. Daily FX Analysis - Pound soars, Euro steadies, Kiwi rises, Loonie retreats on crude.

Daily FX Analysis – Pound soars, Euro steadies, Kiwi rises, Loonie retreats on crude.

Daily FX Analysis – Pound soars, Euro steadies, Kiwi rises, Loonie retreats on crude.

23 Jan 2024

Introduction

GBP/USD gains momentum as the Bank of England signals a likely maintenance of its restrictive policy, reaching near 1.2740. Meanwhile, EUR/USD consolidates near 1.0900 amid uncertainty about the European Central Bank’s potential interest rate cut. NZD/USD sees modest gains above mid-0.6000s, influenced by concerns about China’s economy. USD/CAD grapples with retracement challenges amid upbeat crude prices, anticipating the Bank of Canada to hold its 5.0% policy rate in Wednesday’s meeting.

Markets In Focus Today – GBP/USD

GBP/USD builds on expectation as BoE to maintain the restrictive policy trades near 1.2740.

GBP/USD moves on an upward trajectory for the second successive session on Tuesday, inching higher to near 1.2740. The expectations of a status quo in the BoE’s monetary policy contribute to the positive performance of the Pound Sterling, which underpins the pair. GBP/USD staged a rebound in the second half of the previous week and erased a large portion of its weekly losses. The pair’s near-term technical outlook is yet to point to a build-up of bullish momentum as it holds steady at around 1.2700 in the European morning on Monday. The US Dollar (USD) rally forced GBP/USD to come under bearish pressure last week. However, the improving risk mood toward the end of the week, as reflected by the impressive rally seen in Wall Street’s main indexes, weighed on the USD and opened the door for a decisive rebound in the pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

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

Simple :

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

RSI (Relative Strength Index): 56.05 | Buy Zone | Bullish

Stochastic   Oscillator : 64.55 | Buy Zone | Neutral

Resistance   And Support Levels :

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

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion : Limit Buy: 1.2733 | Take Profit: 1.2822 | Stop Loss: 1.2684

EUR/USD

EUR/USD consolidates near 1.0900 followed by the barrier at 23.6% Fibonacci.

EUR/USD edges higher to near 1.0890 during the early European session on Tuesday. The pair consolidates due to the uncertainty over the timing of a potential interest rate cut by the European Central Bank (ECB). The new trading week for EUR/USD began with indecision amidst the equally vacillating price action surrounding the greenback, while scarce volatility also added to an uneventful Monday. While market participants have already factored in approximately 120 bps in rate cuts for the current year, there seems to be a growing debate between market participants and the ECB’s rate-setters regarding the timing of the central bank’s decision to start reducing the region’s policy rate.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.09 | Positive Crossover | Bullish
  • MA 20 : 1.09 | 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): 48.64 | Buy Zone | Bullish

Stochastic   Oscillator : 31.28 | Sell Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment: Neutral Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0918 | Take Profit: 1.1002 | Stop Loss: 1.0871

NZD/USD

NZD/USD posts modest gains above the mid-0.6000s amid risk-on impulse.

NZD/USD trades with mild gains around 0.6077 on Tuesday. FOMC members emphasized that early rate cuts are probably not appropriate. New Zealand’s Business NZ PSI fell back into contraction in December after reaching a six-month high in November. The NZD/USD pair posts modest gains above the mid-0.6000s during the early Asian trading hours on Tuesday. The upside of the pair remains capped as investors remain concerned about a potential downturn in the property sector, a slowing economy, and subdued investor sentiment in China. NZD/USD currently trades near 0.6077, up 0.03% for the day. Looking ahead, the US Richmond Fed Manufacturing Index for January will be due on Tuesday. On Wednesday, New Zealand’s Consumer Price Index for the fourth quarter (Q4) will be in the spotlight.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.61 | Negative Crossover | Bearish
  • MA 20 : 0.62 | Negative Crossover | Bearish
  • MA 50 : 0.62 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.62 | Negative Crossover | Bearish
  • MA 20 : 0.62 | Negative Crossover | Bearish
  • MA 50 : 0.62 | Negative Crossover | Bearish

RSI (Relative Strength Index): 37.77 | Sell Zone | Bearish

Stochastic   Oscillator : 10.85 | Sell Zone | Positive

Resistance   And Support Levels :

  • R1 : 0.64 R2 : 0.64
  • S1 : 0.61 S2 : 0.61

Overall Sentiment: Neutral Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6118 | Take Profit: 0.6198 | Stop Loss: 0.6065

USD/CAD

USD/CAD grapples to retrace its gains on upbeat Crude prices, inches lower to near 1.3480.

USD/CAD faces a challenge due to the improved Crude oil prices.WTI price gains ground on concerns over global supply disruptions. BoC is expected to maintain its current policy rate of 5.0% in Wednesday’s meeting. USD/CAD attempts to retrace its recent gains on the back of the improved Crude oil prices. The USD/CAD pair trades near 1.3480 during the Asian session on Tuesday. The Canadian Dollar (CAD) experienced losses against the US Dollar (USD) in the previous session, which could be attributed to the risk aversion sentiment over the escalated geopolitical situation in the Middle East. Traders will likely observe the December’s New Housing Price Index from Canada on Tuesday. On Wednesday, the Bank of Canada (BoC) will release its Interest Rate Decision. Markets expect the BoC will not adjust its current 5.0% policy rate.

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 : 1.34 | Positive Crossover | Bullish
  • MA 50 : 1.35 | Negative Crossover | Bearish

RSI (Relative Strength Index): 54.60 | Buy Zone | Bullish

Stochastic   Oscillator : 68.09 | Buy Zone | Positive

Resistance   And Support Levels :

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

Overall Sentiment: Neutral Market Direction: Buy

Trade Suggestion: Stop Buy: 1.3477 | Take Profit: 1.3569 | Stop Loss: 1.3414

Elsewhere In The Forex Market

EUR/GBP up 0.02% to 0.8563. The AUD/USD up 0.53% to 0.6604. The USD/CHF down 0.29% at 0.8665. USD/JPY down 0.05% at 147.34. EUR/JPY is down 0.26% at 160.74, USD/CNY is down 0.31% at 7.1698, and AUD/SEK is up 0.11% at 6.8840, at the time of writing.

Key Economic Events & Data Release Today:

(JPY) BoJ Interest Rate Decision Forecast –0.10%, Previous –0.10% at 08:00. (JPY) BoJ Outlook Report (YoY) at 08:30. (JPY) BoJ Press Conference at noon (CAD) New Housing Price Index (MoM) (Dec) Forecast 0.0%, Previous –0.2% at 19:00.