. Daily FX Analysis - Euro Soars, Pound Holds, Aussie Resilient, Dollar-Yen Drama.

Daily FX Analysis – Euro Soars, Pound Holds, Aussie Resilient, Dollar-Yen Drama.

Daily FX Analysis – Euro Soars, Pound Holds, Aussie Resilient, Dollar-Yen Drama.

26 Dec 2023

Introduction:

In currency markets, EUR/USD retreats from 1.1040 as markets adjust Greenback shorts. The week witnessed heightened volatility, with the Greenback under pressure due to slowing US inflation and anticipated rate cuts. GBP/USD holds firm above 1.2685 amid rate cut expectations after US PCE inflation. AUD/USD, after hitting five-month highs, remains resilient despite a weakened US Dollar. USD/JPY rebounds, aiming for 143.00, as the Dollar recovers, and the Yen weakens. The Yen initially rose following the Japanese National Consumer Price Index (CPI) Inflation data release on Friday.

EUR/USD:

EUR/USD declines back from 1.1040 as markets are back Greenback shorts.

On Friday, EUR/USD reaches an 18-week peak. The pre-holiday market conditions are creating volatility as the week concludes. The decline in US inflation is exerting downward pressure on the Greenback, with markets anticipating rate cuts.

The EUR/USD reached an 18-week peak, touching 1.1040 before retracing to around 1.1000 as markets concluded operations in preparation for the holiday break.

On Friday, US inflation fell short of expectations, registering below anticipated levels and reinforcing investors’ expectations of an accelerated pace of Federal Reserve (Fed) rate cuts in 2024.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.1012| Positive Crossover | Bullish
  • MA 20: 1.0965| Positive Crossover | Bullish
  • MA 50: 1.0911 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.1015 | Positive Crossover | Bullish
  • MA 20: 1.0965 | Positive Crossover | Bullish
  • MA 50: 1.0878 | Positive Crossover | Bullish

RSI (Relative Strength Index): 64.15| Positive Zone | Buy

Stochastic Oscillator: 63.49| Buy zone | Negative

Resistance And Support Levels:

  • R1: 1.1023| R2: 1.1145
  • S1: 1.0963| S2: 1.0886

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.1048| Take Profit: 1.1145 | Stop Loss: 1.0983

GBP/USD:

GBP/USD maintains its position above 1.26850, with rate cut expectations soaring due to US PCE inflation.

The GBP/USD maintains its elevated position following a decrease in US PCE inflation on Friday. Despite a decline in UK GDP QoQ, the growth in UK Retail Sales has left Pound Sterling bidders unfazed. Bearish US Dollar flows are supporting the overall market sentiment.

Amidst choppy conditions in the US market session, the GBP/USD remains elevated, holding above the 1.2685 level regained during the European trading window, following the UK’s positive Retail Sales report for November.

Once again, on Friday, U.S. data took the spotlight, with slowing inflation acting as the primary catalyst that led to a decline in the U.S. Dollar across various markets.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2695| Negative Crossover | Bearish
  • MA 20: 1.2679| Positive Crossover | Bullish
  • MA 50: 1.2637 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2700 | Negative Crossover | Bearish
  • MA 20: 1.2690 | Negative Crossover | Bearish
  • MA 50: 1.2639 | Positive Crossover | Bullish

RSI (Relative Strength Index): 52.48| Buy Zone | Bullish

Stochastic Oscillator: 42.08| Sell zone | Negative

Resistance And Support Levels:

  • R1: 1.2713| R2: 1.2964
  • S1: 1.2560| S2: 1.2377

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2781| Take Profit: 1.2964 | Stop Loss: 1.2675

AUD/USD:

The Australian Dollar lost momentum after hitting five-month highs above 0.6800.

Consumer inflation in the US dropped beyond expectations in November, causing the US Dollar Index to fall to its lowest level since July 27. Meanwhile, the AUD/USD remains resilient, sustaining significant weekly gains.

In the American session, the AUD/USD pair climbed to 0.6824, marking its highest intraday level since July. The upward movement is attributed to a widespread weakness in the Dollar.

The US Dollar index (DXY) fell to 101.42, reaching its lowest point since July, propelling the AUD/USD towards 0.6825. The Australian Dollar remains above 0.6800, indicating its second consecutive weekly gain and reinforcing the positive outlook.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6798 | Positive Crossover | Bullish
  • MA 20: 0.6750| Positive Crossover | Bullish
  • MA 50: 0.6681 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6800 | Positive Crossover | Bullish
  • MA 20: 0.6751 | Positive Crossover | Bullish
  • MA 50: 0.6661| Positive Crossover | Bullish

RSI (Relative Strength Index): 62.55| Buying Zone| Bullish

Stochastic Oscillator: 45.55 |Buying Zone | Negative

Resistance And Support Levels:

  • R1: 0.6802| R2: 0.6893
  • S1: 0.6729 | S2: 0.6662

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6815 | Take Profit: 0.6893 | Stop Loss: 0.6772

USD/JPY:

USD/JPY bounces back to reach a fresh Friday peak, targeting the 143.00 level.

Experiencing a late rally, USD/JPY surges to 142.60. The US Dollar is recovering from earlier losses, while the Yen weakens. The swifter-than-anticipated erosion of US inflation persists.

On Friday, the USD/JPY is surging to fresh highs as the US Dollar attempts to recover from earlier losses. Simultaneously, the Japanese Yen weakens across the broader market as traders prepare for the last day of trading before the holiday break and the final full trading week of 2023.

On Friday, the Yen experienced an initial increase following the release of the Japanese National Consumer Price Index (CPI) Inflation data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 142.34 | Positive Crossover | Bullish
  • MA 20: 142.89| Negative Crossover | Bearish
  • MA 50: 144.31| Negative Crossover | Bearish

Simple:

  • MA 5: 142.28 | Positive Crossover | Bullish
  • MA 20: 142.73| Negative Crossover | Bearish
  • MA 50: 144.44| Negative Crossover | Bearish

RSI (Relative Strength Index): 39.98| Selling Zone | Bearish

Stochastic Oscillator: 30.14| Sell Zone | Neutral

Resistance And Support Levels:

  • R1: 143.84 | R2: 145.75
  • S1: 142.07 | S2: 139.32

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 141.38| Take Profit: 139.32 | Stop Loss: 142.86.

Elsewhere in the Forex Market

EUR/GBP up 0.37% to 0.8679. The NZD/USD up 0.02% to 0.6307. The USD/CHF up 0.18% at 0.8568. USD/CAD was down 0.06% at 1.3258, EUR/JPY was up 0.17% at 156.92, The USD/CNY was up 0.13% at 7.1456, AUD/SEK was up 0.05% at 6.8319, at the time of writing.

 Key Economic Events & Data Release Today:

No Major key events for today.