What happened across the Asia session?
Most major currencies continued to trade in consolidation during the Asia session.
What does it mean for Europe and US Sessions?
Look out for significant volatility across all major currencies with the ECB and BoE due to release their decision on interest rates today.
The Dollar Index (DXY)
Key news events today
USD FOMC Statement
USD Federal Funds Rate
USD FOMC Press Conference
What can we expect from DXY today?
The US Federal Reserve hiked rates by 25bps taking interest rates in the US to 4.75%, with the accompanying statement providing no indications regarding a potential slowdown or pivot in future rate decisions. Initially, the DXY reacted positively to this release but reversed to trade significantly lower during the press conference, reaching the 101 price level by the end of the trading session. The DXY fell despite relatively hawkish comments from Fed Chair Powell, where he indicated that it was “not appropriate for rate cuts this year” and that “ongoing rate increases will be expected”. While the DXY is likely to continue trading lower with the current momentum, with the DXY trading along the key support area of 100.90, look for the potential of a brief rebound to the upside. A reversal to the upside could only be likely if the price breaks above the 101.30 price level.
Central Bank Notes:
- Federal Reserve hiked rates by 25bps taking interest rates to 4.75%
- Next meeting is on 23 March 2023
- Ongoing rate increases will be expected
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY fell strongly, Gold broke out from the near-term resistance level at the 1933 price level to trade significantly higher. Gold surged to a high of 1952 by the end of the trading session overnight. However, as the price claims a new high, look for the potential of a retracement before further a continuation of the upside move. Gold could retrace down to the 1940 price level before developing the next directional bias. If the DXY continues to weaken, Gold could resume the upward trajectory and climb toward the 2000-round number resistance level.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
EUR Main Refinancing Rate
EUR Monetary Policy Statement
EUR ECB Press Conference
What can we expect from EUR today?
The EURUSD traded significantly higher overnight as the DXY weakened during the FOMC press conference. The price broke through the previous resistance level at the 1.09 price level to climb to a near-term high of 1.1020. The EURUSD is likely to consolidate along the current price level in the interim, with the ECB interest rate decision due today. Current anticipation is for the ECB to hike the rates by 50bps rate hike to take the current interest rate to 3.00%. A rate hike could see the EURUSD climb higher toward the next key resistance of 1.1180. However, this decision could have been priced in by the market, due to the early guidance from the ECB, which could see the EURUSD trade significantly lower following the release of the news, down to the 1.0920 key 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 Bullish
The Swiss Franc (CHF)
Key news events today
No Major News Events
What can we expect from CHF today?
The USDCHF traded lower down to the 0.9070 price level, driven down by the weakness in the DXY. With no major news events for the CHF on the horizon, the next directional bias of the USDCHF will be driven by the volatility in the DXY. While further downside momentum is likely to continue, the USDCHF has key support at the 0.8975 price level. If the DXY recovers in strength, the USDCHF could rebound briefly to the upside, with the first key resistance level at 0.91.
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
GBP BoE Monetary Policy Report
GBP Monetary Policy Summary
GBP Official Bank Rate
What can we expect from GBP today?
The GBPUSD currently trades just below the 1.24 round number resistance level following the strong overnight move higher, from the 1.23 support level. The BoE is set to hike rates today to 4.00%, the highest in 14 years. However, pay attention to the accompanying statement which could provide a hint regarding the possibility and timeline for an end to the interest rate hikes. Dissent in the voting numbers or earlier than the anticipated end of the interest rate hikes could see the GBPUSD reverse strongly to the downside, with the key support levels at 1.23 and 1.22.
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 currently trades in consolidation just below the round number price level of 1.33. Anticipating a brief retracement to the upside, the USDCAD could trade higher toward the immediate resistance level of 1.3350. The short-term directional bias of the USDCAD will be dependent on how the DXY reacts to the current support level.
Central Bank Notes:
- Increased interest rates to 4.50%
- Indicated that the BoC was likely to pause on future rate hikes.
- Next meeting on 8 March 2023
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
WTI reversed strongly from the 80.00 price area to trade significantly lower to the 76.00 price level overnight. If the price continues to trade lower, the WTI could retest the 75.00 support level. Similarly, Brent could trade down to the 81.00 price level if the downside momentum continues to push prices lower, beyond the immediate support of 82.50.
Next 24 Hours Bias
Weak Bearish
