USD/JPY Price Analysis – Jan 18, 2024
Daily Price Outlook
Despite expectations that the Bank of Japan (BoJ) will maintain its dovish stance, the USD/JPY currency pair failed to halt its downward trend and remained under pressure around the $147.86 level. The decline can be attributed to a weakening US dollar, influenced by robust U.S. retail sales data that raised doubts about early rate cuts by the Federal Reserve. Additionally, concerns about heightened military activity in the Middle East and ongoing economic challenges in China are affecting investor sentiment. Traders are also adjusting their positions ahead of Japan's consumer inflation data release on Friday, contributing to losses in the USD/JPY currency pair.
Positive US Economic Data Strengthens USD and Supports USD/JPY Pair
It is worth noting that positive US economic data on Wednesday alleviated concerns about the Federal Reserve changing its policies in March. The Commerce Department revealed that US retail sales increased more than expected by 0.6% in December, surpassing estimates even when excluding auto sales. This shows that people are spending more, and the US economy is doing well. Fed Governor Christopher Waller highlighted the need to be cautious about cutting interest rates unless there's clear proof of ongoing lower inflation. The yield on the 10-year US government bond crossed 4%, helping the US Dollar.
Therefore, the positive US economic data boosted the US Dollar, but the USD/JPY pair faced pressure due to cautious Fed stance and global uncertainties.
Impacts of Geopolitical Tensions on USD/JPY Pair and Investor Sentiment
Furthermore, tensions surrounding the Israel-Hamas conflict and slow economic growth in China make investors cautious about riskier assets. This supports the safe-haven Japanese Yen, constraining the USD/JPY pair. Recent events, such as Yemen's Houthi rebels targeting a US-owned cargo ship with a kamikaze drone, contribute to geopolitical concerns.
Besides this, Pakistan conducted military strikes against terrorist hideouts in Iran's Sistan-Baluchistan province, asserting its commitment to protecting its people. Despite China's economy growing at 5.2% in Q4 2023, a property crisis, deflation risks, and weak demand cast doubts on its recovery. Traders are now monitoring US economic data, but attention remains on Japan's upcoming consumer inflation figures on Friday.
Therefore, tensions in the Israel-Hamas conflict, economic concerns in China, and geopolitical events have led investors to prefer the safe-haven Japanese Yen, limiting the USD/JPY pair's upward potential.
USD/JPY - Technical Analysis
As of January 18, the USD/JPY is witnessing a slight downtrend, currently positioned at 148, marking a decrease of 0.11%. The 4-hour chart analysis identifies a pivotal point at 144.95. The pair faces immediate resistance at 146.47, with further barriers at 147.87 and 149.34. On the support side, it finds initial support at 143.42, followed by 141.96 and 140.37.
The Relative Strength Index (RSI) stands at 74, indicating that the pair may be approaching overbought territory, potentially leading to a pullback. The Moving Average Convergence Divergence (MACD) is currently at 0.09, with the signal line at 0.774, suggesting a potential for upward momentum but warranting caution given the high RSI.
The 50-Day Exponential Moving Average (EMA) is at 147.70, indicating potential resistance for the pair. The observed chart pattern shows an upward channel, supporting the current uptrend, yet a double top pattern near 148.50 suggests significant resistance.
The overall trend for USD/JPY appears to be at a critical juncture, with a short-term bearish outlook. Traders might consider a sell limit at 148.500, with a take profit target of 147.100 and a stop loss at 149.350. In the near term, the pair is expected to test its resistance levels, particularly if it moves beyond the current resistance point.
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AUD/USD Price Analysis – Jan 18, 2024
GOLD Price Analysis – Jan 18, 2024
Daily Price Outlook
Gold price (XAU/USD) managed to halt its two-day downward trend and gained bullish traction around the $2,010 level. The upward rally can be attributed to the risk-off market sentiment, providing support to the safe-haven metal. Furthermore, the geopolitical tensions and concerns about a weak economic outlook for China have played a significant role in bolstering the gold price. Besides this, a modest downtick in the US Dollar (USD) has served as another factor benefiting the safe-haven gold.
Impact of Positive US Retail Sales on Economy, Interest Rates, and Gold Prices
It's important to highlight that the recent positive US Retail Sales report signals a strong economy, providing the Federal Reserve with room to maintain higher interest rates. This supports higher US Treasury bond yields, benefiting the USD and limiting potential gains for Gold. The data, which shows higher-than-expected retail sales in December, indicates robust consumer spending and overall economic strength. Fed Governor Waller's cautious stance on cutting rates adds to this narrative. The 10-year US bond yield above 4% supports the USD.
