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What happened across the Asia session?
Most currencies retraced briefly against the DXY during the Asia session following the highly volatile price action during the US session.
What does it mean for Europe and US Sessions?
Price volatility is likely to be reduced as the market heads into the weekend. However, watch out for potential short term retracements from the current trend.
The Dollar Index (DXY)
Key news events today
USD Flash Services PMI
What can we expect from DXY today?
The DXY traded significantly higher through yesterday’s trading session as the price bounced from the support level of 103.50 and looked to recover from the recent drop due to the release of the CPI data. Brief strength in the EURUSD during the release of the ECB interest rate decision paired with weaker-than-expected retail sales data saw the DXY fluctuate lower briefly. However, the move lower was quickly reversed as the DXY climbed toward the 104.50 price area. The DXY could continue with the current correction to trade higher, with the next key resistance level at the round number of 105.50
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?
The strength of the DXY overnight saw Gold slide lower, breaking lower from the consolidation at the 1807 price level. Gold traded steadily lower to reach the 1773 price level. As the markets head into the weekend, Gold could consolidate and retrace briefly. However, if the DXY continues to strengthen, Gold could continue trading lower toward the key support level of 1765 and beyond that the 1735 price level.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
EUR Flash Manufacturing PMI
EUR Flash Services PMI
What can we expect from EUR today?
The ECB released its decision to hike rates by 50bps to take interest rates in the Eurozone to 2.50%. Accompanying the decision, the press conference saw the ECB convey a very hawkish view, reiterating its intention to persist with continual interest rate hikes in the future, in order to bring inflation down to its target level of 2%. The EURUSD responded strongly as the price climbed to a high of 1.0735 during the press conference. However, in the period following the news release, the DXY regained strength to drive the EURUSD significantly lower to the 1.0630 price area. The EURUSD could continue trading lower toward the 1.06 round number support level and the 1.0580 price area.
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?
While the USDCHF traded higher from the support area of 0.9225, the price was unable to break above the resistance price level of 0.93. The SNB increased interest rates by 50bps to 1.00%. On release of the news, the USDCHF spiked to the upside but was quickly retraced. During the US session, despite the strength of the DXY, the USDCHF continues to trade below the 0.93 resistance level. Look for further DXY strength to drive the USDCHF higher. Beyond the 0.93 price level, the next key resistance level is at 0.94.
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 Flash Manufacturing PMI
GBP Flash Services PMI
What can we expect from GBP today?
The GBPUSD traded significantly lower despite a 50bps rate hike from the BoE, to take interest rates to 3.50%. This is due to a dissent in the voting numbers as two members voted to keep interest rates on hold. This indicated to the market a level of uncertainty, which resulted in the GBPUSD trading lower. The GBPUSD fell to the 1.22 round number support level, with further downward moves expected if the DXY continues to strengthen and the next key support level at 1.2115.
Central Bank Notes:
- Interest rate is currently at 3.00%
- Peak inflation revised to more than 15% in 2023.
- Next meeting on 15 December 2022
Next 24 Hours Bias
Medium Bearish
The Canadian Dollar (CAD)
Key news events today
No Major News Events
What can we expect from CAD today?
Despite having no major news events, the USDCAD traded significantly higher as the price action was driven by the strength of the DXY. The USDCAD broke above the 1.3580 price level to reach a high of 1.3650. Expecting the momentum to continue, the USDCAD could continue to climb higher toward the key resistance level of 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 Bullish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
Energy prices retraced from the recent climb as the DXY strengthened. WTI rejected the 78.00 resistance level to trade lower toward the 76 price level. If the DXY continues to strengthen, WTI could continue to trade lower toward the next key support level of 73.00. Similarly, Brent trades along the key support level of 81, with the price action indicating potential for further downside toward the key support level of 78.00.
Next 24 Hours Bias
Weak Bearish
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