. Daily FX Analysis - EUR/USD, USD/JPY, GBP/USD, EUR/GBP in turmoil.

Daily FX Analysis – EUR/USD, USD/JPY, GBP/USD, EUR/GBP in turmoil.

Daily FX Analysis – EUR/USD, USD/JPY, GBP/USD, EUR/GBP in turmoil.

21 Dec 2023

Introduction

Welcome to today’s market highlights where we delve into the latest movements across key currency pairs. In focus, we have the EUR/USD, which maintains a steady presence around the 1.10 mark following a dovish tone from the Federal Reserve. Additionally, the Japanese yen strengthened against the dollar, recovering from recent losses tied to the Bank of Japan’s decision to uphold its ultra-loose monetary policy. Meanwhile, sterling faces a notable decline against the dollar, spurred by weaker-than-expected British inflation data. Lastly, the EUR/GBP pair hits a three-week low, reflecting shifts in the euro-pound dynamics. Stay tuned for a comprehensive overview of these developments and more in today’s market analysis.

Markets In Focus Today – EUR/USD

EUR/USD Hovers at 1.10 Amid Dovish Fed Tone

Post a dovish press conference by Fed Chair Jerome Powell, EUR/USD maintains around the 1.10 mark, likely persisting during the holiday period. Markets anticipate six 25bp rate cuts from the FOMC in the coming year, but concerns exist that this might be excessive, potentially hindering progress on inflation. Despite resistance from some Fed officials, the next U.S. data releases will determine sentiment. With robust U.S. growth (Q4 GDP forecast at 2.7%) and a sluggish Eurozone, even minor triggers could prompt a reduction in euro long positions.

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

RSI (Relative Strength Index): 58.21 | Neutral Zone | Neutral

Stochastic   Oscillator : 81.68 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.09 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: 1.08140

USD/JPY

Japanese Yen Rebounds to 143 per Dollar

The Japanese yen strengthened to around 143 against the dollar, recovering from earlier losses following the Bank of Japan’s decision to maintain ultra-loose monetary policy. Dollar weakness, ahead of key US GDP and inflation data, contributed to the yen’s gains. The BOJ’s recent dovish stance, emphasizing potential additional easing, countered initial speculation of policy normalization, leading to the yen’s resilience.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 143.88 | Negative Crossover | Bearish
  • MA 20 : 145.19 | Negative Crossover | Bearish
  • MA 50 : 146.88 | Negative Crossover | Bearish

Simple :

  • MA 10 : 143.67 | Negative Crossover | Bearish
  • MA 20 : 145.51 | Negative Crossover | Bearish
  • MA 50 : 148.26 | Negative Crossover | Bearish

RSI (Relative Strength Index): 37.35 | Neutral Zone | Neutral

Stochastic   Oscillator : 35.72 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 150.92 R2 : 152.15
  • S1 : 141 S2 : 138

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Buy: 141.871 | Take Profit: 138 | Stop Loss: 142.750

GBP/USD

Sterling (GBPUSD) Faces Steepest Decline in Two Months on Weak Inflation Data

The GBPUSD pair experienced its most significant drop against the dollar in two months on Wednesday following disappointing British inflation figures. In October, annual inflation plummeted below expectations, reaching a two-year low of 3.9%. Responding to this data, the currency saw a 0.7% decline, falling to $1.2638, as traders priced in the likelihood of Bank of England rate cuts as early as May. Although subsequent movements in Thursday’s Asia session were relatively modest, the pair last traded at $1.2639. The market’s reaction reflects concerns about economic conditions, with investors closely monitoring central bank decisions and economic indicators for future trends in the GBPUSD exchange rate.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.26 | Negative Crossover | Bearish
  • 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): 54.74 | Neutral Zone | Neutral

Stochastic   Oscillator : 57.60 | 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

EUR/GBP

EUR/GBP Hits Three-Week Low at 86.68 Pence

The pound weakened against the euro, reaching its lowest level in over three weeks at 86.68 pence, last trading near 86.59 pence. Simultaneously, the Australian dollar hovered at £0.5334, following a six-month peak of £0.5355. Analysts anticipate a similar easing trend in Friday’s U.S. core personal consumption expenditure data, with the annual inflation rate expected to slow to 3.3%. Despite caution due to thinning liquidity ahead of the festive season, the dollar’s selling pressure has been tempered for now, given prior pricing of 150 basis points of Federal Reserve cuts in 2024. The cautious atmosphere extends to Asia trade following a late sell-off in Wall Street equities.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.86 | Positive Crossover | Bullish
  • MA 20 : 0.86 | Positive Crossover | Bullish
  • MA 50 : 0.86 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.86 | Positive Crossover | Bullish
  • MA 20 : 0.86 | Positive Crossover | Bullish
  • MA 50 : 0.87 | Negative Crossover | Bearish

RSI (Relative Strength Index): 56.69 | Neutral Zone | Neutral

Stochastic   Oscillator : 87.42 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.87 R2 : 0.88
  • S1 : 0.85 S2 : 0.83

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 0.86 | Take Profit: 0.87 | Stop Loss: 0.85

Elsewhere In The Forex Market

EUR/USD: 1.0953 (+0.14%) USD/JPY: 143.25 (-0.22%) GBP/USD: 1.2637 (0.00%) USD/CAD: 1.3345 (-0.16%) AUD/USD: 0.6741 (+0.18%) USD/MXN: 17.0952 (-0.27%) USD/INR: 83.264 (0.00%)

Key Economic Events & Data Release Today:

7:00PM(IST)-USD-Unemployment Claims