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 Non-Farm Employment Change
USD Average Hourly Earnings m/m
USD Unemployment Rate
What can we expect from DXY today?
Overnight, the DXY surged strongly to the upside as the price broke through from the 104 price level to trade toward the next resistance level at the 105 price level. This move higher was due to the significantly better-than-expected release of the ADP non-farm employment change data (Actual: 235k Forecast: 152k). This positive data led markets to anticipate a strong Non-Farm Employment Change data to be released today, leading to the strength in the DXY. Look for the DXY to complete the current retracement before trading higher again, with the next key resistance level at the round number price level of 106.00.
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
Medium Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY strengthened, Gold saw a deep correction to the downside as the price reversed from the 1860 price area. Gold traded lower, down to the 1825 price level. If the DXY continues to strengthen, further downside can be expected for Gold, with the next key support level at 1814.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
The EURUSD consolidated along the 1.06 price level before breaking the round number support level to trade significantly lower. The EURUSD slid down to the key support level and price area of 1.0525 due to the strength of the DXY. If the DXY continues to strengthen, further downside can be anticipated on the EURUSD as the price breaks lower from the support level, with the next key support level at 1.0380.
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 spiked higher overnight following the strength of the DXY. The price climbed from the 0.9225 price area to a high of 0.9375. As the volatility of the USDCHF continues to be driven by the DXY, look for the current retracement to complete and if the DXY continues to strengthen, anticipate further upside on the USDCHF, with the next key resistance levels at 0.9445 and 0.9600
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?
Similar to the EURUSD, the GBPUSD broke down from the 1.20 price level to trade toward the next immediate support level of 1.19. Look for the GBPUSD to retrace and test the 1.1955 price level before trading lower again. However, a continuation of the move lower would require further strengthening of the DXY. The next key support level on the GBPUSD is at 1.17.
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
CAD Employment Change
CAD Unemployment Rate
What can we expect from CAD today?
The USDCAD rose from the 1.35 round number support area to trade towards the 1.36 resistance level. With the Canadian employment data to be released today and the unemployment rate expected to rise to 5.2%, further weakness in the Canadian dollar is anticipated. Look for the USDCAD to break above the 1.36 price level, with the next key resistance at 1.37.
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 consolidated along their respective support levels as the strength of the DXY offset the downward pressures from recessionary concerns and the anticipation of weaker demand from China. WTI trades at the 74 price area, with downside potential toward the next key support level at 70.00. Similarly, Brent trades along the 79.00 price area with further downside expected if the price fails to break above the 80.00 resistance level.
Next 24 Hours Bias
Weak Bearish
