What happened across the Asia session?
Most currencies traded in a consolidating during the Asia session with no clear directional bias.
What does it mean for Europe and US Sessions?
Look out for increased volatility in the USDCAD with the CPI data to be released today, and for a resumption in volatility as the US markets come out of a long weekend break.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
Although the DXY traded lower early in the trading session yesterday, the price rebound strongly, to trade higher toward the near-term resistance level of 102.45. The DXY traded with lower volatility overnight as the US market was closed for a bank holiday. With no major news events for the US today, look for the DXY to trade higher if the price breaks above the resistance level, with the next key resistance area at the round number level of 103.00.
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?
Gold reversed from the 1928 high as the DXY strengthened from the key support level. Price reversed down toward the 1911 price level, with the current price action indicating the potential for further downside. If the DXY continues to strengthen, this could have an inverse impact on Gold. Look for the price to break below the 1900 price level to indicate a reversal, with the next key support level at 1895.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
The EURUSD retraced from the 1.0880 price area overnight, trading down to the 1.08 round number support area. This move lower was due to the recovery in strength on the DXY. However, as the EURUSD failed to break below the key support level, the uptrend is likely to maintain. With the price currently at the 1.0830 price level, look for the EURUSD to trade higher if the price breaks above the 1.0850 price level, with the next key resistance at 1.0950.
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 had been trading with choppy price action along the 0.9255 price level, as the DXY traded higher briefly overnight. Look for a breakout potential on the USDCHF if the price breaks below the 0.9250 level with downside potential toward the 0.92 round number and key support level. However, this move lower would require a significant weakness in the DXY to drive prices lower.
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
GBP Claimant Count Change
What can we expect from GBP today?
The GBPUSD reversed strongly from the 1.23 price area overnight, trading lower toward the 1.22 price area. With the price currently consolidating along the round number support level, look for the development of the price action to indicate the next directional move. If the price breaks strongly below 1.22 and the DXY strengthens, further downside can be expected for the GBPUSD, with the next key support level at 1.2080.
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 Bearish
The Canadian Dollar (CAD)
Key news events today
CAD CPI m/m
CAD Median CPI y/y
CAD Trimmed CPI y/y
What can we expect from CAD today?
The Canadian CPI data is due to be released today (Forecast: 4.9% Previous: 5.0%). If the CPI data is released higher than expected, this could increase the likelihood for the Bank of Canada to further increase interest rates in the future. With the USDCAD currently trading along the 1.34 round number level, look for a potential move to the downside, with the next key support level at 1.3330.
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 traded with choppy price action overnight, with the WTI trading lower before bouncing off the support level of 78.70. Currently trading at the 79.25 price level, look for the WTI to retrace lower before potentially climbing higher to test the round number resistance level of 80.00. Similarly, Brent traded higher after bouncing off the 84.00 price level. Currently trading at the 84.60 price level, Brent could consolidate along this level before trading higher with the next resistance level of 85.50 a potential target level.
Next 24 Hours Bias
Weak Bullish
