What happened across the Asia session?
The major currencies traded in consolidation during the Asia session, with the USDJPY trading lower to the 128-round number support level.
What does it mean for Europe and US Sessions?
Look toward the price action on the DXY to indicate the next directional move for the major currency pairs.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY rose to the 102.65 price area before trading significantly lower, testing the key support level of 101.30. The move lower was unsustained as the price retraced sharply to end the trading session along the 102 price level. This wide fluctuation in price on the DXY was due to the weaker-than-expected retail sales data, followed by comments from US President Biden that the lower PPI data indicated that inflation growth was slowing down. Look for the DXY to consolidate along the 102 price level for the interim. If the price breaks above the 102.65 price level, the DXY could continue to climb higher to the next key resistance level of 103.
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 Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
The brief recovery in Gold as price climbed from 1897 up to 1925 was sharply reversed as the DXY recovered in strength overnight. Ending the session at the price area of 1900, the uptrend is still valid. However, if the DXY continues to strengthen, Gold could break below the 1900 round number support level to trade significantly lower. If Gold trades beyond the 1897 price level, the next key support level is at 1882.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
Overnight, the EURUSD rose to the 1.0870 price area before retracing sharply lower toward the round number support level at 1.08. The EURUSD was driven lower due to the recovery in strength of the DXY. Currently, consolidating at the 1.08 price level, the EURUSD could retrace briefly before trading lower again. Look for further strength in the DXY and for the EURUSD to break below the 1.0780 price level to indicate a continuation of the downside, with the next key support level at 1.0620. Alternatively, if the EURUSD fails to break below the 1.08 round number level, the EURUSD could resume with the uptrend, and trade higher toward the near-term resistance level of 1.0890.
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?
As the DXY traded with choppy price action overnight, the USDCHF slid lower to test the round number price level of 0.91. However, the price failed to break the support level and rebounded high to consolidate along the 0.9155 price level. The next directional bias of the USDCHF would depend on the DXY. If the DXY fails to strengthen further, the USDCHF could trade lower to test the round number price level again. Beyond the 0.91 price level, the next key support level for the USDCHF is at 0.9060.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No Major News Events
What can we expect from GBP today?
Following the release of the UK CPI y/y at 10.5%, the GBPUSD climbed steadily higher, reaching a 7 month high at the 1.2430 price area. However, the GBPUSD retraced lower to the 1.2330 price level as the DXY signaled a recovery in strength. Look for the GBPUSD to bounce off the 1.23 price level to trade higher, with the 1.2450 price level as the immediate resistance level.
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 surged strongly to the upside, climbing from the 1.3380 price level, up toward the 1.35 round number resistance level. This move higher was due to both the increasing strength of the DXY and the sharp decline of energy prices overnight. With the USDCAD consolidating along the 1.35 price level, further upside could be anticipated if the DXY continues to strengthen, leading the USDCAD to break above the 1.3530 price level, with the next key resistance at 1.3680.
Central Bank Notes:
- Increased interest rates to 3.75%
- Surprised markets with only 50 bps 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 reversed on the recent gains to drop significantly overnight. This move lower was due to the strength of the DXY and the increasing recession fears due to a sharp decline in US retail sales data and manufacturing output. WTI currently trades at the 78.00 price area, down from the overnight high of 82.00. If the price breaks below 78.00, WTI could trade lower to the next key support level of 76.90. Brent fell from the 88.00 price area down to the 83.84 price level. Further moves to the downside can be anticipated if Brent breaks below the 83.50 price level, with the next key support level at 82.50.
Next 24 Hours Bias
Weak Bearish
