. Daily FX Analysis - GBP/USD, EUR/USD, USD/CAD Dynamics Revealed.

Daily FX Analysis – GBP/USD, EUR/USD, USD/CAD Dynamics Revealed.

Daily FX Analysis – GBP/USD, EUR/USD, USD/CAD Dynamics Revealed.

16 Jan 2024

Introduction 

Amidst mixed UK jobs data, GBP/USD struggles below 1.2700, impacted by risk aversion and escalating Middle East geopolitical tensions. In contrast, the USD gains strength as the Euro weakens on resurging US Dollar demand and persistent geopolitical uncertainties. USD/CAD rises on risk aversion linked to Red Sea tensions, while USD/CHF eyes 0.8600 amid global caution during the World Economic Forum in Davos. 

Markets In Focus Today – GBP/USD

GBP/USD stays weak below 1.2700 after mixed UK jobs data.  

GBP/USD is keeping losses below 1.2700 after Tuesday’s mixed UK employment data. The Pound Sterling is losing ground against the US Dollar on risk aversion, which could be attributed to the escalating Middle East geopolitical risks. GBP/USD reversed its direction after dipping below 1.2700 and closed in positive territory above 1.2750 on Thursday. The positive shift in risk mood supports the pair on Friday as markets await Producer Price Index (PPI) data from the US. Inflation figures provided a boost to the US Dollar (USD) with the initial reaction but they seemingly failed to persuade markets that the Federal Reserve (Fed) could refrain from lowering the policy rate in March. 

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 : 1.26 | Positive Crossover | Bullish 

RSI (Relative Strength Index): 48.59 | Buy Zone | Bullish 

Stochastic   Oscillator : 47.00 | Buy Zone | Negative 

Resistance   And Support Levels :  

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

Overall Sentiment: Neutral Market Direction: Sell  

Trade Suggestion: Stop Sell: 1.2648 | Take Profit: 1.2541 | Stop Loss: 1.2732 

EUR/USD

EUR/USD declines toward 1.0900 ahead of ZEW.  

EUR/USD is nearing 1.0900, declining for the fourth consecutive day early Tuesday. Resurgent US Dollar demand is undermining the pair, as Middle East geopolitical tensions scale up. The Euro shrugs off the hawkish ECB chorus. German ZEW survey awaited. Persistent Middle East tensions have improved the appeal for safe-haven assets while risk-perceived currencies have been hit hard in the Asian session on Tuesday. The EUR/USD pair has declined to a near-weekly low around 1.0900 amid dull risk appetite as Iran-backed-Houthi rebels threatened to retaliate for airstrikes launched by the United States and the United Kingdom in Yemen. The Euro failed to gain strength despite European Central Bank (ECB) policymaker Joachim Nagel pushing back against market expectations of early rate cuts. Nagel said it is too early to discuss rate cuts as inflation is too high. 

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.09 | Negative Crossover | Bearish 
  • MA 20 : 1.10 | Negative Crossover | Bearish 
  • MA 50 : 1.09 | Positive Crossover | Bullish 

Simple :

  • MA 10 : 1.09 | Negative Crossover | Bearish 
  • MA 20 : 1.10 | Negative Crossover | Bearish 
  • MA 50 : 1.09 | Negative Crossover | Bearish 

RSI (Relative Strength Index): 45.26 | Neutral Zone | Neutral 

Stochastic   Oscillator : 21.55 | Sell Zone | Negative 

Resistance   And Support Levels :  

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

Overall Sentiment: Bearish Market Direction: Sell  

Trade Suggestion: Stop Sell: 1.0892 | Take Profit: 1.0787 | Stop Loss: 1.0971 

USDCAD

USD/CAD rises to near 1.3480 as risk aversion emerges on the escalated situation in the Red Sea.  

USD/CAD gained ground as investors turned back to the US Dollar. WTI price could rise on the escalated situation in the Red Sea; supporting CAD. USD/CAD moves on a winning streak for the fourth consecutive session, with positive market sentiment turning into risk aversion. This shift is attributed to the heightened geopolitical situation, specifically the reported missile launched by the Islamic Revolutionary Guard Corps (IRGC) targeting espionage centers and gatherings of anti-Iranian terrorist groups in northern Iraq near the US Consulate in Erbil. As a result, the USD/CAD pair trades higher around 1.3480 during the early European hours on Tuesday. 

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.34 | Positive Crossover | Bullish 
  • MA 20 : 1.34 | Positive Crossover | Bullish 
  • MA 50 : 1.35 | Positive Crossover | Bullish 
  • Simple :
  • MA 10 : 1.34 | Positive Crossover | Bullish 
  • MA 20 : 1.33 | Positive Crossover | Bullish 
  • MA 50 : 1.35 | Negative Crossover | Bearish 

RSI (Relative Strength Index): 61.41 | Buy Zone | Bullish 

Stochastic   Oscillator : 91.35 | Buy Zone | Positive 

Resistance   And Support Levels :  

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

Overall Sentiment: Bullish Market Direction: Buy  

Trade Suggestion: Limit Buy: 1.3472 | Take Profit: 1.3584 | Stop Loss: 1.3407 

USDCHF

USD/CHF looks to surpass the psychological level of 0.8600, awaiting Fed Waller’s speech.  

USD/CHF moves on an upward trajectory amid market caution. Traders observe the five-day World Economic Forum in Davos to understand the global economic scenario. USD/CHF extends its gains for the fourth-consecutive session, trading higher near 0.8590 during the European hours on Tuesday. The Swiss Franc (CHF) faces challenges amid risk-off sentiment due to the threat of war escalation in the Middle East region. This threat is reinforced by a reported missile launched by Iran’s Islamic Revolutionary Guard Corps (IRGC) targeting northern Iraq near the US Consulate in Erbil. 

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.85 | Positive Crossover | Bullish 
  • MA 20 : 0.85 | Positive Crossover | Bullish 
  • MA 50 : 0.87 | Negative Crossover | Bearish 
  • Simple :
  • MA 10 : 0.85 | Positive Crossover | Bullish 
  • MA 20 : 0.85 | Positive Crossover | Bullish 
  • MA 50 : 0.87 | Negative Crossover | Bearish 

RSI (Relative Strength Index): 54.30 | Buy Zone | Bullish 

Stochastic   Oscillator : 89.42 | Buy Zone | Neutral 

Resistance   And Support Levels :  

  • R1 : 0.87 R2 : 0.88 
  • S1 : 0.83 S2 : 0.82 

Overall Sentiment: Neutral Market Direction: Buy  

Trade Suggestion: Limit Buy: 0.8549 | Take Profit: 0.8690 | Stop Loss: 0.8476 

Elsewhere In The Forex Market

EUR/GBP up 0.18% to 0.8616. The NZD/USD was down 0.47% to 0.6170. The AUD/USD down 0.53% at 0.6625. USD/JPY up 0.33% at 146.25. EUR/JPY is down 0.14% at 159.09, The USD/CNY is up 0.16% at 7.1828, and AUD/SEK is down 0.14% at 6.8696, at the time of writing.

Key Economic Events & Data Release Today:

(AUD) Building Approvals (MoM) Forecast 1.6%, Previous 7.5% at 06:00. (EUR) German CPI (MoM) (Dec) Forecast 0.1%, Previous –0.4% at 12:30. (CAD) CPI (MoM) (Dec) Forecast –0.3%, Previous 0.1% at 19:00. (CAD) Core CPI (MoM) (Dec) Previous 0.1% at 19:00. (GBP) BoE Gov Bailey Speaks at 20:30.