Therefore, the positive US Retail Sales report suggests a strong economy, supporting higher interest rates and US Treasury yields. This caps potential gains for Gold, a non-yielding asset, making it less attractive to investors.
Gold Gains Modestly Amid Global Concerns and Geopolitical Tensions
Moreover, the safe-haven gold has been gaining traction and maintains modest gains as investors seek safety amid global concerns. However, the geopolitical tensions and worries about China's economic outlook contribute to the precious metal's appeal. In the meantime, the slight decline in the US Dollar also supports Gold, attracting buyers around the $2,000 mark. Houthi rebels claim a second attack on a US-operated vessel, escalating tensions, while Pakistan conducts military strikes in Iran, emphasizing its commitment to protect its people.
Therefore, the Gold price benefits from global concerns, including geopolitical tensions and China's economic worries. A weaker US Dollar and escalating geopolitical events, such as Houthi attacks and military strikes, elevate Gold's appeal amid uncertainty
GOLD (XAU/USD) - Technical Analysis
As of January 18, Gold (XAU/USD) has shown a modest increase, trading at $2008, up by 0.09%. The chart analysis on a 4-hour timeframe indicates a pivot point at $1,993, with the metal facing immediate resistance at $2,021. Further resistance levels are seen at $2,042 and $2,069. On the support side, immediate backing is found at $1,972, followed by $1,950 and $1,930.
The Relative Strength Index (RSI) stands at 33, suggesting that Gold may be entering an oversold territory. The Moving Average Convergence Divergence (MACD) presents a value of -3.61, with its signal line at -8.27. This could indicate a potential for downward momentum, although a cautious approach is warranted given the proximity to oversold conditions.
The 50-Day Exponential Moving Average (EMA) currently sits at $2,017, reinforcing the resistance area near the $2,021 level. The observed symmetrical triangle pattern in the chart suggests a strong selling pressure, yet the entry into the oversold zone offers a counterbalance.
The overall trend for Gold appears to be at a critical juncture. Investors might consider a buy limit at 2008, with a take profit target of 2030 and a stop loss set at 1996. Short-term, Gold is expected to test its immediate resistance levels, particularly if it can sustain a move beyond the pivot point of $1,993.
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AUD/USD Price Analysis – Jan 18, 2024
GBP/USD Price Analysis – Jan 17, 2024
Daily Price Outlook
Despite the bullish US dollar and softer-than-projected UK wage growth, along with ongoing geopolitical tensions in the Middle East, the GBP/USD currency pair maintained its upward trend and remained well bid above the 1.2650 level. The reason for this upward trend can be attributed to the upcoming December UK inflation data, measured by the Consumer Price Index (CPI). The CPI figure is expected to rise by 0.2% MoM, following a 0.2% drop in November.
UK Labor Market Update: Mixed Signals Raise Concerns and Potential Impact on GBP/USD Pair
The latest data from the Office for National Statistics (ONS) shows that the UK's unemployment rate held steady at 4.2% in the three months leading up to November, matching expectations. However, there is a slight concern as the number of people claiming jobless benefits increased by 11.7K in December, up from 0.6K in November.
On a positive note, the employment change for November saw a gain of 73K, compared to the previous 50K. Yet, wage growth has slowed down, with average earnings (excluding bonuses) dropping to 6.6%, and earnings (including bonuses) growing at a slower pace of 6.5%. This may prompt the Bank of England to consider cutting interest rates in the near future.
Therefore, the steady unemployment rate and positive employment change support GBP, but concerns over rising jobless claims and slowed wage growth may pressure the currency, impacting the GBP/USD pair.
Geopolitical Tensions and Fed Outlook Propel US Dollar, Creating Headwinds for GBP/USD Pair
Furthermore, tensions in the Middle East are boosting the appeal of the US Dollar as a safe-haven. A recent US airstrike on a Houthi missile facility in Yemen aimed to counter an imminent threat to ships. Additionally, decreased speculation of a Federal Reserve rate cut is lifting the Greenback. Fed Governor Christopher Waller emphasized a cautious approach to rate adjustments, reducing the likelihood of a cut. According to the CME FedWatch tool, investors now see a 67% chance of rate hikes starting in March. This development acts as a hurdle for the GBP/USD pair, favoring the stronger US Dollar.
Therefore, the rising Middle East tensions and reduced Fed rate cut expectations lift the US Dollar, posing a challenge for the GBP/USD pair.
