts and investor sentiment.

Markets In Focus Today – USD/JPY

USD/JPY Reaction to Bank of Japan’s Policy Decision:

Following the Bank of Japan’s anticipated decision to maintain ultra-easy policy settings and unchanged dovish forward guidance in its December monetary policy meeting, the USD/JPY currency pair experienced a brief dip. The yen weakened against the US dollar, with USD/JPY briefly slipping to 143.78 per dollar after the central bank’s decision. Market attention is now centered on the upcoming press conference by BOJ Governor Kazuo Ueda at 3:30 p.m. (0630 GMT), where analysts will be keenly listening for any cues regarding the central bank’s potential exit from negative short-term rates and its implications for USD/JPY.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 144.29 | Positive Crossover | Bullish
  • MA 20 : 145.67 | Negative Crossover | Bearish
  • MA 50 : 147.20 | Negative Crossover | Bearish

Simple :

  • MA 10 : 144.22 | Positive Crossover | Bullish
  • MA 20 : 146.17 | Negative Crossover | Bearish
  • MA 50 : 148.52 | Negative Crossover | Bearish

RSI (Relative Strength Index): 43.13 | Neutral Zone | Neutral

Stochastic   Oscillator : 29.31 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 150.92 R2 : 152.15
  • S1 : 141.10 S2 : 138.60

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Buy: 141.10 | Take Profit: 138.60 | Stop Loss: 142.50

EUR/USD

EUR/USD Movement Amid Central Bank Signals

The dollar index slipped 0.1% as markets considered potential 2024 rate cuts by the Fed, ECB, and BoE, with attention on the Bank of Japan. Post last week’s dovish Fed and hawkish ECB/BoE meetings, EUR/USD rose by 0.3%, driven by rebounding Bunds-Treasury yield spreads. Concerns over German business sentiment and a potential GDP drop added uncertainty. While 2- and 10-year bund yields rose, their U.S. counterparts remained stable. EUR/USD is expected to trade within Friday’s 1.0885-1.1004 range ahead of key U.S. data, focusing on contrasting signals from the dovish Fed and rebounding ECB.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.09 | Positive Crossover | Bullish
  • MA 20 : 1.09 | Positive Crossover | Bullish
  • MA 50 : 1.08 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.08 | Positive Crossover | Bullish
  • MA 20 : 1.09 | Positive Crossover | Bullish
  • MA 50 : 1.08 | Positive Crossover | Bullish

RSI (Relative Strength Index): 58.86 | Neutral Zone | Neutral

Stochastic   Oscillator : 67.34 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.10 R2 : 1.11
  • S1 : 1.06 S2 : 1.05

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 1.09 | Take Profit: 1.11 | Stop Loss: 1.08

GBP/USD

GBP/USD Focus: Navigating November’s Inflation Report

This week’s focus for GBP/USD revolves around the November inflation report, driven by substantial easing expectations for the coming year. With over four 25bps rate cuts priced in, the market anticipates the first cut by May (0#BOEWATCH). While this aligns with the typical cycle between the last rate hike and the first cut, Bank of England (BoE) policymakers diverge, citing elevated inflation, notably the services Consumer Price Index (CPI) at 6.6%. The recent BoE meeting maintained the status quo, heightening the significance of upcoming data in shaping market pricing. With a considerable easing already expected, a lower bar for triggering a hawkish repricing may boost sterling. A crucial element is the surprise factor, especially in services CPI. Presently 0.3 percentage points below the BoE’s forecast of 6.9%, any dip to 6.3% or below could weaken GBP, deviating from the bank’s 6.4% projection by March 2024.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.26 | Positive Crossover | Bullish
  • MA 20 : 1.26 | Positive Crossover | Bullish
  • MA 50 : 1.25 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.26 | Positive Crossover | Bullish
  • MA 20 : 1.26 | Positive Crossover | Bullish
  • MA 50 : 1.24 | Positive Crossover | Bullish

RSI (Relative Strength Index): 59.08 | Neutral Zone | Neutral

Stochastic   Oscillator : 57.48 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.27 R2 : 1.29
  • S1 : 1.22 S2 : 1.21

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 1.27 | Take Profit: 1.29 | Stop Loss: 1.26

AUD/USD

AUD/USD Inches Up Despite Resistance

The Australian dollar (AUD/USD) made a modest 0.2% gain to $0.6720 on Tuesday, supported by yen selling following the Bank of Japan’s policy decision. Despite hitting a fresh five-month high of $0.6736 before retracing most gains, AUD/USD faced resistance around $0.6728. This level has posed a challenge three times in the past week, despite the currency’s robust 7% rally since October.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.67 | Positive Crossover | Bullish
  • MA 20 : 0.66 | Positive Crossover | Bullish
  • MA 50 : 0.65 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.66 | Positive Crossover | Bullish
  • MA 20 : 0.66 | Positive Crossover | Bullish
  • MA 50 : 0.65 | Positive Crossover | Bullish

RSI (Relative Strength Index): 66.86 | Neutral Zone | Neutral

Stochastic   Oscillator : 88.62 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.67 R2 : 0.68
  • S1 : 0.64 S2 : 0.63

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion: Limit Buy: 0.67 | Take Profit: 0.68 | Stop Loss: 0.66

Elsewhere In The Forex Market

EUR/USD: 1.0945 (+0.0023, +0.21%) USD/JPY: 144.68 (+1.94, +1.36%) GBP/USD: 1.2687 (+0.0045, +0.36%) USD/CAD: 1.3386 (-0.0009, -0.07%) AUD/USD: 0.6726 (+0.0021, +0.31%) USD/MXN: 17.1397 (-0.0177, -0.10%) USD/INR: 83.176 (+0.025, +0.03%)

Key Economic Events & Data Release Today:

7:00PM(IST)-CAD-CPI m/m 8:00PM(IST)-USD-FOMC Member Barkin Speaks