. Daily FX Analysis - Forex's major pairs ride economic waves, shaping markets.

Daily FX Analysis – Forex’s major pairs ride economic waves, shaping markets.

Daily FX Analysis – Forex’s major pairs ride economic waves, shaping markets.

05 Jan 2024

Introduction:

In the dynamic forex market, the EUR/USD, GBP/USD, USD/CAD, and USD/JPY pairs showcase noteworthy trends. The EUR/USD sees slight gains, with a focus on Eurozone CPI and US NFP data. Meanwhile, GBP/USD maintains an upward trajectory ahead of US Nonfarm Payrolls. USD/CAD rises amid improved US Treasury yields, while USD/JPY experiences fluctuations before the release of NFP data. Stay tuned for key economic indicators shaping these currency pairs’ movements.

EUR/USD:

The EUR/USD is experiencing slight gains, trading above the mid-1.0900s, as it anticipates the release of Eurozone CPI and US NFP data.

On Friday, the EUR/USD pair maintains a positive trend for the second consecutive day. However, it is showing limited momentum and continues to stay within the broader trading range established on the previous day. Current spot prices are situated above the mid-1.0900s, with traders eagerly anticipating significant macroeconomic data from both the Eurozone and the United States.

On Thursday, the EUR/USD successfully recovered and briefly touched the 1.0970/75 range. However, bulls encountered initial resistance in this zone, marking a pause after enduring four consecutive sessions of bearish dominance.

Overseas, a robust ADP report in December appears to have strengthened the argument for a similarly strong Nonfarm Payrolls reading expected on Friday in the same period.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0937| Negative Crossover | Bearish
  • MA 20: 1.1000| Negative Crossover | Bearish
  • MA 50: 1.0972 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.0936 | Negative Crossover | Bearish
  • MA 20: 1.1013 | Negative Crossover | Bearish
  • MA 50: 1.0972 | Positive Crossover | Bullish

RSI (Relative Strength Index): 38.87| Sell Zone | Bearish

Stochastic Oscillator: 18.05| Sell zone | Neutral

Resistance And Support Levels:

  • R1: 1.0984| R2: 1.1110
  • S1: 1.0922| S2: 1.0786

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.0891| Take Profit: 1.0786 | Stop Loss: 1.0962

GBP/USD:

GBP/USD is ascending towards the 1.2700 level in anticipation of the release of US Nonfarm Payrolls.

For the third consecutive day, GBP/USD maintains its upward momentum, trading at approximately 1.2690 during the early European hours on Friday. The British Pound has advanced, potentially influenced by the improved data released on Thursday from the United Kingdom (UK).

In the face of a risk-averse market atmosphere and the ongoing strength of the US Dollar (USD), GBP/USD recorded slight gains on Wednesday. As of early Thursday, the pair continues its upward trend, approaching the 1.2700 mark.

The hawkish stance evident in the minutes of the Federal Reserve’s (Fed) December policy meeting, coupled with a notable drop in the main indexes of Wall Street, contributed to the mid-week strengthening of the USD. Nevertheless, GBP/USD remained resilient and maintained its position throughout the day.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2669| Positive Crossover | Bullish
  • MA 20: 1.2701| Negative Crossover | Bearish
  • MA 50: 1.2681 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.2671 | Positive Crossover | Bullish
  • MA 20: 1.2701 | Negative Crossover | Bearish
  • MA 50: 1.2681| Negative Crossover | Bearish

RSI (Relative Strength Index): 47.26| Positive Zone | Bullish

Stochastic Oscillator: 48.73| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.2727| R2: 1.2819
  • S1: 1.2658| S2: 1.2503

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2626| Take Profit: 1.2503| Stop Loss: 1.2716

USD/CAD:

USD/CAD rises above 1.3350 as US Treasury yields improve; focus shifts to labor data from Canada and the US.

USD/CAD rebounds from its losses due to a strengthened US Dollar. The rise in WTI prices may provide support for the Canadian Dollar, while improved US bond yields guide the Greenback on an upward trajectory.

USD/CAD is recovering from the losses recorded in the previous session and is trading at a higher level around 1.3360 during the European session on Friday.

Canada is preparing to unveil the Unemployment Rate and Net Change in Employment figures for December this Friday. Simultaneously, in the United States, the focus is on the Average Hourly Earnings and Nonfarm Payrolls (NFP) data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3354 | Positive Crossover | Bullish
  • MA 20: 1.3280| Positive Crossover | Bullish
  • MA 50: 1.3338 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.3353 | Positive Crossover | Bullish
  • MA 20: 1.3287 | Positive Crossover | Bullish
  • MA 50: 1.3338| Positive Crossover | Bullish

RSI (Relative Strength Index): 62.29| Buy Zone| Bullish

Stochastic Oscillator: 91.91 |Buying Zone | Neutral

Resistance And Support Levels:

  • R1: 1.3372| R2: 1.3504
  • S1: 1.3292 | S2: 1.3192

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3399 | Take Profit: 1.3504 | Stop Loss: 1.3324

USD/JPY:

The Japanese Yen reaches a two-week low against the USD and bears a pause before the release of US NFP data.

For the fourth consecutive day on Friday, the Japanese Yen exhibited a downward inclination against the US Dollar, as the USD/JPY pair reached a level above a two-week high around the 144.85 region during the Asian session.

During Thursday’s trading session, the USD/JPY pair experienced a rally, surging to multi-week highs of 147.70 with a strong 1% increase.

Friday will witness the release of December’s Nonfarm Payrolls, along with the Unemployment Rate and Average Hourly Earnings in the US, determining the short-term trajectory of the pair.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 144.48 | Positive Crossover | Bullish
  • MA 20: 142.55| Positive Crossover | Bullish
  • MA 50: 142.86| Positive Crossover | Bullish

Simple:

  • MA 5: 144.55 | Positive Crossover | Bullish
  • MA 20: 142.55| Positive Crossover | Bullish
  • MA 50: 142.86| Positive Crossover | Bullish

RSI (Relative Strength Index): 70.70| Buy Zone | Bullish

Stochastic Oscillator: 100| Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 145.24 | R2: 147.87
  • S1: 142.86 | S2: 140.76

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 145.82| Take Profit: 147.87 | Stop Loss: 144.53.

Elsewhere in the Forex Market

EUR/GBP down 0.04% to 0.8626. The AUD/USD down 0.06% to 0.6700. The NZD/USD is down 0.09% at 0.6228. USD/CHF up 0.05% at 0.8506. EUR/JPY is up 0.07% at 158.41, USD/CNY is up 0.05% at 7.1524, and AUD/SEK is down 0.06% at 6.8498, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) CPI (YoY) (Dec) Forecast 3.0%, Previous 2.4% at 15:30.

(USD) Average Hourly Earnings (MoM) (Dec) Forecast 0.3%, Previous 0.4% at 19:00.

(USD) Nonfarm Payrolls (Dec) Forecast 170K, Previous 199K at 19:00.

(USD) Unemployment Rate (Dec) Forecast 3.8%. Previous 3.7% at 19:00.

(CAD) Employment Change (Dec) Forecast 13.5K, Previous 24.9K at 19:00.

(USD) ISM Non-Manufacturing PMI (Dec) Forecast 52.6, Previous 52.7 at 20:30.