By JustMarkets
The latest US inflation report highlighted the peak of the Fed’s hawkish stance. But the largest component of the Consumer Price Index continues to rise, leaving concerns about tight prices ahead. San Francisco Fed President Mary Daley said Friday that the central bank is “far” from its goal of price stability and that the market remains more dovish than the Fed predicts about interest rates going forward.
The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is correcting to the nearest support levels. The MACD indicator became negative, and within the day, sales prevailed. Under such market conditions, buy trades are best considered from the support level of 1.0549 but with additional confirmation. Sell deals can be considered from the resistance level 1.0641, but it is better with a confirmation in the form of a reverse initiative or false breakout because the level has already been tested.
Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.
According to S&P Global Chief Business Economist Chris Williamson, the latest economic data raises the possibility that the UK is already in recession, with PMIs pointing to a 0.3% contraction in fourth quarter GDP after a 0.2% decline. This week the UK will release its final Q4 GDP data, and experts believe the economy will enter a technical recession. In addition to the stagnant economy, the UK is in a series of strikes that will hit the economy even harder. Strikes by nurses, railway workers, and postal services in December will cause not only economic damage but also provoke civil unrest.
From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. But the price is trading below the moving averages and is approaching the priority change level. The MACD indicator is in the negative zone, but there are signs of divergence, which indicates some weakness of the sellers. Under such market conditions, it is better to look for buy trades from the support level of 1.2092 but with confirmation on the intraday time frames. Sell trades are best looked for from the resistance level of 1.2197, but they are also better with confirmation.
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Alternative scenario: if the price breaks down of the 1.2100 support level and fixes below it, the downtrend will likely resume.
The Bank of Japan will hold a monetary policy and interest rate meeting this week. The “ultra-dovish” Bank of Japan is expected to adhere to a negative interest rate policy. Bank of Japan Governor Haruhiko Kuroda is due to step down in April 2023 after ten years at the helm, and major policy changes before then are unlikely. Meanwhile, new inflation data this week will show another rise in consumer prices.
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but the probability of change in the trend is increasing. The price is forming a wide-volatile flat, and the MACD indicator indicates that it is getting harder for the sellers to put pressure on the price. Buy trades are best considered on intraday time frames from the support level of 135.61, but only with confirmation. Sell deals can be looked for from the resistance level of 136.81, provided there is a reverse reaction.
Alternative scenario: If the price fixes above 139.00, the uptrend will likely resume.
Renewed recession fears and long-term interest rate hikes by global central banks stifled oil’s recovery from last week. Rising rates are negatively affecting the demand for “black” gold, which translates into lower quotes. The Canadian dollar is a commodity currency, so falling oil prices lead to a weakening of the Canadian national currency (growth of USD/CAD). However, in the mid-term, the Canadian dollar has strong fundamental support from the Bank of Canada as the latter keeps one of the highest interest rates.
From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading above the slips, but the price has hit a strong resistance level of 1.3700. The MACD indicator is in the positive zone, but the divergence indicates that the buyers are limited in their potential. Buy trades should be considered only after a breakout and a fixation above 1.3700. Sell deals are better to look for on the intraday time frames, but with a confirmation in the form of a reverse initiative or after a false breakout because the level has already been tested.
Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.
By JustMarkets
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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