What happened across the Asia session?
Most currencies gained slightly against the DXY during the Asia session as the DXY continued to slide lower from the 102.90 price level.
What does it mean for Europe and US Sessions?
Watch out for significant price volatility with the US inflation data to be released, with the major currencies expected to gain strength against the US dollar.
The Dollar Index (DXY)
Key news events today
USD CPI y/y
USD Core CPI m/m
What can we expect from DXY today?
The DXY currently trades at the 102.81 price level, slightly lower from the overnight consolidation at the 103-round number support level. With the release of the US CPI data, a key economic indicator of inflation, due today, expect significant price volatility on the DXY. The CPI y/y is expected to indicate a slowdown of inflation growth at 6.5% (Previous 7.1%) which could spur markets to expect the Federal Reserve to slow down on future interest rate hikes. This could lead the DXY to trade significantly lower. Look for the DXY to break below the 102.80 price level to indicate further downside potential, with the next key support levels at 102.50 and 102.00.
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?
After testing a new high of 1885, Gold retraced down to the 1870 price level to test the support level overnight. Finding strong support, Gold has reversed the brief downward move to climb higher and is currently trading back toward the 1885 price level. The price bounced from the support level as the DXY continued to weaken. Look for further weakness in the DXY and for the price to break above the 1885 price level to indicate a continuation of the uptrend, with the next key resistance level at 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 climbed higher from the 1.0730 price area with very choppy price action. Reaching a high of 1.0770, further upside is anticipated for the EURUSD, especially if the DXY continues to weaken on the release of the CPI data today. Look for the price to break above the 1.08 round number resistance level to signal a continuation of the uptrend, with the next key resistance level at 1.0950.
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 Bullish
The Swiss Franc (CHF)
Key news events today
No Major News Events
What can we expect from CHF today?
Overnight, the CHF weakened significantly against the Euro. This resulted in the EURCHF climbing strongly beyond the parity level. Similarly, the USDCHF broke out of the previous range and the 0.9240 price level to reach a high of 0.9310. With the price consolidating along the 0.9310 price level, look for a potential reversal if the DXY weakens significantly. However, if the CHF continues to weaken against the Euro, the USDCHF could trade higher toward the previous swing high and round number resistance of 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
No Major News Events
What can we expect from GBP today?
The GBPUSD traded with significant volatility overnight as the price fluctuated between 1.21 and 1.2175 in the absence of any major news events. However, as the GBPUSD failed to break below the 1.21 round number support level, the uptrend is still valid. Currently trading at the 1.2165 price level, look for the GBPUSD to continue climbing higher toward the next key resistance level at 1.24.
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 Bullish
The Canadian Dollar (CAD)
Key news events today
No Major News Events
What can we expect from CAD today?
The USDCAD traded in a narrow consolidation under the 1.3450 price level as the surge in energy prices offset the impact of the weakness in the DXY. The longer the USDCAD remains in the consolidation, a breakout could see significant price volatility. Anticipating significant weakness in the DXY, look for the USDCAD to break below the 1.34 round number support level to trade significantly lower, toward the next key support levels of 1.33 and 1.32.
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 Bullish
Oil
Key news events today
Natural Gas Storage
What can we expect from Oil today?
Brent and WTI surged strongly to the upside overnight as the market braced for additional curbs aimed at Russian fuel which is set to come into force in February. As the European Union keeps working on more sanctions against Russia over the invasion of Ukraine, energy prices are likely to experience significant price volatility. WTI bounced higher from the 74.50 price level to reach the near term resistance of 78.00 overnight. Look for the price to consolidate along this price level with further upside potential toward the next key resistance level at 81.00. Brent rose to the round number resistance level of 83.00, with further upside expected. If Brent trades beyond 83.00, the price could continue to climb higher toward the next key resistance level of 86.00.
Next 24 Hours Bias
Weak Bullish
