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?
While volatility could be higher during the Europe and US session, look for volatility to slow down as the market heads into the weekend.
The Dollar Index (DXY)
Key news events today
USD Prelim UoM Consumer Sentiment
What can we expect from DXY today?
The DXY traded with significant volatility overnight due to the release of the US CPI y/y data. With markets expecting a slowdown in inflation growth, the CPI was released at 6.5% as forecasted (Previous: 7.3%). This increased the likelihood for the Federal Reserve to slow down on future interest rate hikes. On the release of the data, the DXY spiked to the downside and reached the 102 round number support level. However, this move was immediately reversed before resuming the downside again. Look for the DXY to break below the 102-round number level to indicate further downside potential, toward the next key support level of 101.30, which was last tested in May 2022.
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?
In the lead up to the release of the US CPI data, Gold climbed steadily to the upside to reach the 1900 key resistance level. However, as the DXY traded with increased volatility, Gold reversed strongly from the 1900 level to trade down to the 1875 price level. If the DXY continues to weaken as anticipated, look for Gold to resume with the uptrend to retest the 1900 resistance level and beyond that, the 1955 price level.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
The EURUSD broke above the 1.0775 price level to trade higher with very choppy price action. Markets are developing a more bullish sentiment over the economic performance in the Eurozone, with some analysts anticipating that the Eurozone could avoid a recession. Look for the EURUSD to break above the 1.0840 price level, toward the next key resistance level of 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?
The USDCHF reversed most of the gains from the previous trading session as the price corrected lower from the 0.9350 price level to trade down to the 0.9280 level. If the DXY continues to weaken, look for the USDCHF to continue trading lower toward the key support level of 0.9180.
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 GDP m/m
What can we expect from GBP today?
The GBPUSD traded with higher volatility overnight as the price saw a 150pip fluctuation as a result of the DXY and the release of the CPI data. However, the GBPUSD has failed to break above the 1.2250 price level strongly and currently trades align the 1.2160 level. Look for the GBPUSD to continue climbing higher to break above the 1.2250 price level, with 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 broke out of the previous consolidation at the 1.3450 price level with a strong spike to the downside. The USDCAD reached the key support level of 1.3355 before surging higher again. The directional bias of the USDCAD is heavily influenced by the DXY. Look for the USDCAD to trade lower toward the 1.3355 support level and beyond that, the next key support level of 1.3240.
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
No Major News Events
What can we expect from Oil today?
Energy prices continued with the previous momentum and traded slightly higher overnight. WTI reach the 79.00 round number resistance level and could trade higher toward the next key resistance level of 81.43. Similarly, Brent saw a steady climb as the price rose from the 81.50 price level, toward the resistance area of 85.00. Look for Brent to break above the resistance and climb higher toward the next resistance level of 86.50.
Next 24 Hours Bias
Weak Bullish
