. Daily FX Analysis - EUR/USD defends, GBP eyes Fed, NZD climbs.

Daily FX Analysis – EUR/USD defends, GBP eyes Fed, NZD climbs.

Daily FX Analysis – EUR/USD defends, GBP eyes Fed, NZD climbs.

28 Dec 2023

Introduction:

In currency markets, EUR/USD defends gains above 1.1100, anticipating crucial U.S. data. Expectations of a dovish Fed stance fuel the pair’s upward momentum. Meanwhile, GBP/USD holds steady above 1.2800, reflecting an 88% probability of a March 2024 Fed rate cut. NZD/USD and AUD/USD eye U.S. Jobless Claims, with the NZD benefiting from a softer USD, and the AUD maintaining highs amid the RBA’s hawkish stance. Investors across these pairs await key U.S. data for further market direction.

EUR/USD:

EUR/USD defends gains above 1.110 in anticipation of upcoming U.S. data.

EUR/USD is securing slight support above 1.1100, pulling back from multi-month peaks during Thursday’s European trading session. The pair’s upward trend is supported by expectations of a dovish stance from the Federal Reserve regarding the interest rate path.

On Wednesday, the EUR/USD extended its gains, surpassing the 1.1100 mark for the first time since July. The upward movement was propelled by a broadly weakened U.S. Dollar. The Greenback continues to face pressure, particularly as US Treasury yields hit new lows.

Investors are awaiting the release of US Jobless Claims data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.1092| Positive Crossover | Bullish
  • MA 20: 1.1019| Positive Crossover | Bullish
  • MA 50: 1.0948 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.1088 | Positive Crossover | Bullish
  • MA 20: 1.1012 | Positive Crossover | Bullish
  • MA 50: 1.0903 | Positive Crossover | Bullish

RSI (Relative Strength Index): 75.07| Positive Zone | Buy

Stochastic Oscillator: 100| Buy zone | Neutral

Resistance And Support Levels:

  • R1: 1.1123| R2: 1.1268
  • S1: 1.1037| S2: 1.0889

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.1154| Take Profit: 1.1268 | Stop Loss: 1.1085

GBP/USD:

GBP/USD maintains its position above 1.2800 amid the USD weakness, focusing on US Jobless Claims.

GBP/USD draws interest from buyers above 1.2800 due to a weakened USD. Currently, markets reflect an 88% probability of a Fed rate cut commencing in March 2024.

During Thursday’s Asian trading hours, the GBP/USD pair continues moving upward beyond the 1.2800 level. The decrease in inflationary pressure in the U.S. economy, coupled with dovish remarks from the Federal Reserve (Fed), has led to a decline in the U.S. Dollar (USD) and provided some backing to GBP/USD.

On Thursday, investors will be directing their attention to the US Initial Jobless Claims, Trade Balance, and November Pending Home Sales.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2777| Positive Crossover | Bullish
  • MA 20: 1.2714| Positive Crossover | Bullish
  • MA 50: 1.2652 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2775 | Positive Crossover | Bullish
  • MA 20: 1.2713 | Positive Crossover | Bullish
  • MA 50: 1.2652 | Positive Crossover | Bullish

RSI (Relative Strength Index): 64.45| Buy Zone | Bullish

Stochastic Oscillator: 94.61| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.2797| R2: 1.2991
  • S1: 1.2640| S2: 1.2495

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2850| Take Profit: 1.2991 | Stop Loss: 1.2766

NZD/USD:

NZD/USD gradually advances to 0.6360 on the softer USD, eyes on US Jobless Claims.

Gaining traction around 0.6360 due to a softer USD, NZD/USD is predicted by ANZ analysts to experience an upside driven by a global return of risk appetite and the NZD’s high carry advantage until 2024.

The NZD/USD pair is exhibiting strength above the 0.6350 region, buoyed by a weakened US Dollar (USD) and increased risk appetite, characteristic of the low trading volume in the final week of 2023.

Market participants are anticipating the release of US Jobless Claims, Trade Balance, and Pending Home Sales data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6330 | Negative Crossover | Bearish
  • MA 20: 0.6295| Positive Crossover | Bullish
  • MA 50: 0.6214 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6332 | Negative Crossover | Bearish
  • MA 20: 0.6295 | Positive Crossover | Bullish
  • MA 50: 0.6214| Positive Crossover | Bullish

RSI (Relative Strength Index): 61.79| Buying Zone| Bullish

Stochastic Oscillator: 74.16 |Buying Zone | Neutral

Resistance And Support Levels:

  • R1: 0.6337| R2: 0.6410
  • S1: 0.6256 | S2: 0.6168

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Limit Buy: 0.6306 | Take Profit: 0.6399 | Stop Loss: 0.6249

AUD/USD:

The AUD/USD remains just below a significant threshold, with attention directed toward upcoming U.S. labor and housing data.

The Australian Dollar persists in attaining new highs amidst a weakened US Dollar. The robust economic conditions in Australia contribute to the Reserve Bank of Australia (RBA) maintaining its hawkish stance.

On Thursday, the Australian Dollar (AUD) remains on an upward trajectory, driven by the U.S. Dollar (USD) falling below the 101.00 level amid subdued U.S. Treasury yields. The AUD/USD pair receives further upward momentum from increased risk appetite, as investors speculate on a potential dovish stance from the Federal Reserve (Fed) regarding interest rates in early 2024.

Investors are anticipating releases of U.S. data to obtain additional insights into the Federal Reserve’s stance.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6832 | Negative Crossover | Bearish
  • MA 20: 0.6791| Positive Crossover | Bullish
  • MA 50: 0.6685| Positive Crossover | Bullish

Simple:

  • MA 5: 0.6835 | Negative Crossover | Bearish
  • MA 20: 0.6791| Positive Crossover | Bullish
  • MA 50: 0.6685| Positive Crossover | Bullish

RSI (Relative Strength Index): 64.07| Buying Zone | Bullish

Stochastic Oscillator: 76.32| Buy Zone | Negative

Resistance And Support Levels:

  • R1: 0.6830 | R2: 0.6895
  • S1: 0.6770 | S2: 0.6688

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Buy Limit: 0.6770| Take Profit: 0.6858 | Stop Loss: 0.6714.

Elsewhere in the Forex Market

EUR/GBP up 0.08% to 0.8683. The USD/CHF was down 0.42% to 0.8389. The USD/CAD is down 0.06% at 0.3200. USD/JPY down 0.67% at 140.86. EUR/JPY is up 0.22% at 157.58, The USD/CNY is down 0.43% at 7.1099, and the AUD/SEK is down 0.30% at 6.7840, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) Industrial Production (MoM) (Nov) Actual –0.9, Forecast –0.6%, Previous 1.3% at 05:20.

(JPY) Retail Sales (YoY) (Nov) Actual 5.3%, Forecast 5.0%, Previous 4.2% at 5:20.

(USD) Initial Jobless Claims Forecast 210K, Previous 205K at 19:00.

(USD) Pending Home Sales (MoM) (Nov) Forecast 1.0%, Previous –1.5% at 20:30.

(USD) Crude Oil Inventories Forecast –2.704M, Previous 2.909M at 21:30.