GBP/USD - Technical Analysis
On January 17, the GBP/USD pair is trading at 1.25998, showing a decline of 0.28%. This movement in the forex market is critical for traders focusing on the short-term trends of the British Pound against the US Dollar. The 4-hour chart timeframe provides a detailed view of the key price levels that are pivotal for the day's trading.
The pivot point for GBP/USD is set at 1.25768, serving as a crucial juncture for determining the pair's direction. Resistance levels are identified at 1.26240, 1.26891, and 1.27375, which could pose challenges for bullish movements. Conversely, support levels are found at 1.28014, 1.25271, and 1.24786, offering potential floors for the pair.
Technical indicators shed light on the pair's momentum. The RSI is at a low of 26, indicating an oversold market condition that might lead to a potential rebound. The MACD stands at -0.00123, with the MACD line below the signal line at -0.00315, suggesting a bearish trend. The 50-Day EMA is currently at 1.26999, reinforcing the resistance zone.
A significant chart pattern observed is the violation of the upward trendline around the 1.2645 mark. The formation of a bearish engulfing pattern below this level suggests a selling trend, indicating a potential continuation of the downward momentum.
The overall trend for GBP/USD appears bearish. Traders might consider a sell strategy below 1.26381, with a take profit target at 1.25876 and a stop loss at 1.26702. The short-term forecast suggests the pair may test lower support levels, unless it breaks above the immediate resistance.
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EUR/USD Price Analysis – Jan 17, 2024
Daily Price Outlook
Despite the bullish US dollar, the EUR/USD currency pair maintained its upward trend and ticked higher around the 1.0880 level. The reason for this upward trend could be attributed to the upcoming release of the final Eurozone CPI print, which might influence the Euro. Meanwhile, mixed messages from ECB leaders could make investors unsure about making strong moves.
ECB Policy Divergence and USD Strength Impact EUR/USD Outlook
It's important to mention that the shared European currency is facing challenges in finding buyers because there are mixed opinions among European Central Bank (ECB) policymakers regarding inflation and interest rates. Joachim Nagel, the President of Bundesbank, thinks it's too early to talk about cutting interest rates due to high inflation. On the other hand, Tuomas Valimaki from the ECB Governing Council is open to the idea of lowering interest rates sooner. This uncertainty, combined with a positive vibe around the US Dollar, suggests a less positive outlook for the EUR/USD pair in the short term.
Consequently, the conflicting views among ECB policymakers on interest rates and inflation create uncertainty for the EUR/USD pair. Joachim Nagel's caution and Tuomas Valimaki's openness, coupled with a strong US Dollar, signal a less optimistic near-term outlook for EUR/USD.
USD Strength and Cautious Fed Stance Impact EUR/USD Pair
Furthermore, the broad-based US Dollar is standing strong near its highest point since December 13. This strength is fueled by reduced expectations for an early interest rate cut by the Federal Reserve (Fed). Last week, despite slightly higher US consumer inflation, Fed Governor Christopher Waller said we should be cautious and not rush rate cuts because the economy is doing well. This stance supports higher US Treasury bond yields, coupled with a cautious market sentiment, boosting the safe-haven appeal of the dollar and putting a lid on the EUR/USD pair.
Therefore, the robust performance of the USD Index, driven by reduced expectations for a prompt Fed rate cut, and Governor Waller's cautious stance, supporting higher Treasury bond yields, create a cautious market. This favors the safe-haven dollar, restricting the upside potential for the EUR/USD pair.
EUR/USD - Technical Analysis
As of January 17, the EUR/USD pair is trading at 1.08597, marking a slight decrease of 0.15% within a 24-hour period. Analyzing the 4-hour chart, we can discern several critical levels that could influence the pair's short-term direction. The pivot point is established at 1.08175, indicating a potential shift in market sentiment. Resistance levels are identified at 1.08645, 1.09081, and 1.09539, which could act as barriers to upward movement. On the flip side, support levels are found at 1.09975, 1.07728, and 1.07258, offering potential floors for price dips.
The technical indicators provide a deeper insight into the pair's momentum. The RSI stands at 27, suggesting an oversold condition that might lead to a price correction. The MACD, at -0.00078, with its line below the signal line at -0.00244, indicates a bearish trend. The 50-Day EMA is positioned at 1.09361, further reinforcing the resistance zone.
A key observation in the chart patterns is the violation of the upward trendline around $1.0928. The closing of a bearish engulfing pattern below this level supports a selling trend, signaling a potential continuation of the downward momentum.
