What happened across the Asia session?
Most currencies consolidated during the Asia session as the DXY develops its next directional move.
What does it mean for Europe and US Sessions?
Look for volatility to increase as the major currencies break out of the current consolidation.
The Dollar Index (DXY)
Key news events today
USD FOMC Meeting Minutes
USD ADP Non-Farm Employment Change
What can we expect from DXY today?
Although the DXY traded lower early in the trading session, the move lower was retraced during the US session. The FOMC meeting minutes indicated that ‘further rate increases would be necessary’ and that ‘rate cuts shouldn’t happen in 2023’. This did not support the market anticipation that the Federal Reserve would pivot on its current monetary policy path. Look for the DXY to consolidate at the current price level with potential for further downside, with the next key support level at 103.22.
Central Bank Notes:
- Federal Reserve hiked rates by 50bps taking interest rates to 4.50%
- Next meeting is on 2 February 2023
- Further rate increases are expected to slow
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Overnight, Gold traded higher with choppy price action. Reaching a high of 1863 before retracing, the uptrend on Gold is likely to continue. Currently, at the 1856 price level, look for Gold to retrace to test the 1850 price level. If the price action indicates a rejection of the support level, Gold could continue trading higher ward the next key resistance level of 1900.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
Overnight, the EURUSD rose slightly from the 1.0550 price level toward the 1.06 round number resistance level. As the EURUSD continues to consolidate just below the resistance level, look for breakout potential. If the price breaks above the 1.06 resistance level, the key resistance level is at 1.0690. Alternatively, if the EURUSD breaks down due to a resumption of strength on the DXY, the EURUSD could trade lower toward the 1.0530 support level.
Central Bank Notes:
- Main Refinancing Rate is currently at 2.50%
- Significant and consistent rate hikes expected from the ECB
- Next meeting on 2 February 2023
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No Major News Events
What can we expect from CHF today?
The USDCHF traded lower overnight as the price slid to the 0.9280 price level and consolidated at the support level. Anticipating some DXY strength, the USDCHF could trade higher from the current support level, if the price breaks above the 0.9320 price level. The next immediate key resistance level for the USDCHF is at 0.94.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
GBP Final Services PMI
What can we expect from GBP today?
The GBPUSD traded higher overnight, rising from the 1.1965 price level toward the 1.2075 price level. However, the price failed to break above the price level and consolidated along the 1.2060 price area. Look for the DXY to strengthen further which could drive the GBPUSD lower again, with the 1.20 price level as a round number key support level. If the price breaks below the support level, the next key support level is at 1.1910.
Central Bank Notes:
- Interest rate is currently at 3.50%
- Peak inflation revised to more than 15% in 2023.
- Next meeting on 2 February 2023
Next 24 Hours Bias
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
No Major News Events
What can we expect from CAD today?
Despite the brief strength of the DXY, the USDCAD reversed strongly from the 1.37 price area overnight, driven lower due to the slide in energy prices. The USDCAD fell to the support level and price area of 1.35 toward the end of the trading session. Anticipating the strength of the DXY to continue, the USDCAD could rebound from the current support level to trade higher again, with the immediate resistance level at 1.3585. However, watch for the development of the price action to indicate the next directional bias.
Central Bank Notes:
- Increased interest rates to 3.75%
- Surprised markets with only 50bps hike in October
- Future hikes determined by future inflation data and expectations
- Next meeting on 25 January 2022
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
Energy prices continued to trade lower as recessionary concerns and the anticipation of weaker demand from China applied downward pressure. WTI currently trades at the 73.65 price level after testing the key support level of 73.00. Look for the current retracement to complete before a reversal to the downside, with the next key support level at 70.00. Brent saw significant moves to the downside as the price slid toward the 78.00 price level. If Brent fails to break above the 80.00 price level, further downside can be expected, with the next key support level at 75.40.
Next 24 Hours Bias
Weak Bearish
