Introduction:

In the realm of forex markets, GBP/USD remains under pressure below the 1.2400 mark, hitting a three-month low recently. Despite a favorable market backdrop and a weakened US Dollar, the pair grapples with finding support. The looming specters of UK inflation data and the Bank of England’s policy decision add to traders’ apprehension. Explore the latest developments in the GBP/USD, along with insights into EUR/USD, AUD/USD, and USD/JPY in this comprehensive currency update.

GBP/USD:

GBP/USD is still on the back foot, below 1.2400.

GBP/USD is still trading below 1.2400, where it hit a three-month low early on Monday. Despite a positive market climate and a significant decline in the US Dollar, the pair is having trouble finding support. The UK inflation data and the BoE decision are two major event risks that traders continue to be wary about.

On the final day of the week, the GBP/USD pair regained some upward momentum and partially retraced the previous day’s decline to sub-1.2400 levels, or its lowest level since June 7. Through the early European session, spot prices maintained their small intraday gains and received support from a weakening US dollar (USD).

The BoE survey on consumer inflation expectations is anticipated to provide some momentum for traders. The US data docket, which includes the Empire State Manufacturing Index and Prelim Michigan Consumer Sentiment Index, will later during the early North American session fuel the USD demand and create short-term trading possibilities. However, spot prices are still expected to post losses for a second straight week.

Technical Overview :

Moving Averages:

Exponential:

• MA 5: 1.2394 | Negative Crossover | Bearish
• MA 20: 1.2455| Negative Crossover | Bearish
• MA 50: 1.2533 | Negative Crossover | Bearish

Simple:

• MA 5: 1.2393 | Negative Crossover | Bearish
• MA 20: 1.2466 | Negative Crossover | Bearish
• MA 50: 1.2546 | Negative Crossover | Bearish

RSI (Relative Strength Index): 32.01 | Sell Zone | Negative

Stochastic Oscillator: 9.98| Sell Zone | Negative

Resistance And Support Levels: 

• R1: 1.2459 | R2: 1.2561
• S1: 1.2363 | S2: 1.2270

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.2328 | Take Profit: 1.2270 | Stop Loss: 1.2372

EUR/USD:

EUR/USD defends gains above 1.0650 amid quiet markets.

The EUR/USD currency pair is finding buyers above 1.0650 on Monday, kicking off the week positively. A more positive market environment and a significant US Dollar decline are providing the pair with upward support. German Bundesbank’s monthly report is being watched.

On the final day of a new week, the EUR/USD pair sees some buying and partially undoes the previous day’s decline to a nearly six-month low reached in the wake of the dovish European Central Bank (ECB) rate decision. To combat persistently high inflation, the ECB decided to increase rates for the tenth consecutive time by 25 basis points, bringing the main rate to an all-time high of 4%.

Currently, market investors are anticipating ECB President Christine Lagarde’s speech for a new impetus. In addition, the US economic calendar, which includes the publication of the Empire State Manufacturing Index and the Prelim Michigan Consumer Sentiment Index, may have an impact on the USD price dynamics and create possibilities for short-term trading in the major.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 1.0664| Negative Crossover | Bearish
• MA 20: 1.0701 | Negative Crossover | Bearish
• MA 50: 1.0756 | Negative Crossover | Bearish

Simple:

• MA 5: 1.0658 | Positive Crossover | Bullish
• MA 20: 1.0705 | Negative Crossover | Bearish
• MA 50: 1.0763 | Negative Crossover | Bearish

RSI (Relative Strength Index): 38.45| Sell Zone | Negative

Stochastic Oscillator: 31.59 | Sell Zone | Negative

Resistance And Support Levels: 

• R1: 1.0745| R2: 1.0827
• S1: 1.0653 | S2: 1.0540

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell 1.0620| Take Profit: 1.0547 | Stop Loss: 1.0680

AUD/USD:

AUD/USD increases toward 0.6445 with a decline in the US Dollar.

AUD/USD is gaining new bids to target 0.6450 in Monday’s Asian trading. As trading is slack due to the holidays and China’s property market struggles, improving risk appetite is driving a small decline in the US dollar. On Tuesday, the RBA Minutes will come under scrutiny.

The US Federal Reserve’s (Fed) hawkish position on monetary policy has caused market players to exercise prudence, which has limited the possibility for a substantial corrective slide in the US Dollar (USD).

Trading in the AUD/USD pair is likely to be restrained by the belief that the Fed would stick to a more restrained monetary policy, which may include additional interest rate hikes or tightening measures.

Technical Overview:

moving Averages:

Exponential:

• MA 5: 0.6437 | Negative Crossover | Bearish
• MA 20: 0.6429 | Positive Crossover | Bullish
• MA 50: 0.6436 | Negative Crossover | Bearish

Simple:

• MA 5: 0.6442 | Negative Crossover | Bearish
• MA 20: 0.6424 | Positive Crossover | Bullish
• MA 50: 0.6433 | Positive Crossover | Bullish

RSI (Relative Strength Index): 50.45 | Buying Zone | Bullish

Stochastic Oscillator: 28| Sell Zone | Negative

Resistance And Support Levels: 

• R1: 0.6481 | R2: 0.6581
• S1: 0.6406 | S2: 0.6316

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6385 | Take Profit: 0.6316 | Stop Loss: 0.6447

USD/JPY:

Investors are awaiting the BoJ and Fed rate decisions as USD/JPY consolidates in a constrained range above 147.50.

The USD/JPY pair has been consolidating in a constrained range since retracing from the 147.95 region early on Monday. Markets become cautious in front of this week’s significant Federal Reserve (Fed) and Bank of Japan (BoJ) events. The major is trading close to 147.68 and is down 0.11% for the day.

In regard to the Japanese Yen, a policymaker for the Bank of Japan (BoJ) warned that the JPY will remain sensitive to its competitors as long as wage and inflation indicators do not match expectations.

The US Empire State Manufacturing Index, Industrial Production, and the University of Michigan Consumer Confidence survey will all be released, and market participants will be watching these numbers closely. In advance of the Fed meeting next week, these numbers may provide clues regarding the Federal Reserve’s (Fed) peak interest rate for the remainder of the year.

Technical Overview:

Moving Averages:

Exponential:

• MA 5: 147.64 | Positive Crossover | Bullish
• MA 20: 147.32 | Positive Crossover | Bullish
• MA 50: 146.72 | Positive Crossover | Bullish

Simple:

• MA 5: 147.68 | Positive Crossover | Bullish
• MA 20: 147.25 | Positive Crossover | Bullish
• MA 50: 146.78 | Positive Crossover | Bullish

RSI (Relative Strength Index): 57.63 | Buy Zone | Bullish

Stochastic Oscillator: 72.86| Buy Zone | Neutral

Resistance And Support Levels: 

• R1: 147.88 | R2: 150.32
• S1: 146.60 | S2: 145.21

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 148.41 | Take Profit: 150.32 | Stop Loss: 147.01

Elsewhere in the Forex Market

NZD/USD up 0.17% to 0.5906. The EUR/JPY down 0.02% to 157.50. The USDCHF is down 0.18% at 0.8960. USD/CAD is down 0.13% at 1.3509, EUR/GBP is up 0.12% at 0.8613. The USD/CNY is up 0.23% at 7.2912, and AUD/SEK is up 0.10% at 7.209, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) ECB`s Elderson Speaks at 18:00.

GBP/USD up slightly but still near 3-month lows

EUR/USD up after strong end to the week but still near six-month lows

AUD/USD up as risk appetite lifts; RBA Minutes in focus

USD/JPY consolidates in a constrained range ahead of Fed and BoJ