The overall trend for EUR/USD appears bearish. Traders might consider a sell strategy below 1.08812, with a take profit target at 1.08263 and a stop loss at 1.09151. The short-term forecast suggests the pair may test lower support levels, unless it breaks above the immediate resistance.
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- GOLD Price Analysis – Jan 17, 2024
GOLD Price Analysis – Jan 17, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to halt their downward rally and remained well offered around the 2,019 level. The reason for this downward trend can be attributed to the bullish US dollar, backed by higher US Treasury bond yields. It should be noted that Federal Reserve (Fed) Christopher Waller's remarks on Tuesday forced investors to scale back their expectations for an early interest rate cut by the US central bank. This pushed the US Treasury bond yields higher, lifting the US Dollar (USD) to over a one-month peak.
Fed Comments and Rising Bond Yields Put Pressure on Gold Prices, Eyes on Future Economic Data
It's worth noting that investors are exercising caution due to reduced expectations of a Federal Reserve rate cut in March, combined with global tensions and sluggish economic growth in China. This cautious sentiment is creating a generally subdued atmosphere in the stock markets. Surprisingly, it's not boosting the demand for the safe-haven Gold.
Federal Reserve Governor Christopher Waller made comments on Tuesday that added to the skepticism about a March rate cut. He emphasized the need for the Fed to be careful and not rush into rate cuts, highlighting that the economy is performing well. This push up the yields on the 10-year US government bonds, crossing the 4.0% mark. This rise in bond yields is supporting the US Dollar and putting a cap on Gold prices.
Looking ahead, speeches by Fed Governors Michael Barr and Michelle Bowman could impact the US Dollar and provide some momentum for Gold. Traders are now keeping an eye on upcoming US economic data, expecting to see a 0.4% growth in monthly Retail Sales for December and flat Industrial Production.
Gold Price Faces Limited Relief Amid Middle East Tensions and Positive Chinese Economic Data
Despite ongoing tensions in the Middle East, safe-haven Gold (XAU/USD) isn't finding much support, and bullish traders remain subdued. A recent US airstrike targeting a Houthi missile site in Yemen due to a threat to ships adds to the geopolitical complexities. On the economic front, China reported a 5.2% annual growth in its economy for Q4 2023, meeting expectations. In December, Retail Sales saw a YoY rise of 7.4%, while Industrial Production experienced a YoY increase of 6.8%.
Despite facing external challenges and dealing with low consumer prices due to weak domestic demand, the presence of geopolitical risks and China's economic hurdles might moderate aggressive bearish bets on Gold, thereby aiding in limiting potential losses.
GOLD (XAU/USD) - Technical Analysis
Gold's current trading price of $2,018.60, down by 0.47%, reflects a cautious market sentiment. Analyzing the 4-hour chart timeframe, we observe several key levels that could dictate the metal's short-term trajectory. The pivot point is set at $1,993, suggesting a neutral to bearish outlook unless this level is decisively breached. Resistance levels are established at $2,021, $2,041, and $2,070, which could cap upward movements. Conversely, support levels at $1,972, $1,951, and $1,930 might offer a cushion against further declines.
From a technical standpoint, the RSI at 34 hints at a potential oversold scenario, possibly leading to a rebound. However, the MACD, currently at -3.64 with the MACD line below the signal line, suggests that the bearish momentum is still in play. The 50-Day EMA stands at $2,040, reinforcing the resistance zone. Notably, a symmetrical triangle pattern is observed, with a breakout at the $2,020 level, indicating a critical juncture for future price action.
The overall trend for Gold appears bearish, with a short-term forecast suggesting a potential test of lower support levels. Traders might consider a sell limit at 2023, with a take profit target at 2004 and a stop loss at 2034.
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GOLD Price Analysis – Jan 16, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to prolong their three-day upward trend and dropped lower near the $2,050 level during the early European session on Tuesday. However, the reason for the downward trend could be attributed to the bullish US dollar, which gained ground after hawkish comments from Atlanta Fed President Raphael Bostic. In the meantime, upbeat US Treasury yields were seen as another key factor that boosted the US dollar and contributed to the losses in gold prices. Apart from this, risk-off market sentiment, driven by the escalated Middle East conflict, was seen as one of the key factors that could help safe-haven gold limit its deeper losses.
