What happened across the Asia session?
Most major currencies traded in consolidation during the Asia session, apart from the AUDUSD which saw a significant move to the upside following the release of the CPI data.
What does it mean for Europe and US Sessions?
Look toward the USDCAD for significant volatility, with an interest rate decision to be released from the Bank of Canada today.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY spiked strongly to the upside to test the 102 price level overnight, but the move higher was quickly retraced as the DXY reversed to consolidate along the 101.65 price level. With no major news head for the DXY, the price could consolidate along the 101.60 price level for now. If the price breaks below 101.60, the DXY could trade lower toward the 101.30 key support level. Alternatively, if the DXY breaks out of the current consolidation to the upside, look for the DXY to trade toward the 102-round number resistance level again.
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?
Gold traded with significantly choppy price action overnight as the price rejected the 1940 price level strongly. After the price reach the 1940 price level, Gold spiked lower toward the key support level of 1920. However, the move lower was quickly retraced as Gold ended the trading session consolidating at the 1938 price level. Currently, Gold is indicating a retracement lower again, with the price signaling a potential break of the 1930 price level. Look for Gold to complete the retracement before trading with the uptrend again, with the next key resistance level at 1950.
Next 24 Hours Bias
Weak Bullish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
Overnight, the EURUSD attempted to trade lower as the DXY strengthened briefly, with the price spiking lower to test the 1.0840 price level before trading higher again. With the EURUSD trading along the 1.09 round number resistance level, look for a breakout to the upside to signal a continuation of the uptrend, with interim resistance at 1.0930 and the next key resistance level at 1.1080. Further moves to the upside is expected as members of the ECB continue to comment about the expectation of 50bps rate hikes to come at the upcoming meeting. The move higher would also be driven by the anticipation of further weakness in the DXY.
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 climbed steadily to the upside as the DXY strengthened briefly overnight, with the price rising to test the 0.9280 price area. However, the move higher was unsustained, as it sharply reversed, with the USDCHF consolidating along the 0.9225 price level by the end of the trading session. Directional bias on the USDCHF continues to be driven by the DXY despite comments from SNB indicating that weaker growth was expected for the next quarter. If the DXY continues to weaken, look for the USDCHF to break out of the current consolidation, to trade lower toward the 0.9150 support level.
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?
The GBPUSD rejected the 1.24 round number resistance level strongly overnight as the price traded significantly lower down to the 1.2275 price level. Currently, the GBPUSD is trading at the 1.2330 price level, with the price action indicating some potential for further downside. With no major news events for the UK on the horizon, look for the GBPUSD to break below the 1.23 round number support level to retest the previous swing low of 1.2250. However, with the current uptrend, look for buying opportunities if the GBPUSD bounces off the support level, with the next key resistance level at 1.2460.
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
CAD Overnight Rate
CAD BoC Rate Statement
CAD Monetary Policy Report
What can we expect from CAD today?
Anticipate significant volatility on the USDCAD with the Bank of Canada (BoC) interest rate decision due today. Anticipating a 25bps rate hike from the BoC, the Canadian dollar could strengthen following the rate decision. Look for the USDCAD to break below the 1.33 price level to indicate further downside potential, with the next key support level at 1.3220.
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?
WTI reversed strongly overnight, with the price reversing from the 82.00 price level down to the 80-round number support level. Similarly, Brent reversed from 88.50 down to 86.00. Energy prices traded lower overnight as the news was released that OPEC was unlikely to recommend any changes to the current oil policy. If WTI breaks below the current support level, price could trade lower, down to the 78.00 price area. Brent could also trade lower toward the 84.00 price level if the immediate support level was broken.
Next 24 Hours Bias
Weak Bearish
