Yesterday, the pair did not manage to successfully violate the resistance at 1.1892 and, at the time of writing, the EUR/USD is holding steady above 1.1840. As the bulls are still in control, a new attempt to breach the aforementioned zone is the most probable scenario. If the previously mentioned resistance level of 1.1892 is violated, the rally will most probably head towards the next important level of 1.2010. Major support zone for the bears lies at 1.1839. The current positive market sentiment will change only with a breach of the 1.1798 level, which could lead to a deeper sell-off. Today, investors will be keeping an eye on the announcement of the Consumer price index data for the Eurozone at 10:00 GMT, which could spark some volatility.
The Cable is in a clear downtrend and, in the early hours of today, prices gravitate around the local support of 1.3360. Due to the shrinking activity, a corrective wave with a target of around 1.3500 can be expected. The first daily resistance for the pair is 1.3427. The current expectations are for new declines and a breach of 1.3360 would pave the road towards 1.3200. A change in sentiment can only be expected if prices stay above 1.3550.
The currency pair is currently trading in the range between 1.3359 and 1.3439 after the bears lost momentum and couldn’t overcome the support at 1.3359. The forecasts for today’s trading session are for the pair to retest the support at 1.3359 and a successful breach of the mentioned level would pave the way for the pair towards the support at 1.3290. On the other hand, a breach of the resistance at 1.3439 may lead the pair towards the next resistance at 1.3503.
The currency pair managed to stay above the 1.1839 level and, at the time of writing, is preparing to test the key resistance at 1.1892. Even if the resistance at 1.1892 is to be breached, the expectations are for the pair to shortly trade above the mentioned level before returning to values below it. The first important support is the level of 1.7961. Today, investors will be focused on the speech of the ECB President Christine Lagarde (08:15 GMT).
GBPUSD the asset is preparing to continue its decline
GBPUSD the asset is preparing to continue its decline. Key US macroeconomic news came out yesterday, setting the dollar’s tone for the next couple of months. Thus, the US Federal Reserve left the rate unchanged at the level of 0–0.25%, and the regulator also decided to accelerate the phasing out of emergency stimulus by two times – up to $30B a month.
The renewed forecast for the rates of the Federal Open Market Committee (FOMC) members of the US Federal Reserve now implies three increases in 2022 and 2023. The regulator also increased the forecast for inflation in the United States for 2021 to 5.3% from 4.2%, and for 2022 – to 2.6% from 2.2%. The only negative point in the accompanying statement from the Central Bank was the decrease in the GDP forecast for 2021 to 5.5% from 5.9%, but for 2022 the forecast was improved to 4% from 3.8%.
GBPUSD the asset is preparing to continue its decline. Key US macroeconomic news came out yesterday, setting the dollar’s tone for the next couple of months. Thus, the US Federal Reserve left the rate unchanged at the level of 0–0.25%, and the regulator also decided to accelerate the phasing out of emergency stimulus by two times – up to $30B a month. .
The market reacted ambiguously to the publication of the above data: first, the dollar index grew, followed by a strong decline. The regulator’s forecasts were probably already included in the price, and market participants fixed profits on long positions in the US dollar. Nevertheless, the medium and long-term outlook for the US currency remains positive. The central bank is tightening monetary policy to support the dollar.
There was also the publication of important economic data on the UK yesterday. The consumer price index for November amounted to 5.1% YoY, which is higher than the forecast of 4.7% and higher than the previous value of 4.2%. The indicator increased by 0.7% MoM, which is higher than the forecast of 0.4%. This news did not significantly impact the British pound rate, as investors are now watching the development of the situation with the epidemic. On Wednesday, the UK reported 78610 new coronavirus cases, the highest since the pandemic.
Support and resistance
The long-term trend is downwards. Market participants are trying to break through the support level 1.3220, in which case the fall will continue with the target at 1.3065. If the level of 1.3220 is held, then a correction will begin with the target at the testing of the resistance level of 1.3365.
The medium-term trend is downwards. For the last three weeks, sellers have been trying to break through the target zone 3 (1.3216–1.3182). Until they succeed, and the price is trying to grow. If a correction develops, a movement to the resistance level 1.3365 is expected, which will become the first point to look for new sales.
USDCHF the likelihood of the growth of the instrument remains
USDCHF the likelihood of the growth of the instrument remains. The USD/CHF pair moves within a long-term uptrend, growing from the 0.9175 support level to the target at 0.9260.
The positive dynamics of the asset was caused by the strengthening of the US dollar against all major currencies, supported by analysts’ expectations, who believe that this week, the US Federal Reserve officials will decide to accelerate the curtailment of the bond purchase program and will report an increase in interest rates in 2022.
The regulator meeting will be held tomorrow, after which at 21:00 (GMT+2), economic forecasts and the statement of the Federal Open Market Committee of the US Federal Reserve (FOMC) will be published, and the decision on the interest rate will be announced. It is expected to remain at 0.25%, so investors’ attention will be focused on a press conference, where the head of the department, Jerome Powell, is likely to clarify the specific timing of the interest rate hike in 2022 to combat high inflation.
In general, the American labor market allows one to think about tightening monetary policy. Unemployment is declining. Last week, Initial Jobless Claims was a record low and amounted to 184K instead of the forecast of 215K. The index of consumer expectations from the University of Michigan for December (preliminary data) was 67.8 points. Analysts predicted a value of 62.0 points against the previous figure of 63.5 points.
The consumer sentiment index from the University of Michigan for the same period (preliminary data) amounted to 70.4 points, which is better than the forecast of 67.1 and the previous value of 67.4 points. Against this background, the news about the growth of the producer price index in Switzerland for November by 0.5% did not provide significant support to the franc.
Support and resistance
The long-term trend is upward with the target at 0.9260, the breakout of which will allow reaching 0.9339.
The medium-term trend is downward. Last week, market participants tested the key resistance of the trend 0.9280–0.9269, but so far, it is holding, maintaining the likelihood of a decline in quotations with the target at the November low.
USDJPY the US dollar began a rapid decline. USD/JPY is correcting, trading around 113.53. The yen reacted slightly to today’s decision by the Bank of Japan, which continued to pursue a policy of negative rates since, at the moment, it does not see a significant improvement in the economy, which would allow something to change.
The interest rate remained at the level of –0.10%, the purchase of Japanese government bonds (JGB) will continue without setting an upper limit, and their yield will remain near zero. The bank plans to acquire exchange-traded funds (ETFs) with a cap of 12T yen and Japanese real estate trusts (J-REITs) with a cap of 180B yen and 20T yen corporate bonds at least the end of March 2022. It follows from this that the regulator does not expect significant improvement in economic indicators, at least until spring, and the pressure on the yen will remain the same.
Tension around the dollar is growing, and for the first time since the beginning of December, the USD Index fell below 96 points after publication data on the labor market. Initial Jobless Claims rose to 206K after falling to 188K last week. Additional pressure on the American currency was exerted by a significant drop in the index of manufacturing activity from the Federal Reserve Bank of Philadelphia, which reached a year low at 15.4 points after 39.0 points in the previous period.
Support and resistance
The asset corrects, forming a possible Head and shoulders reversal pattern. Technical indicators are in a state of uncertainty: indicator Alligator’s EMA fluctuations range narrowed almost completely, and the histogram of the AO oscillator forms new upward bars, being close to the transition level.