Raphael Bostic's Remarks Propel US Dollar, Putting Pressure on Gold Prices
It's worth noting that the US Dollar Index (DXY) started Tuesday higher at around 102.90, with 2-year and 10-year US Treasury yields at 4.20% and 3.99%, respectively. However, this uptrend can be linked to increased Atlanta Fed President Raphael Bostic's optimistic remarks. Bostic warned against premature interest rate cuts, suggesting that doing so might cause inflation to fluctuate. He also mentioned that the slowdown in inflation toward the central bank's 2.0% target is expected to ease in the coming months. This news has contributed to the positive momentum of the US Dollar.
Therefore, the positive outlook for the US Dollar, driven by Raphael Bostic's comments on inflation and interest rates, has exerted downward pressure on gold prices. Gold often moves inversely to the strength of the US Dollar.
Geopolitical Tensions in Red Sea Spark Shift in Market Sentiment, Driving Demand for Safe-Haven Gold
On a different note, the tension between Israel and Gaza is spreading to the Red Sea, where the Houthi group is attacking ships. Despite recent military actions by the United States and the United Kingdom against Houthi locations in Yemen, the situation is prompting a shift in market sentiment from optimism to caution. Investors, now adopting a more careful approach, are increasingly seeking safety. People are now looking for safety, and this could mean more interest in safe-haven assets like Gold due to the increased tension in the region.
Hence, the rising tension in the Red Sea has shifted market sentiment and could boost demand for safe-haven assets like Gold due to increased geopolitical risks, potentially impacting its price positively.
GOLD (XAU/USD) - Technical Analysis
On January 16th, Gold faced a marginal downturn, with its price falling by 0.26% to $2,049. Analyzing the 4-hour chart, the precious metal hovers around a pivotal point of $2,021, with immediate resistance levels observed at $2,042, $2,071, and $2,091. In contrast, support levels are positioned at $1,992, $1,972, and $1,951.
From a technical perspective, the Relative Strength Index (RSI) stands at 54, indicating a somewhat neutral market sentiment. The Moving Average Convergence Divergence (MACD) presents a value of 0.984 against a signal line at 4.981, suggesting that the downward momentum may not be strongly established yet. The 50-day and 200-day Exponential Moving Averages (EMAs) are currently converging around the $2,050 level, offering a critical juncture for the metal's price movements.
A symmetrical triangle pattern is observed, extending resistance at the $2,060 mark. This formation indicates that a break below this level could lead to increased selling pressure.
In conclusion, the overall short-term trend for Gold appears to be leaning towards a bearish outlook. A recommended strategy could be to set a sell limit at 2055, with a take-profit target at 2040 and a stop loss at 2065. As always, traders should remain vigilant for potential resistance tests and market fluctuations in the coming days.
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-AUD/USD Price Analysis – Jan 16, 2024
AUD/USD Price Analysis – Jan 16, 2024
Daily Price Outlook
The AUD/USD currency pair failed to halt its downward trend and remained well offered around the $0.6616 level. However, the reason for its decline can be attributed to the bullish US dollar and downbeat Australian data. The pair faces downward pressure after the release of the Westpac Consumer Confidence data for January, which showed a contraction. This might lead market participants to believe that the Reserve Bank of Australia (RBA) won't increase interest rates in its February meeting.
US Dollar Strengthens on Higher Treasury Yields, Hawkish Fed Comments, and Geopolitical Tensions
It's worth noting that Australia's Consumer Confidence, measured by the Melbourne Institute, dropped by 1.3%, reversing a previous gain of 2.7%. However, the Australian Dollar's decline was capped by the TD Securities Inflation data, showing a 5.2% year-on-year increase in December, up from 4.4% in November.
On a positive note, job advertisements in Australia improved by 0.1% in December, bouncing back from a 4.6% decline. In China, the People's Bank kept its medium-term facility rate steady at 2.5%, raising expectations for a future reduction in the Reserve Requirement Ratio. However, China's Consumer Price Index fell by 0.3% in December, contrary to the expected 0.4% decline, while the yearly Producer Price Index dropped by 2.7%, slightly more than the anticipated 2.6% fall.
Therefore, the drop in Australian consumer confidence and mixed economic data may exert downward pressure on the AUD/USD pair, reflecting uncertainty and potential economic challenges.
USD Strength and Geopolitical Tensions Impact AUD/USD Pair
Furthermore, the US Dollar Index (DXY) started the day on a positive note, boosted by higher US Treasury yields. Investor confidence in the USD strengthened after hawkish comments from Atlanta Fed President Raphael Bostic, who cautioned against premature rate cuts, foreseeing potential inflation fluctuations.
