. Daily FX Analysis - Pairs Navigate Tight Ranges, Dovish Trends.

Daily FX Analysis – Pairs Navigate Tight Ranges, Dovish Trends.

Daily FX Analysis – Pairs Navigate Tight Ranges, Dovish Trends.

27 Dec 2023

Introduction:

In currency markets, EUR/USD remains tightly bound near 1.1050, maintaining a narrow range in early European trading during the final week of 2023’s holiday season. The pair lacks a clear trend as the US Dollar faces headwinds from dovish Fed expectations.  Meanwhile, GBP/USD trades within a limited range above 1.2700, supported by divergent Fed and BoE policies. USD/CAD struggles below 1.3200, influenced by dovish Fed expectations and Canadian economic slowdown signs. USD/CHF stays under 0.8550 amid heightened risk aversion, with anticipation of a proactive stance from the Swiss National Bank (SNB).

EUR/USD:

EUR/USD continues to trade within a tight range, hovering around the 1.1050 level.

In early Europe on Wednesday, EUR/USD fluctuated within a narrow range of around 1.1050. The pair shows a lack of a distinct directional trend during the holiday season in the last week of 2023, with the US Dollar facing challenges amid dovish Fed expectations.

EUR/USD gained bullish traction, surpassing 1.1000, as the US Dollar faced bearish pressure amid mixed data releases. The pair maintains stability around 1.1000 early on Friday, awaiting the release of the Personal Consumption Expenditures (PCE) Price Index data from the US.

On Thursday, the US Bureau of Economic Analysis (BEA) revealed a downward revision of the annualized third-quarter Gross Domestic Product (GDP) growth from 5.2% to 4.9%.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.1034| Positive Crossover | Bullish
  • MA 20: 1.0985| Positive Crossover | Bullish
  • MA 50: 1.0926 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.1034 | Positive Crossover | Bullish
  • MA 20: 1.0982 | Positive Crossover | Bullish
  • MA 50: 1.0887 | Positive Crossover | Bullish

RSI (Relative Strength Index): 67.52| Positive Zone | Buy

Stochastic Oscillator: 89.82| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.1050| R2: 1.1170
  • S1: 1.0962| S2: 1.0878

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.1074| Take Profit: 1.1170 | Stop Loss: 1.1012

GBP/USD:

GBP/USD remains range-bound above 1.2700 in subdued trading conditions.

In the European morning on Wednesday, GBP/USD hovers above 1.2700. The pair is supported by the divergent monetary policy outlooks between the Federal Reserve (Fed) and the Bank of England (BoE), weakening the US Dollar. Light year-end trading conditions contribute to the pair’s stability.

Benefiting from widespread selling of the US Dollar (USD) in the latter part of Thursday, GBP/USD successfully recouped a substantial portion of Wednesday’s losses. On Friday, the pair stabilized around 1.2700 as market participants evaluate the latest data releases from the UK.

Investors will closely monitor Wall Street’s performance before the Christmas break. After an impressive Thursday rally, major US equity indexes are poised to commence trading on a lower note.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2711| Negative Crossover | Bearish
  • MA 20: 1.2690| Positive Crossover | Bullish
  • MA 50: 1.2647 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2711 | Negative Crossover | Bearish
  • MA 20: 1.2691 | Positive Crossover | Bullish
  • MA 50: 1.2642 | Positive Crossover | Bullish

RSI (Relative Strength Index): 53.71| Buy Zone | Bullish

Stochastic Oscillator: 66.94| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.2720| R2: 1.2887
  • S1: 1.2623| S2: 1.2497

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2761| Take Profit: 1.2887 | Stop Loss: 1.2691

USD/CAD:

USD/CAD trades below the 1.3200 mark, influenced by the dovish outlook of the Federal Reserve, with attention turning to mid-impact US data.

USD/CAD encounters hurdles amid a more positive market sentiment, with traders factoring in expectations of Federal Reserve policy easing in the coming year. The Greenback faces additional downward pressure due to subdued US Treasury yields.

USD/CAD lingers below 1.3200 in the Asian trading session on Wednesday. Nevertheless, economic data from Canada reveals signs of an economic slowdown, with the monthly Gross Domestic Product (GDP) failing to exhibit growth for the fourth consecutive month.

Thursday will witness the unveiling of Initial Jobless Claims and Pending Home Sales data in the United States (US). Conversely, the Canadian economic calendar remains devoid of scheduled data releases for the week.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3211 | Negative Crossover | Bearish
  • MA 20: 1.3294| Negative Crossover | Bearish
  • MA 50: 1.3406 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.3208 | Negative Crossover | Bearish
  • MA 20: 1.3299 | Negative Crossover | Bearish
  • MA 50: 1.3441| Negative Crossover | Bearish

RSI (Relative Strength Index): 24.24| Selling Zone| Bearish

Stochastic Oscillator: 10.71 |Selling Zone | Neutral

Resistance And Support Levels:

  • R1: 1.3261| R2: 1.3350
  • S1: 1.3194 | S2: 1.3088

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.3177 | Take Profit: 1.3088 | Stop Loss: 1.3244

USD/CHF:

USD/CHF remains below 0.8550 amidst increased risk aversion, with the Swiss National Bank (SNB) expected to take a proactive stance.

USD/CHF stays under 0.8550 amid rising risk aversion, boosting demand for the safe-haven CHF.

The USD/CHF pair maintains a calm stance, hovering near 0.8540 in the early European session on Wednesday. Elevated risk aversion appears to be driving an uptick in demand for safe-haven currencies, such as the Swiss Franc (CHF).

The Swiss National Bank (SNB) is positioned to take a proactive approach, as outlined in its latest Quarterly Bulletin.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8541 | Negative Crossover | Bearish
  • MA 20: 0.8591| Negative Crossover | Bearish
  • MA 50: 0.8666| Negative Crossover | Bearish

Simple:

  • MA 5: 0.8541 | Negative Crossover | Bearish
  • MA 20: 0.8595| Negative Crossover | Bearish
  • MA 50: 0.8682| Negative Crossover | Bearish

RSI (Relative Strength Index): 30.01| Selling Zone | Bearish

Stochastic Oscillator: 69.71| Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 0.8586 | R2: 0.8676
  • S1: 0.8523 | S2: 0.8423

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Sell Limit: 0.8604| Take Profit: 0.8511 | Stop Loss: 0.8666.

Elsewhere in the Forex Market

EUR/GBP up 0.18% to 0.8692. The NZD/USD was down 0.08% to 0.6321. The AUD/USD up 0.10% at 0.6831. USD/JPY up 0.16% at 142.61. EUR/JPY is up 0.22% at 157.58, The USD/CNY is up 0.02% at 7.1448, and AUD/SEK is down 0.08% at 6.8166, at the time of writing.

Key Economic Events & Data Release Today:

No Major key events for today.