. Daily FX Analysis - USD/JPY faces uncertainty, NZD concerns post-Chinese PMI.

Daily FX Analysis – USD/JPY faces uncertainty, NZD concerns post-Chinese PMI.

Daily FX Analysis – USD/JPY faces uncertainty, NZD concerns post-Chinese PMI.

01 Feb 2024

Introduction

EUR/USD grapples near 1.0800 amidst Fed-induced US Dollar strength, with Chair Powell’s insistence on inflation aligning with the 2% target bolstering the greenback. As the market eyes EU inflation data, the pair faces renewed selling pressure, testing the 1.0800 support. Meanwhile, USD/CHF improves post-Powell’s rejection of a March rate cut, and USD/JPY struggles amid geopolitical risks and diminished prospects for a March Fed rate cut. NZD/USD edges higher post-Chinese PMI but contends with concerns over China’s economic slowdown and geopolitical uncertainties.

Markets In Focus Today – EUR/USD

EUR/USD struggles near 1.0800 on Fed-led US Dollar strength.

EUR/USD is battling 1.0800, consolidating the previous decline. Fed Chair Powell highlighted the need for inflation figures to reflect the Fed’s 2% ceiling, pushing back against early rate cut expectations and boosting the US Dollar. The focus now shifts to the EU inflation data. The bullish momentum in the US dollar sparked renewed selling momentum in EUR/USD, dragging it to the lower end of the weekly range near the 1.0800 region. Moving forward, investors’ debate is still expected to keep the door open to the first interest rate cut in March or May, with the probability of those outcomes at around 36% and 58%, respectively, according to Fed Watch Tool by CME Group.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.08 | 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 : 1.09 | Negative Crossover | Bearish
  • MA 50 : 1.09 | Negative Crossover | Bearish

RSI (Relative Strength Index): 37.09 | Sell Zone | Bearish

Stochastic   Oscillator : 12.69 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 1.10 R2 : 1.10
  • S1 : 1.08 S2 : 1.07

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Limit Sell: 1.0820 | Take Profit: 1.0733 | Stop Loss: 1.0873

USD/CHF

USD/CHF improves to near 0.8620 as Fed Powell rules out interest rate cut in March.

USD/CHF gains ground after Fed Chair Powell dismissed the possibility of a rate cut in March’s meeting. Fed chose to maintain its existing interest rates as expected.SNB Jordan anticipated that Swiss inflation would remain below 2.0%. USD/CHF edges higher to near 0.8620 during the Asian session on Thursday. Despite a setback in the US Dollar (USD) against the Swiss Franc (CHF) on Wednesday due to disappointing US employment data, a recovery ensued after Federal Reserve (Fed) Chair Jerome Powell dismissed the likelihood of a rate cut in the forthcoming March meeting. This decision was widely expected, given the Fed’s choice to uphold the existing interest rates. Powell underscored the enduring presence of heightened inflation and emphasized the strong growth in economic activity.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.86 | Positive Crossover | Bullish
  • MA 20 : 0.86 | Positive Crossover | Bullish
  • MA 50 : 0.87 | Negative Crossover | Bearish

Simple :

  • MA 10 : 0.86 | Negative Crossover | Bearish
  • MA 20 : 0.86 | Positive Crossover | Bullish
  • MA 50 : 0.86 | Positive Crossover | Bullish

RSI (Relative Strength Index): 52.97 | Buy Zone | Bullish

Stochastic   Oscillator : 53.85 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 0.87 R2 : 0.88
  • S1 : 0.85 S2 : 0.84

Overall Sentiment: Neutral Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8610 | Take Profit: 0.8527 | Stop Loss: 0.8675

USD/JPY

Japanese Yen oscillates in a narrow band against the USD and remains below its two-week peak.

The Japanese Yen lacks any firm intraday direction and is influenced by diverging forces. Geopolitical risks, China’s economic woes, and the ongoing decline in the US bond yields benefit the JPY. The USD remains supported by reduced bets for a March Fed rate cut and helps limit losses for USD/JPY. The Japanese Yen (JPY) seesaws between tepid gains/minor losses against its American counterpart heading into the European session on Thursday, though it remains well within the striking distance of a two-week high touched the previous day. A positive tone around the US equity futures is seen as a key factor acting as a headwind for the safe-haven JPY amid a bullish US Dollar (USD), supported by the Federal Reserve’s (Fed) less dovish outlook on Wednesday. That said, a combination of factors underpin the JPY and fails to assist the USD/JPY pair to build on the overnight bounce from the 146.00 mark.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 147.26 | Negative Crossover | Bearish
  • MA 20 : 146.68 | Positive Crossover | Bullish
  • MA 50 : 146.23 | Positive Crossover | Bullish

Simple :

  • MA 10 : 147.67 | Negative Crossover | Bearish
  • MA 20 : 146.75 | Positive Crossover | Bullish
  • MA 50 : 145.32 | Positive Crossover | Bullish

RSI (Relative Strength Index): 53.96 | Buy Zone | Bullish

Stochastic   Oscillator : 61.03 | Buy Zone | Negative

Resistance   And Support Levels :

  • R1 : 148.58 R2 : 150.46
  • S1 : 142.46 S2 : 140.57

Overall Sentiment: Bullish Market Direction: Buy

Trade Suggestion: Limit Buy: 146.57 | Take Profit: 148.26 | Stop Loss: 145.61

NZD/USD

NZD/USD edges up after Chinese PMI remains below the two-week high set on Wednesday.

NZD/USD regains positive traction following the release of a slightly better Chinese PMI.Worries about slowing economic growth in China and geopolitical risk to cap the Kiwi. The Fed’s less dovish outlook supports the USD and acts as a headwind. The NZD/USD pair attracted some buyers during the Asian session on Thursday and for now, seems to have stalled the previous day’s retracement slide from the 0.6175 region, or over a two-week peak. Spot prices currently trade around the 0.6130-0.6135 zone, though the lack of follow-through buying warrants some caution before positioning for any further appreciating move.

Technical   Overview With Chart :

Moving Averages :

Exponential :

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

Simple :

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

RSI (Relative Strength Index): 39.93 | Sell Zone | Bearish

Stochastic   Oscillator : 27.09 | Sell Zone | Negative

Resistance   And Support Levels :

  • R1 : 0.63 R2 : 0.63
  • S1 : 0.61 S2 : 0.60

Overall Sentiment: Bearish Market Direction: Sell

Trade Suggestion: Stop Sell: 0.6098 | Take Profit: 0.6027 | Stop Loss: 0.6147

Elsewhere In The Forex Market

EUR/GBP up 0.04% to 0.8529. The GBP/USD was down 0.26% to 1.2655. The USD/CAD is up 0.14% at 1.3454. EUR/JPY down 0.34% at 158.42. AUD/USD is down 0.49% at 0.6533, The USD/CNY is up 0.19% at 7.1811, and the AUD/SEK is down 0.21% at 6.8120, at the time of writing.

Key Economic Events & Data Release Today:

(EUR) ECB President Lagarde Speaks at 03:00. (EUR) German Manufacturing PMI (Jan) Forecast 45.4, Previous 43.3 at 03:55. (EUR) CPI (YoY) (Jan) Forecast 2.7%, Previous 2.9% at 05:00. (GBP) BoE Interest Rate Decision (Jan) Forecast 5.25%, Previous 5.25% at 07:00. (GBP) BoE Gov Bailey Speaks at 07:30. (USD) Initial Jobless Claims Forecast 213K, Previous 214K at 08:30. (USD) ISM Manufacturing PMI (Jan) Forecast 47.2, Previous 47.4 at 10:00.