In the meantime, the geopolitical tensions, particularly the Israel-Gaza conflict affecting Red Sea trade, fueled risk aversion, contributing to USD gains. Barclays moved up its forecast for the first Fed rate cut to March, citing expectations of a 25 basis points reduction. Meanwhile, December's Producer Price Index (PPI) rose 1.0% YoY, and Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding market expectations and influencing the USD's performance.
Thus, the AUD/USD faced declines as the USD strengthened on higher Treasury yields, hawkish comments, geopolitical tensions, and Barclays' rate cut forecast.
AUD/USD - Technical Anaylsis
On January 16th, the Australian Dollar (AUD/USD) exhibited a notable decline, dropping by 0.71% to a current level of 0.66128. The 4-hour chart analysis reveals a pivot point at 0.6557. The AUD faces immediate resistance at 0.6602, followed by 0.6644 and 0.6688. On the downside, support levels are identified at 0.6509, 0.6466, and a seemingly out-of-place 0.6734, which may need correction.
The Relative Strength Index (RSI) is notably low at 28, indicating that the AUD/USD is potentially oversold. The Moving Average Convergence Divergence (MACD) shows a value of -0.001, with the signal line at -0.00182, suggesting a lack of strong directional momentum. The 50-day and 200-day Exponential Moving Averages (EMAs) are at 0.6654, further indicating potential resistance points.
A key pattern on the chart is a downward channel, reinforcing a bearish sentiment for the AUD, particularly below the 0.66333 mark. This trend suggests that the AUD is currently in a selling mode.
In conclusion, the short-term outlook for the AUD/USD pair appears bearish. Traders might consider a sell limit at 0.66333, with a take profit target near 0.6509 and a stop loss around 0.6688. However, given the oversold conditions, caution is advised as reversals are possible, especially if the pair tests and breaks above key resistance levels.
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- USD/CAD Price Analysis – Jan 16, 2024
USD/CAD Price Analysis – Jan 16, 2024
Daily Price Outlook
The USD/CAD currency pair sustained its upward trend and remained well bid around the 1.3483 level. The reason for this upward trend could be attributed to the bullish US dollar. The US dollar gained ground after hawkish comments from Atlanta Fed President Raphael Bostic. Besides this, upbeat US Treasury yields were seen as another key factor that boosted the US dollar and contributed to the gains in the USD/CAD pair. Meanwhile, the Bank of Canada's Business Outlook Survey showed further declines in sentiment, undermining the Canadian dollar and contributing to the gains in the USD/CAD pair.
Canada's Sales Recovery and Economic Concerns
It's important to highlight that Canada's Wholesale and Manufacturing Sales data performed better than expected but is still on the road to recovery from recent setbacks. In November, Wholesale Sales reached a three-month high, beating forecasts at 0.9%, bouncing back from the previous month's -0.3%. Similarly, Manufacturing Sales rebounded more than anticipated, hitting a four-month high at 1.2% in November, surpassing the expected 1.0%.
However, the Bank of Canada's Business Outlook Survey for Q4 2023 revealed growing concerns among businesses regarding declining sales and persistent price pressures. Investors are now looking ahead to Tuesday's Canadian Consumer Price Index for potential inflation upticks.
Therefore, the positive Wholesale and Manufacturing Sales data may strengthen the Canadian dollar (CAD) against the US dollar (USD). However, concerns from the Business Outlook Survey could create volatility. Traders await the Canadian Consumer Price Index for further insights.
Market Impact of Martin Luther King Day and Upcoming Canadian CPI Data on USD/CAD Pair
Additionally, US markets are closed on Monday for Martin Luther King Day, leading to reduced trading activity in North America. Canadian traders are anticipating Tuesday's release of December's Consumer Price Index (CPI), expecting a year-on-year increase of 3.3%, up from November's 3.1%. However, the monthly CPI is predicted to decrease by 0.3%. This data could impact the Canadian Dollar (CAD), currently at four-week lows near 1.3400 against the US Dollar (USD).
Alongside CPI, the Bank of Canada will release the Core CPI, excluding volatile elements. In November, Core CPI showed a 0.1% monthly increase and a 2.8% year-on-year rise, influencing CAD direction and shaping expectations for the BoC's policy. Therefore, the news will lead to increased volatility in the USD/CAD pair, with the potential for CAD strength due to positive CPI data.
USD/CAD - Technical Analysis
On January 16th, the USD/CAD pair showed a positive trend, gaining 0.34% to reach 1.34723. The 4-hour chart highlights a key pivot point at 1.3399, with the pair encountering immediate resistance at 1.3456, followed by 1.3500 and 1.3555. On the support front, levels are established at 1.3353, 1.3294, and 1.3248.
