. Daily FX Analysis - Red Sea, Stable EUR, AUD Retreats, USD/JPY Eyes BoJ.

Daily FX Analysis – Red Sea, Stable EUR, AUD Retreats, USD/JPY Eyes BoJ.

Daily FX Analysis – Red Sea, Stable EUR, AUD Retreats, USD/JPY Eyes BoJ.

22 Jan 2024

Introduction

The GBP/USD consolidates above 1.2700 amid modest USD weakness, driven by a positive risk-on environment. Despite a rebound in the pair, rising tensions in the Red Sea pose potential challenges. Meanwhile, EUR/USD stabilizes near 1.0900, influenced by an improving risk mood. The Australian Dollar retraces gains as the market awaits potential policy rate reduction by the Australian Central Bank. Japanese Yen struggles against the USD, with investors anticipating dovish actions from the Bank of Japan amid geopolitical risks and China’s economic concerns.

Markets In Focus Today – GBP/USD

GBP/USD consolidates above 1.2700 on modest USD weakness.

GBP/USD kicks off the new week on a positive note, trading above 1.2700 early Monday. The rebound of the major pair is bolstered by the risk-on environment. However, the rising tension in the Red Sea might boost safe-haven asset demand and cap the upside of 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. Nevertheless, investors remain indecisive about the timing of the Federal Reserve (Fed) policy pivot ahead of this week’s key growth and inflation data from the US.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.27 | Negative Crossover | Bearish
  • MA 20 : 1.27 | Positive Crossover | Bullish
  • 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) : 51.69 | Buy Zone | Bullish

Stochastic   Oscillator : 55.73 | Buy Zone | Positive

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 : 1.2685 | Take Profit : 1.2792 | Stop Loss : 1.2619

EUR/USD

EUR/USD hold steady near 1.0900 to start the week.

EUR/USD stabilized at around 1.0900 early Monday after closing the previous week in negative territory. In the absence of high-tier data releases, the improving risk mood limit the US Dollar’s gains and helps the pair hold its ground. EUR/USD managed to edge higher during the Asian trading hours on Monday and stabilized near 1.0900 after closing the previous week in negative territory. In the absence of fundamental drivers, the risk perception could drive the pair’s action in the short term. The US economic docket will not offer any data releases on Monday.

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

RSI (Relative Strength Index) : 45.14 | Neutral Zone | Neutral

Stochastic   Oscillator : 23.50 | 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 : Limit Sell : 1.0914 | Take Profit : 1.0827 | Stop Loss : 1.0974

AUD/USD

Australian Dollar retraces its recent gains amid a stable US Dollar.

Australian Dollar found support as the domestic share market surged following a rally in the US markets on Friday. Australian Central Bank is expected to reduce the policy rate after the softer Consumer Confidence and Employment Change figures. The Australian Dollar (AUD) hovers around a psychological level at 0.6600 on Monday amid market uncertainty driven by discussions between the United States (US) and the United Kingdom (UK) on intensifying actions against Iran-backed Houthi terrorists in Yemen. Nevertheless, the AUD/USD pair finds some uplift from a subdued US Dollar (USD), influenced by a reduction in long-term US Treasury yields.

Technical   Overview With Chart :

Moving Averages :

Exponential :

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

Simple :

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

RSI (Relative Strength Index) : 38.46 | Sell Zone | Bearish

Stochastic   Oscillator : 20.82 | 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 : Limit Sell : 0.6619 | Take Profit : 0.6532 | Stop Loss : 0.6677

USD/JPY

Japanese Yen bulls remain on the sidelines amid bets for BoJ inaction on Tuesday.

The Japanese Yen trims a part of its modest intraday gains amid dovish BoJ expectations. Geopolitical risks and China’s economic woes limit further losses for the safe-haven JPY. Reduced bets for a March Fed rate cut favour the USD bulls and lend support to USD/JPY. The Japanese Yen (JPY) struggles to capitalize on its modest intraday gains against the US Dollar (USD) on Monday and remains well within the striking distance of its lowest level since November 28 touched last week. Investors seem convinced that the Bank of Japan (BoJ) will show little desire towards ending negative interest rates or tweaking the Yield Curve Control (YCC) policy at the end of a two-day meeting on Tuesday.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 146.78 | Positive Crossover | Bullish
  • MA 20 : 145.72 | Positive Crossover | Bullish
  • MA 50 : 145.75 | Positive Crossover | Bullish

Simple :

  • MA 10 : 146.61 | Positive Crossover | Bullish
  • MA 20 : 144.61 | Positive Crossover | Bullish
  • MA 50 : 145.67 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 67.18 | Buy Zone | Bullish

Stochastic   Oscillator : 93.12 | Buy Zone | Negative

Resistance   And Support Levels :

  • R1 : 146.29 R2 : 148.19
  • S1 : 140.10 S2 : 138.19

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 147.65 | Take Profit : 149.36 | Stop Loss : 146.56

Elsewhere In The Forex Market

EUR/GBP up 0.08% to 0.8580. The USD/CAD up 0.04% to 1.3433. The USD/CHF up 0.13% at 0.8690. NZD/USD down 0.02% at 0.6101. EUR/JPY up 0.0% at 161.39, The USD/CNY down 0.02% at 7.1946, AUD/SEK down 0.07% at 6.8916, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) PBoC Loan Prime Rate Forecast 3.45%, Previous 3.45% at 06:45. (EUR) ECB President Lagarde Speaks at 19:30.