. Daily FX Analysis - GBP/USD, EUR/USD dip, Aussie drops, USD/CAD recovers.

Daily FX Analysis – GBP/USD, EUR/USD dip, Aussie drops, USD/CAD recovers.

Daily FX Analysis – GBP/USD, EUR/USD dip, Aussie drops, USD/CAD recovers.

31 Jan 2024

Introduction

GBP/USD retreats near 1.2680 ahead of the US Fed’s rate decision amidst market caution amid Middle East tensions. With the Fed expected to maintain rates and the Bank of England’s commitment to restrictive policies, risk aversion boosts the US Dollar. Meanwhile, EUR/USD faces selling pressure, the Australian Dollar weakens on softer inflation and USD/CAD recovers above 1.3400 amid robust US economic data. The global market awaits key central bank decisions and economic indicators.

Markets In Focus Today – GBP/USD

GBP/USD edges lower to near 1.2680 ahead of US Fed interest rate decision.

GBP/USD declines on market caution due to the Middle East tension. Fed is expected to keep interest rate unchanged at 5.5% in January’s meeting. BoE is expected to maintain a prolonged period of restrictive monetary policy to curb inflation. GBP/USD extends its losses for the second consecutive session on Wednesday, inching lower to near 1.2680 during the Asian session. The risk aversion sentiment drives Investors towards the US Dollar (USD), which undermines the GBP/USD pair. US President Joe Biden has communicated that the United States will respond in a tiered approach to a specific situation following the deadly drone attack on US troops near the Jordan-Syria border.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.27 | Negative Crossover | Bearish
  • MA 20 : 1.27 | Negative Crossover | Bearish
  • MA 50 : 1.26 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.27 | Negative Crossover | Bearish
  • MA 20 : 1.27 | Negative Crossover | Bearish
  • MA 50 : 1.27 | Positive Crossover | Bullish

RSI (Relative Strength Index): 48.54 | Buy Zone | Bullish

Stochastic   Oscillator : 51.85 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 1.28 R2 : 1.29
  • S1 : 1.26 S2 : 1.25

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.2684 | Take Profit: 1.2589 | Stop Loss: 1.2749

EUR/USD

EUR/USD Price Languishes near the monthly low, the focus remains on the Fed decision.

EUR/USD comes under renewed selling pressure amid a modest pickup in the USD demand. The technical setup favors bearish traders and supports prospects for a further depreciating move. A sustained strength beyond the 1.0900 mark is needed to negate the near-term negative outlook. The EUR/USD pair meets with a fresh supply during the Asian session on Wednesday and drops to the 1.0815 regions in the last hour, well within the striking distance of its lowest level since December 13 touched earlier this week.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.09 | Negative Crossover | Bearish
  • MA 20 : 1.09 | Negative Crossover | Bearish
  • MA 50 : 1.09 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.09 | Negative Crossover | Bearish
  • MA 20 : 1.09 | Negative Crossover | Bearish
  • MA 50 : 1.09 | Negative Crossover | Bearish

RSI (Relative Strength Index): 38.99 | Sell Zone | Bearish

Stochastic   Oscillator : 18.07 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.11 R2 : 1.12
  • S1 : 1.08 S2 : 1.07

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.0840 | Take Profit: 1.0751 | Stop Loss: 1.0902

AUD/USD

Australian Dollar depreciates on softer Aussie inflation data, improved US Dollar.

The Australian Dollar depreciates for the second straight session on weaker inflation data from Australia. Australia’s Monthly CPI reported 3.4% in December, down from November’s 4.3%. Traders expect two rate cuts from the Reserve Bank of Australia in 2024. The Australian Dollar (AUD) remained on a downtrend on Wednesday after Australian inflation slowed more than anticipated in the December quarter. This has led traders to factor in the possibility of as many as two rate cuts from the Reserve Bank of Australia (RBA) throughout the year. The prevailing risk-off sentiment is adding further downward pressure on the AUD/USD pair, as market participants exercise caution amid heightened tensions in the Middle East.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.66 | Negative Crossover | Bearish
  • MA 20 : 0.66 | Negative Crossover | Bearish
  • MA 50 : 0.66 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.66 | Negative Crossover | Bearish
  • MA 20 : 0.66 | Negative Crossover | Bearish
  • MA 50 : 0.67 | Negative Crossover | Bearish

RSI (Relative Strength Index): 39.14 | Sell Zone | Bearish

Stochastic   Oscillator : 33.43 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.69 R2 : 0.69
  • S1 : 0.66 S2 : 0.65

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6545 | Take Profit: 0.6467 | Stop Loss: 0.6607

USD/CAD

USD/CAD snaps the four-day losing streak above the 1.3400 mark, eyes on Canadian GDP, Fed rate decision.

USD/CAD recovers some lost ground near 1.3405 on the stronger USD. The Federal Reserve will hold its first-rate meeting in 2024 in the range of 5.25–5.50%. The Bank of Canada (BoC) said growth in Canada is likely to remain around zero in the first quarter of 2024. Investors await the Canadian GDP growth and FOMC rate decision on Wednesday. The USD/CAD pair snaps the four-day losing streak during the early Asian session on Wednesday. The pair’s recovery is supported by upbeat US job openings and consumer confidence data, which lift the US dollar (USD). The Federal Reserve (Fed) monetary policy meeting on Wednesday will be in the spotlight, with no change in rate expected. At press time, USD/CAD is trading at 1.3405, gaining 0.04% on the day.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.34 | Negative Crossover | Bearish
  • MA 20 : 1.34 | Negative Crossover | Bearish
  • MA 50 : 1.35 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.35 | Negative Crossover | Bearish
  • MA 20 : 1.34 | Negative Crossover | Bearish
  • MA 50 : 1.34 | Negative Crossover | Bearish

RSI (Relative Strength Index): 48.77 | Buy Zone | Bullish

Stochastic   Oscillator : 33.15 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.35 R2 : 1.36
  • S1 : 1.32 S2 : 1.31

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.3427 | Take Profit: 1.3324 | Stop Loss: 1.3492

Elsewhere In The Forex Market

EUR/GBP down 0.06% to 0.8534. The USD/CHF up 0.13% to 0.8628. The NZD/USD is down 0.36% at 0.6113. EUR/JPY down 0.15% at 0.15. USD/JPY is up 0.09% at 147.72, USD/CNY is up 0.09% at 7.1816, and AUD/SEK is down 0.32% at 6.8498, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) German Unemployment Change (Jan) Forecast –11K, Previous –5K at 03:55. (EUR) German CPI (MoM) (Jan) Forecast 0.2%, Previous 0.1% at 08:00. (USD) ADP Nonfarm Employment Change (Jan) Forecast 145K, Previous 164K at 08:15. (CAD) GDP (MoM) (Nov) Forecast 0.1%, Previous 0.0% at 08:30. (USD) Fed Interest Rate Decision at 14:00. (USD) FOMC Press Conference at 14:30.