The technical indicators for USD/CAD present a bullish outlook. The Relative Strength Index (RSI) is at 68, nearing the overbought territory but still indicative of strong buying interest. The Moving Average Convergence Divergence (MACD) shows a value of 0.001, with the signal line at 0.00216, suggesting a potential upward momentum. The 50-day Exponential Moving Average (EMA) is currently at 1.3431, which the pair has recently surpassed, reinforcing the bullish sentiment.
A notable chart pattern is the breakout from a downward trendline, indicating a shift towards a buying trend. Given these technical insights, the short-term forecast for USD/CAD appears bullish. Traders might consider a buy limit at 1.34430, aiming for a take profit at 1.35133, with a stop loss set at 1.34037. This strategy banks on the expectation that the pair will test and potentially break through the upcoming resistance levels.
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GBP/USD Price Analysis – Jan 15, 2024
Daily Price Outlook
During the European session on Monday, the GBP/USD currency pair extended its upward rally, maintaining a positive stance around the 1.2760 level. The rise in the GBP/USD pair was supported by a combination of factors, including a weaker US dollar and encouraging production data from the United Kingdom (UK).
The US Dollar (USD) experienced a decline due to lower US bond yields and softer Producer Price Index (PPI) data from the United States (US).
Furthermore, heightened tensions in the Middle East, particularly the military attacks on Iran-led Houthi targets by the United States (US) and the United Kingdom (UK), have dampened market sentiment, affecting the GBP/USD pair.
Factors Influencing USD Decline and Potential Impact on GBP/USD Pair
It's worth noting that the US Dollar Index (DXY) is giving up some of its earlier gains, mainly due to a drop in US Treasury yields. Currently, the 2-year and 10-year yields on US bonds are lower at 4.14% and 3.94%, respectively. The market is increasingly speculating on potential rate cuts by the US Federal Reserve (Fed) in March. This speculation gained momentum after Barclays revised its forecast last Friday, bringing forward the expected date of the first rate cut.
Additionally, the softer-than-expected Producer Price Index (PPI) data released on Friday may be putting downward pressure on the US Dollar. The December PPI figure was 1.0% year-on-year, up from the previous 0.8%. The Core PPI year-on-year was 1.8%, down from 2.0% in November. Monthly, both the headline and Core PPI indices remained at a 0.1% decline and 0.0%, respectively.
Therefore, the news suggests a weakening US Dollar due to lower yields and potential rate cuts, impacting the GBP/USD pair positively. Traders may find the Pound more attractive amid Dollar uncertainties.
Positive UK Data Fuels Confidence for GBP/USD Pair
At home, the GBP/USD pair might be gain further ground, thanks to better UK production data from Friday. The UK's industrial sector showed a positive rebound in November, as reported by the Office for National Statistics (ONS). Monthly industrial production met expectations, contrasting with the previous decline. On the annual basis, UK Manufacturing Production saw growth, but Total Industrial Output slipped by 0.1% in the same period.
Meanwhile, January's Rightmove House Price Index improved by 1.3% compared to a previous decline of 1.9%. Yearly, it eased by 0.7% against December's 1.1% drop. Traders are likely eyeing upcoming labor market data, including Claimant Count Change and ILO Unemployment Rate (3M).
Therefore, the GBP/USD pair could see a boost with improved UK production data, signaling economic resilience. Positive industrial and housing indicators may enhance confidence, potentially leading to increased demand for the British Pound against the US Dollar.
GBP/USD - Technical Analysis
The GBP/USD pair opens the week with a slight bearish bias, trading down by 0.09% at 1.27378. This subtle yet noticeable downtrend in the early hours of Monday indicates a market grappling with recent economic cues and geopolitical events. A look at the daily chart time frame reveals critical levels that could dictate the pair's short-term trajectory.
The pivot point for the pair is narrowly above its current price, at 1.2739, suggesting a tentative balance in market forces. Key resistance levels are lined up at 1.2803, 1.2849, and 1.2913, each representing a potential turnaround point for the sterling. Conversely, immediate support is established at 1.2688, followed by 1.2627 and 1.2576, which could provide cushioning in the event of a continued decline.
The technical indicators paint a picture of neutrality with a bearish undertone. The RSI is at a dead-even 50, reflecting a market in equipoise. However, the MACD tells a slightly different story, positioned at -0.00016 and below its signal line at 0.00095, hinting at a potential downtrend.
