. Daily FX Analysis - USD strength, GBP resilience, AUD rebound, seismic USD/JPY impact.

Daily FX Analysis – USD strength, GBP resilience, AUD rebound, seismic USD/JPY impact.

Daily FX Analysis – USD strength, GBP resilience, AUD rebound, seismic USD/JPY impact.

02 Jan 2024

Introduction:

In the currency markets, EUR/USD is pressured below 1.1050 amid a strengthening US Dollar. GBP/USD resists a broader Dollar recovery, while AUD/USD rebounds from recent losses. USD/JPY weakens against the Yen, with limited upside potential. Stay informed about these developments and the impact of a devastating earthquake on the Japanese Yen.

EUR/USD:

EUR/USD remains under pressure below the 1.1050 level as the US Dollar strengthens.

In early Europe on Tuesday, EUR/USD returned to negative territory below 1.1050. The major is facing downward pressure due to a widespread recovery of the US Dollar and a sense of cautious optimism, marking the first trading day of 2024.

EUR/USD remains in a bearish stance, trading slightly lower below 1.1050 during the initial European session of 2024. The short-term technical analysis indicates a potential continuation of the downward correction for the pair. Yet, investors may exercise caution and avoid significant positions as they await crucial macroeconomic data releases scheduled for later this week.

Attention now turns to economic data from the European Union and the United States.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.1040| Negative Crossover | Bearish
  • MA 20: 1.1037| Negative Crossover | Bearish
  • MA 50: 1.0931 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.1042 | Negative Crossover | Bearish
  • MA 20: 1.1037 | Negative Crossover | Bearish
  • MA 50: 1.0931 | Positive Crossover | Bullish

RSI (Relative Strength Index): 54.27| Positive Zone | Buy

Stochastic Oscillator: 00| Sell zone | Negative

Resistance And Support Levels:

  • R1: 1.1118| R2: 1.1215
  • S1: 1.1003| S2: 1.0885

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Limit Buy: 1.1008| Take Profit: 1.1118 | Stop Loss: 1.0940

GBP/USD:

GBP/USD is ascending towards the mid-1.2700s in anticipation of PMI data releases from the UK and the US.

In European trading on Tuesday, GBP/USD is recording slight increases, receiving support just above the 1.2710 level. The pair remains resistant to a widespread recovery of the US Dollar and the ascent of US Treasury bond yields, reflecting a subdued sense of market optimism.

Last week, GBP/USD reached a five-month peak above 1.2800 but relinquished its gains leading up to the New Year holiday, concluding the week with marginal changes. As of early Tuesday, the pair is experiencing modest gains, hovering around 1.2750, as trading conditions are still in the process of normalizing.

We now await the final PMI figures from both the UK and the US.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2740| Positive Crossover | Bullish
  • MA 20: 1.2725| Positive Crossover | Bullish
  • MA 50: 1.2667 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2739 | Positive Crossover | Bullish
  • MA 20: 1.2725 | Positive Crossover | Bullish
  • MA 50: 1.2667| Positive Crossover | Bullish

RSI (Relative Strength Index): 54.68| Buy Zone | Bullish

Stochastic Oscillator: 16.42| Sell zone | Neutral

Resistance And Support Levels:

  • R1: 1.2764| R2: 1.2957
  • S1: 1.2632| S2: 1.2500

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2808| Take Profit: 1.2957 | Stop Loss: 1.2720

AUD/USD:

The Australian Dollar is bouncing back from its recent declines after an improvement in the US Dollar.

Despite the US Dollar gaining strength, the Australian Dollar is making slight upward movements. The Australian currency experienced a 0.06% decline against the Greenback in 2023. Additionally, China’s Caixin Manufacturing PMI showed improvement, rising to 50.8 in December from the previous 50.7.

On Tuesday, the Australian Dollar (AUD) hovers around 0.6820 following a rebound on Friday. The AUD/USD pair saw a 0.06% decrease in 2023, further extending its three-year trend of losses.

Nevertheless, over the last two months, the pair has experienced increases, which can be attributed to a weakened US Dollar (USD) caused by a slight decrease in United States (US) inflation.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6823 | Positive Crossover | Bullish
  • MA 20: 0.6813| Positive Crossover | Bullish
  • MA 50: 0.6715 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6820 | Positive Crossover | Bullish
  • MA 20: 0.6813 | Positive Crossover | Bullish
  • MA 50: 0.6715| Positive Crossover | Bullish

RSI (Relative Strength Index): 57.78| Buying Zone| Bullish

Stochastic Oscillator: 38.00 |Selling Zone | Positive

Resistance And Support Levels:

  • R1: 0.6832| R2: 0.6984
  • S1: 0.6760 | S2: 0.6677

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6854 | Take Profit: 0.6984 | Stop Loss: 0.6778

USD/JPY:

The Japanese Yen continues to show weakness against the US Dollar, with limited upside potential anticipated for USD/JPY.

On Tuesday, the Japanese Yen experienced a slight decline against the USD, but any sustained downward movement is lacking. Expectations that the Bank of Japan (BoJ) might move away from the negative interest rates regime could contribute to restraining additional losses.

The Japanese Yen (JPY) faces selling pressure on the initial trading day of 2024 and maintains a subdued position as the European session approaches.

A severe earthquake in central Japan is negatively impacting the domestic currency, a significant factor during relatively low trading volumes.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 141.40 | Positive Crossover | Bullish
  • MA 20: 141.92| Negative Crossover | Bearish
  • MA 50: 143.12| Negative Crossover | Bearish

Simple:

  • MA 5: 141.38 | Positive Crossover | Bullish
  • MA 20: 141.92| Negative Crossover | Bearish
  • MA 50: 143.12| Negative Crossover | Bearish

RSI (Relative Strength Index): 42.36| Neutral Zone | Neutral

Stochastic Oscillator: 62.49| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 142.86 | R2: 144.35
  • S1: 141.27 | S2: 138.31

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 140.74| Take Profit: 138.81 | Stop Loss: 142.14.

Elsewhere in the Forex Market

EUR/GBP down 0.23% to 0.8650. The USD/CHF was up 0.41% to 0.8447. The USD/CAD is down 0.01% at 1.3238. NZD/USD down 0.16% at 0.6306. EUR/JPY is up 0.22% at 155.96, USD/CNY is up 0.47% at 7.1317, and AUD/SEK is up 0.18% at 6.8829, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) Caixin Manufacturing PMI (Dec) Actual 50.8, Forecast 50.4, Previous 50.7 at 07:15.

(EUR) German Manufacturing PMI (Dec) Forecast 43.1, Previous 42.6 at 15:30.

(GBP) Manufacturing PMI (Dec) Forecast 46.4, Previous 47.2 at 15:00.

(USD) Manufacturing PMI (Dec) Forecast 48.2, Previous 49.4 at 20:15.