What happened across the Asia session?
The major currencies traded in consolidation during the Asia session.
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 continued to consolidate along the 102 price level overnight with no clear directional bias, despite hawkish comments from Federal Reserve Member Brainard that the US economy could avoid a recession and indicated that the FOMC was committed to bringing inflation down. Current price action suggests the potential for a brief retracement to the downside before trading higher again. Look for the DXY to test the 101.70 price level before rebounding higher toward the 102.65 price level. However, as the market approaches the end of the week, look out for potentially choppy price action.
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?
As the DXY consolidates along the 102 price level and the global recessionary fears increases, Gold continued to climb higher. Bouncing off the 1900 price level, Gold rose to the 1925 price level. If the DXY continues to weaken, look for Gold to break above the 1925 price level to signal brief upside potential, with the next key resistance level at 1950. Alternatively, if the DXY strengthens, Gold could retrace from this near-term high, back down toward the 1900 round number support 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 traded with significant choppy price action as the price fluctuated between the 1.0785 and 1.0840 price range. Look for a breakout potential with the anticipation of brief weakness on the DXY and hawkish comments from the ECB, indicating that recent Eurozone economic data had been more positive, look for the EURUSD to trade steadily higher toward the previous swing high and price level of 1.0870. However, watch for choppy price action as the markets head into the weekend.
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 in a tight price range of 40pips through the trading session yesterday. However, look for further downside potential following comments from the SNB that some tightening is on the card. If the price breaks strongly below the 0.9150 price level, the USDCHF could trade steadily lower toward the next support level of 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?
Overnight, despite the volatility across the other major currency pairs, the GBPUSD held above the 1.23 price level to indicate that the previous uptrend was still valid. The price climbed steadily to the upside toward the 1.2390 price area. With no major news events on the horizon, look for the GBPUSD to continue trading steadily higher, toward the next key resistance level of 1.2450.
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?
Overnight, the USDCAD reversed briefly from the 1.3528 price level down to the 1.3460 price area as DXY consolidated along the 102 price level and indicated some brief downside potential. In addition, the brief revival in energy prices also led the Canadian dollar to strengthen. Therefore, look for the USDCAD to continue the retracement to the downside, if the price breaks below the 1.3450 level, the next key support level is at 1.3350.
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 Bullish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
Overnight energy prices rebounded from the respective key support levels to regain the losses from the previous day. Brent bounced off the 84.00 price level to trade toward the 86.50 price level, and could continue climbing toward the next key resistance level of 88.00. Similarly, WTI bounced from the 78.00 price level up to the 81.00 price level. If the price breaks above 81.00, WTI could continue to climb higher toward the next key resistance level of 82.50.
Next 24 Hours Bias
Weak Bullish