A critical observation on the chart is the presence of a downward trendline extending resistance at the $1.2780 mark. This line acts as a ceiling of sorts, with selling pressure expected below this threshold and buying sentiment potentially strengthening over the 1.2720 mark.
In conclusion, the GBP/USD pair presents a cautiously neutral to bearish outlook as it navigates through key technical levels. The balance of technical indicators suggests a market on the cusp of a directional decision, with traders advised to watch these key levels closely for signs of a definitive move.
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EUR/USD Price Analysis – Jan 15, 2024
Daily Price Outlook
The EUR/USD currency pair maintained its winning streak and remained well-bid around the 1.0955 level. The reason for its upward trend could be linked to the bearish US Dollar (USD) and a risk-on environment, providing support to the EUR/USD currency pair. The broad-based US dollar saw a slight dip in Asian trade on Monday. This was driven by expectations of early interest rate cuts by the Federal Reserve, with a 70% chance of a 25 basis point cut in March, up from 64% last week. Traders are closely watching Fed officials' speeches this week for insights into the bank's rate-cutting plans, while upcoming US retail sales data will impact the country's inflation outlook.
European Central Bank's Cautious Stance on Interest Rates Amidst Economic Uncertainty
It is worth noting that European Central Bank (ECB) officials stress the importance of waiting for more economic data before deciding on rate changes. ECB's chief economist, Philip Lane, mentioned they'll have crucial data by June to consider a series of interest rate cuts. Acting too soon might backfire. Last week, ECB President Christine Lagarde indicated that the toughest part of dealing with inflation might be over. She mentioned that if the ECB is confident inflation is below 2%, they would consider cutting interest rates. So, the ECB is cautious and waiting for solid data before making decisions on rate normalization.
Therefore, the EURUSD pair could experience increased volatility as traders respond to the ECB's cautious approach to interest rates. Uncertainty about potential rate cuts based on economic data may influence the pair's direction in the coming months.
Market Speculation on Fed Rate Cuts Amidst U.S. Producer Price Index Drop
In December, the U.S. Producer Price Index (PPI) unexpectedly dropped, leading to speculation about potential interest rate cuts by the Federal Reserve (Fed) in 2024. The Bureau of Labor Statistics reported a 1.0% yearly increase in December, slightly higher than November's 0.8%. However, the core PPI remained steady, causing the annual increase to decrease from 2.0% to 1.8%. This slowing inflation has investors anticipating significant rate cuts, with the market expecting a total of 160 basis points (bps) reduction by the Fed throughout the year.
According to the CME FedWatch tool, traders now give a 70% probability to a 25 basis point cut in March, up from 64% a week ago. Investors' confidence in early rate cuts was reinforced by Friday's data, showing a larger-than-expected decline in the producer price index inflation for December. It's worth noting that this report contrasts with earlier data indicating a more significant-than-anticipated increase in Consumer Price Index (CPI) inflation during the same month.
Hence, the EUR/USD pair may experience volatility as the unexpected drop in the U.S. Producer Price Index raises speculation of Federal Reserve interest rate cuts. Traders will closely monitor developments for potential currency fluctuations.
EUR/USD - Technical Analysis
On Monday, the EUR/USD pair presents a cautiously optimistic technical landscape as it edges up by 0.04%, currently positioned at 1.0955. The minor uptick may appear trivial at first glance, but it holds within it the potential energy of an impending larger move. The chart's daily timeframe reveals a currency pair flirting with its pivot point—also its current price—of $1.0955, indicating a pivot in market sentiment that could be the precursor to more decisive movements.
Immediate resistance levels are arrayed above, beginning at $1.0997, with subsequent barriers at $1.1045 and $1.1086. These thresholds will test the pair's resilience and the bulls' determination. On the flip side, supports loom below at $1.0907, $1.0863, and $1.0819, potentially offering reprieve to the pair should bearish pressures mount.
Technical indicators offer a nuanced narrative. The RSI is neutral at 48, hinting at a market in balance, while the MACD's slight dip below its signal line suggests that the currency pair could be on the cusp of a downward shift, albeit tentatively so. The 50 EMA at $1.0958 further corroborates the pivot point's role as a critical juncture.
An upward trendline has been traced, marking out a trajectory of support around 1.096, which, if held, could see the pair mounting a challenge on higher resistances.
In conclusion, the EUR/USD maintains a neutral overall trend with an inclination towards bullish behavior in the short term. Traders may consider a strategic entry with a buy limit order at 1.0942, eyeing a take profit level at 1.0998, and a stop loss at 1.0916 to manage potential downside risk.
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