. Daily FX Analysis - EUR/USD, GBP/USD resist, AUD retreats, USD/JPY grapples.

Daily FX Analysis – EUR/USD, GBP/USD resist, AUD retreats, USD/JPY grapples.

Daily FX Analysis – EUR/USD, GBP/USD resist, AUD retreats, USD/JPY grapples.

22 Dec 2023

Introduction:

In currency markets, EUR/USD is positioned below 1.1000, retracting from a recent three-week peak at 1.1012. Supported by a less dovish ECB stance amid expectations of Fed easing, the pair climbed to 1.1000 as the Dollar weakened. GBP/USD hovers near 1.2700, responding to mixed UK data. The Australian Dollar (AUD/USD) retreats from a five-month high ahead of US Core PCE data, influenced by USD weakness. USD/JPY pulls back from a one-week high on softer Japanese inflation data, with traders eyeing the US Core PCE Price Index for direction.

EUR/USD:

EUR/USD hovers below 1.1000 after reaching a two-month high.

EUR/USD stays below the psychological resistance level of 1.1000, retracting from the three-week peak at 1.1012.

The pair finds support in a relatively less dovish stance from the ECB, in contrast to the heightened expectations of the Fed easing monetary policy in the first quarter of 2024.

On Thursday, the EUR/USD climbed to the 1.1000 region, propelled by a resumption of Dollar weakness, even in the face of increased Treasury yields. U.S. economic data presented a mixed picture, preceding the eagerly awaited consumer inflation data scheduled for Friday.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0992| Positive Crossover | Bullish
  • MA 20: 1.0944| Positive Crossover | Bullish
  • MA 50: 1.0897 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0991 | Positive Crossover | Bullish
  • MA 20: 1.0953 | Positive Crossover | Bullish
  • MA 50: 1.0872 | Positive Crossover | Bullish

RSI (Relative Strength Index): 66.57| Positive Zone | Buy

Stochastic Oscillator: 85.49| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.1017| R2: 1.1180
  • S1: 1.0913| S2: 1.0791

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.1045| Take Profit: 1.1180 | Stop Loss: 1.0960

GBP/USD:

GBP/USD hovers around the 1.2700 level following a blend of mixed economic data from the UK.

In the European morning on Friday, GBP/USD remains within a tight range near 1.2700. UK data indicates that Retail Sales exceeded expectations in November. However, on a less positive note, the Q3 GDP growth saw a downward revision.

Benefiting from widespread selling pressure on the US Dollar (USD) during the latter part of Thursday, GBP/USD successfully recovered a significant portion of the losses incurred on Wednesday.

Investors will closely monitor activity on Wall Street in anticipation of the Christmas break.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2684| Positive Crossover | Bullish
  • MA 20: 1.2670| Positive Crossover | Bullish
  • MA 50: 1.2628 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2679 | Positive Crossover | Bullish
  • MA 20: 1.2690 | Positive Crossover | Bullish
  • MA 50: 1.2635 | Positive Crossover | Bullish

RSI (Relative Strength Index): 55.2| Buy Zone | Bullish

Stochastic Oscillator: 45.8| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.2699| R2: 1.2866
  • S1: 1.2605| S2: 1.2499

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2729| Take Profit: 1.2866 | Stop Loss: 1.2649

AUD/USD:

The Australian Dollar retreats from a five-month peak in anticipation of the US Core PCE data.

The Australian Dollar saw an upswing as the US Dollar weakened, approaching monthly lows. The Australian central bank will assess further data for future monetary policy decisions. Weaker US data adds to speculation about the Fed considering monetary policy easing in early 2024, with US GDP Annualized Q3 and Core PCE QoQ easing by 4.9% and 2.0%, respectively.

On Friday, the Australian Dollar (AUD) is trading below its recent peak of 0.6802, a level not seen in nearly five months.

As emphasized in its latest Meeting Minutes, the Reserve Bank of Australia (RBA) underscores the significance of a thorough examination of additional data to evaluate the risk balance before making decisions on future interest rates.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6778 | Positive Crossover | Bullish
  • MA 20: 0.6730| Positive Crossover | Bullish
  • MA 50: 0.6664 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6778 | Positive Crossover | Bullish
  • MA 20: 0.6735 | Positive Crossover | Bullish
  • MA 50: 0.6649| Positive Crossover | Bullish

RSI (Relative Strength Index): 64.8| Buying Zone| Bullish

Stochastic Oscillator: 57.99 |Buying Zone | Positive

Resistance And Support Levels:

  • R1: 0.6795| R2: 0.6893
  • S1: 0.6710 | S2: 0.6617

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6808 | Take Profit: 0.6893 | Stop Loss: 0.6758

USD/JPY:

The Japanese Yen (JPY) pulled back from a one-week high against the US Dollar (USD) following softer inflation data.

The Japanese Yen weakened in response to subdued inflation data from Japan. Dovish expectations for the Fed put pressure on the USD and are likely to limit the upside for the USD/JPY pair.

On Friday, the Japanese Yen (JPY) weakened after the announcement of subdued consumer inflation data domestically. This further heightened uncertainty about the timing of the potential tightening of the ultra-loose policy by the Bank of Japan (BoJ).

Traders are now turning their attention to the US Core PCE Price Index for significant direction.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 142.42 | Negative Crossover | Bearish
  • MA 20: 143.10| Negative Crossover | Bearish
  • MA 50: 144.57| Negative Crossover | Bearish

Simple:

  • MA 5: 142.35 | Negative Crossover | Bearish
  • MA 20: 143.10| Negative Crossover | Bearish
  • MA 50: 144.76| Negative Crossover | Bearish

RSI (Relative Strength Index): 37.76| Selling Zone | Bearish

Stochastic Oscillator: 30.99| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 143.27 | R2: 144.73
  • S1: 141.97 | S2: 140.20

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 141.56| Take Profit: 140.20 | Stop Loss: 142.52.

Elsewhere in the Forex Market

EUR/GBP down 0.13% to 0.8665. The NZD/USD was down 0.18% to 0.6283. The USD/CHF is down 0.08% at 0.8555. USD/CAD was down 0.08% at 1.3272, EUR/JPY was up 0.04% at 156.50, The USD/CNY was down 0.03% at 7.1359, AUD/SEK was down 0.42% at 6.8349, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) Monetary Policy Meeting Minutes at 5:20.

(GBP) GDP (QoQ) (Q3) Actual –0.1%, Forecast 0.0%, Previous 0.2% at 12:30.

(GBP) Retail Sales (MoM) (Nov) Actual 1.3%, Forecast –0.4%, Previous –0.3% at 12:30.

(CAD) GDP (MoM) (Oct) Forecast 0.2%, Previous 0.1% at 19:00.

(USD) Core PCE Price Index (MoM) (Nov) Forecast 0.2%, Previous 0.2% at 19:00.

(USD) New Home Sales (Nov) Forecast 695K, Previous 679K at 20:30.