What happened across the Asia session?
Most currencies consolidated during the Asia session as the DXY develops its next directional move.
What does it mean for Europe and US Sessions?
Look for volatility to increase as the major currencies break out of the current consolidation.
The Dollar Index (DXY)
Key news events today
USD ISM Manufacturing PMI
USD JOLTS Job Openings
What can we expect from DXY today?
The DXY surged strongly to the upside as the market liquidity increased with market activity resumed in the new year. The DXY climbed from the 103.25 price level to reach an overnight high of 104.65 before retracing briefly. Currently trading at the 104.30 price level, look for the DXY to break above the previous swing high to signal a continuation of the upside, with the next key resistance level at 105.63.
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?
Overnight, Gold climbed strongly from the 1823 price level to reach the 1850 price level twice before trading lower again, due to the strength of the DXY. However, the price action at the interim support level of 1830 signals a rejection of further downside potential, with Gold climbing higher toward the 1845 price level. Look for the XAUUSD to break above the 1850 price level to signal a continuation of the uptrend, with the next key resistance level at 1900.
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 the 1.0655 support level to trade significantly lower, toward the 1.0525 price level. However, as the price failed to break below the support level, the EURUSD retraced slightly and currently consolidates at the 1.0570 price level. If the DXY weakens, look for the EURUSD to break above the 1.056 price level to signal further upside potential, with the key resistance level at 1.0690.
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
CHF CPI m/m
What can we expect from CHF today?
The USDCHF surged strongly to the upside as the price approached the round number resistance level of 0.94. This move higher was primarily driven by the strength of the DXY. Currently trading at the 0.9335 price level, the USDCHF is likely to consolidate at this price level as the DXY develops its next directional move. If the USDCHF breaks below the 0.93 round number support level, the USDCHF could trade lower down to the 0.9240 price level again.
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?
As the DXY strengthened overnight, the GBPUSD reversed strongly from the 1.2060 price level to reach the price area of 1.1915. However, the move lower was brief as the GBPUSD retraced strongly. The GBPUSD ended the trading day at the 1.1965 price level. Currently trading just under the 1.20 price level, look for the GBPUSD to break above the round number resistance level to signal further upside potential, with the next key resistance level at 1.21.
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 traded with significant choppy price action as the price surged strongly from the 1.3525 price level to reach a high of 1.3685 overnight. This move higher was due to the strength of the DXY. However, the USDCAD is retracing and currently trading at the 1.3640 price level. look for the USDCAD to retrace lower, testing the 1.36 round number support level before trading higher again, if the DXY continues to strengthen. Alternatively, the USDCAD could trade lower back down toward the 1.3560 price level.
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 Bearish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
Energy prices traded significantly lower due to the strength of the DXY overnight. WTI reversed from the 81.00 price level and is currently trading at the 76.75 price level. Look for the price to break below the 76.50 price level to indicate further downside, with the next key support level at 73.00. Similarly, price action for Brent at the 86.00 price level signaled a strong reversal, as the price fell toward the 82.00 price level. Look for Brent to break the round number support level to indicate a continuation of the downside, with the next key support level at 80.00.
Next 24 Hours Bias
Weak Bearish
