. Weekly FX Analysis - GBP/USD, EUR/USD, NZD/USD Highlights.

Weekly FX Analysis – GBP/USD, EUR/USD, NZD/USD Highlights.

Weekly FX Analysis – GBP/USD, EUR/USD, NZD/USD Highlights.

23 Dec 2023

Introduction:

In the dynamic currency markets, GBP/USD remains resilient above 1.2700, buoyed by stable US PCE inflation and positive UK Retail Sales. Meanwhile, EUR/USD retraces from 1.1040, driven by market adjustments in Greenback positions amid slowing US inflation expectations. NZD/USD breaks through 0.6300 as the New Zealand Dollar gains momentum, anticipating the US PCE Prices Index. USD/CAD claws back just below 1.3300, recovering from a Friday sell-off amid holiday preparations and rate expectations.

GBP/USD:

GBP/USD maintains its position above 1.2700 after US PCE inflation, which keeps rate cut hopes pinned to the ceiling.

GBP/USD remains elevated as US PCE inflation stabilizes. UK Retail Sales grew in November, and despite a decline in UK GDP QoQ, Pound Sterling bidders remain unfazed. Bearish US Dollar flows are supporting the broader market.

Amidst choppy conditions in the US market session, GBP/USD stays elevated, holding above the 1.2700 level regained during the European trading window, following the UK’s positive Retail Sales report for November.

On Friday, U.S. data regained prominence, with slowing inflation acting as the primary catalyst, resulting in a decline of the U.S. Dollar across various markets.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2680 | Positive Crossover | Bullish
  • MA 20: 1.2617 | Positive Crossover | Bullish
  • MA 50: 1.2515 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2679 | Positive Crossover | Bullish
  • MA 20: 1.2641| Positive Crossover | Bullish
  • MA 50: 1.2341 | Positive Crossover | Bullish

RSI (Relative Strength Index): 58.01 | Buy Zone | Bullish

Stochastic Oscillator: 22.01 | Selling Zone | Neutral

Resistance And Support Levels:

  • R1: 1.2710 | R2: 1.2941
  • S1: 1.2562 | S2: 1.2387

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2756 | Take Profit: 1.2941 | Stop Loss: 1.2650

EUR/USD:

EUR/USD retraces from 1.1040 as markets pare back Greenback shorts.

EUR/USD reaches an 18-week peak on Friday amid choppy pre-holiday markets. The Greenback weakens as slowing US inflation fuels expectations of rate cuts. Following the data release, the pair experienced an immediate downward spike, propelled by the initially positive impact of the better-than-expected US Durable Goods orders report on the Dollar.

The EUR/USD surged to an 18-week high at 1.1040 before retracing towards 1.1000 as markets finalized operations ahead of the holiday break.

On Friday, U.S. inflation fell short of expectations, registering below the anticipated levels and reinforcing investor expectations of accelerated Federal Reserve (Fed) rate cuts in 2024.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0974 | Positive Crossover | Bullish
  • MA 20: 1.0895 | Positive Crossover | Bullish
  • MA 50: 1.0823 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0972 | Positive Crossover | Bullish
  • MA 20: 1.0890 | Positive Crossover | Bullish
  • MA 50: 1.0778 | Positive Crossover | Bullish

RSI (Relative Strength Index): 62.13| Buy Zone | Bullish

Stochastic Oscillator: 76.58 | Buy Zone | Positive

Resistance And Support Levels:

  • R1: 1.1014 | R2: 1.1154
  • S1: 1.0894 | S2: 1.0760

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.1048 | Take Profit: 1.1154 | Stop Loss: 1.0986

NZD/USD:

NZD/USD is breaking through the 0.6300 resistance level in anticipation of the US PCE Prices Index.

The New Zealand Dollar rebounds, pushing past the 0.6300 level as the US Dollar stays defensive after disappointing US GDP data on Thursday.

The Kiwi has resumed its upward momentum during Friday’s European morning session, aiming for levels beyond 0.6300. The US Dollar is experiencing broad declines ahead of the release of November’s PCE Prices Index data.

Investors perceive a slight easing in the core inflation data, considering the Federal Reserve’s (Fed) recent tightening stance on interest rates. Projections indicate a consistent monthly growth of 0.2% in the core PCE data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6263| Positive Crossover | Bullish
  • MA 20: 0.6176 | Positive Crossover | Bullish
  • MA 50: 0.6084 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.6262 | Positive Crossover | Bullish
  • MA 20: 0.6180 | Positive Crossover | Bullish
  • MA 50: 0.6023 | Positive Crossover | Bullish

RSI (Relative Strength Index): 70.79| Buying zone| Bullish

Stochastic Oscillator: 83.1 | Buy Zone | Positive

Resistance And Support Levels:

  • R1: 0.6304 | R2: 0.6441
  • S1: 0.6210 | S2: 0.6092

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6323 | Take Profit: 0.6441 | Stop Loss: 0.6260

USD/CAD:

USD/CAD claws back on Friday, as the Greenback recovers ahead of the holiday, hovering just below the 1.3300 mark.

The US Dollar is recovering from the Friday sell-off as the market prepares for the holiday.

The Loonie briefly surged to a new 19-week high as markets, driven by rate expectations, exerted pressure on the USD. USD/CAD is poised for its fifth weekly decline in the last six weeks.

The USD/CAD rebounded above 1.3260 after hitting a new 19-week low on Friday, with markets adjusting expectations for an accelerated pace of rate cuts from the Federal Reserve (Fed) in 2024 due to faster-than-expected easing of US inflation.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.3325 | Negative Crossover | Bearish
  • MA 20: 1.3472 | Negative Crossover | Bearish
  • MA 50: 1.3562 | Negative Crossover | Bearish

Simple:

  • MA 5: 1.3329 | Negative Crossover | Bearish
  • MA 20: 1.3492 | Negative Crossover | Bearish
  • MA 50: 1.3641 | Negative Crossover | Bearish

RSI (Relative Strength Index): 26.76| Selling Zone | Bearish

Stochastic Oscillator: 9.95| Sell zone | Neutral

Resistance And Support Levels:

  • R1: 1.3380 | R2: 1.3515
  • S1: 1.3253 | S2: 1.3091

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 1.3225| Take Profit: 1.3091 | Stop Loss: 1.3316

Elsewhere in the Forex Market

AUD/USD down 0.03% to 0.6799. The EUR/JPY up 0.23% to 156.80. The USDCHF is down 0.11% at 0.8552. USD/JPY up 0.02% at 142.38, EUR/GBP down 0.03% at 0.8674. The USD/CNY is down 0.07% at 7.1333, AUD/SEK is down 0.90% at 6.8018, and CHF/SGD is down 0.21% at 1.5460 at the time of writing.

Key Economic Events & Data Release for Upcoming Week:

(JPY) Retail Sales (YoY) (Nov) (Thursday).

(USD) Initial Jobless Claims (Thursday).

(USD) Pending Home Sales (MoM) (Nov) (Thursday)

(USD) Crude Oil Inventories (Thursday).