2024-01-09 09:09

USD/JPY Analysis Light economic calendar looks to US CPI for direction, Tokyo CPI cools threat of BoJ policy change USD/JPY at major decision point ahead of US CPI – cluster of support halts selling for now The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library It is a rather calm week in the FX space as can be expected for this time of year and given the relatively low amount of high impact economic data, apart from US CPI and UK GDP while you can throw in the start of the US earnings season to the mix as well. Speaking of economic data, inflation figures for Tokyo suggested that inflation in the capital is struggling to make progress as it has broadly been in decline for some months already. All items less fresh food (core CPI) and all items less fresh food and fuel (core core) declined to 2.1% and 3.5%, respectively. The Bank of Japan (BoJ) is in the process of assessing the urgency around a pivotal policy shift (hiking rates into positive territory) to combat persistently high inflation – something that cannot be confirmed yet. Price data in Tokyo helps to inform wider national measures as Tokyo accounts for around 20% of Japanese GDP and forms an integral part of the economy. While national CPI has breached the 2% target for over a year now, the BoJ is yet to be convinced that price pressures will persist above target but is also looking for compelling evidence that the inflation profile has shifted away from a ‘cost push’ issue, towards a ‘demand pull’ phenomenon. Persistently rising wage growth is also imperative if the BoJ is to reverse accommodative policy. Tokyo’s Core Inflation Slows Further (yellow/gold line) Source: LSEG, prepared by Richard Snow USD/JPY at Major Decision Point Ahead of US CPI USD/JPY turned higher after reaching the late December swing low but momentum was culled last Friday after the ISM services PMI report revealed a sharp drop in the composite measure as well as the employment component of the report. Admittedly, the drop can be attributed to fewer hires and less so to increased layoffs, but the lower reading speaks to a labour market that is easing, while remaining resilient overall. Today, the pair is slightly softer and tests an immediate cluster of support which is comprised of the 200 simple moving average (SMA) and channel support. Both markers overlap at the 143.35 level. The threat of a BoJ policy change has cooled during the early days of 2024 after an earthquake hit the island. Channel support could offer clues about future price action should it hold past Thursday when the US is scheduled to post core and headline inflation figures for December. A lower core print is anticipated while headline CPI is expected to hold flat with any surprised to the downside likely to see that cluster of support come under pressure. USD/JPY Daily Chart at Major Decision Point Source: TradingView, prepared by Richard Snow For more on how to approach breakout trading, take a look at our guide dedicated to the topic: https://www.dailyfx.com/news/usd-jpy-price-outlook-the-pair-faces-major-support-cluster-pre-cpi-20240109.html

2024-01-09 01:45

GOLD PRICE OUTLOOK Gold prices have trended lower in 2024 after a strong performance late last year Traders seem reluctant to take on new bullish positions before having more clarity on the Fed’s monetary policy outlook The December U.S. inflation report will steal the spotlight later this week Most Read: US Dollar Reverses Lower Before US CPI, Setups on EUR/USD, GBP/USD, USD/JPY Gold prices rallied strongly through late December, but have trended lower in early January, with traders reluctant to take on new bullish positions for fears of a larger bearish reversal should deep interest rate cuts projected for 2024 fail to materialize. Although the FOMC has signaled that it would cut borrowing costs later this year, easing expectations seems extreme for an economy that is nowhere near a recession and still struggling with sticky inflation. If markets started to unwind dovish monetary policy bets, bullion could suffer. FOMC MEETING PROBABILITIES Source: FedWatch Tool For insights into the Fed’s path, which is vital for precious metals, it is important to keep a close eye on a high-impact event later this week: the release of the December U.S. inflation report. While the yearly reading for the core CPI indicator is seen moderating slightly, the headline gauge is forecast to reaccelerate, creating a headache for policymakers. Upcoming US Inflation Data In terms of possible outcomes, gold needs weak inflation numbers to have a better chance of resuming its upward journey. An in-line or above forecast CPI report could trigger a hawkish repricing of the central bank’s policy trajectory, reinforcing the metal's recent downward correction. GOLD PRICE TECHNICAL ANALYSIS Gold prices (XAU/USD) fell on Monday, extending losses after breaching a key support band at $2,050/ $2,045 last week. Prolonged trading beneath this area could empower sellers to push prices towards the 50-day simple moving average located near $2,010, with further weakness shifting attention to $1,990. Conversely, if buyers regain control and spark a rebound, resistance looms at $2,045-$2,050. While reclaiming this area may be challenging for the bulls, a breakout could pave the way for a move toward the late December peak near $2,085. Continued strength could send gold toward its record near $2,150. GOLD PRICE TECHNICAL CHART Gold Price Chart Created Using TradingView https://www.dailyfx.com/news/xau-usd-gold-price-forecast-xau-usd-s-trend-hinges-on-us-inflation-data-what-now-20240109.html

2024-01-08 19:00

Most Read: Markets Q1 Outlook - Gold, Stocks, EUR/USD, GBP/USD & USD/JPY Eye Fed, US Yields The U.S. dollar, as measured by the DXY index, fell on Monday following its robust showing the previous week, undermined by the pullback in Treasury yields ahead of key economic data in the coming days, including the release of the U.S. CPI survey on Thursday. With the Fed's commitment to a data-driven strategy, the upcoming December inflation report will hold substantial weight in shaping future monetary policy actions. For this reason, traders should closely track data on consumer prices going forward. In this context, EUR/USD and GBP/USD pushed higher in late afternoon trading in New York, resuming their upward journey. USD/JPY, for its part, retreated moderately, heading back towards its 200-day simple moving average. This article focuses on these three FX pairs, examining their near-term outlook from a technical standpoint. US YIELDS AND SELECT FX PERFORMANCE Source: TradingView Fine-tune your trading skills and stay proactive in your approach. Request the EUR/USD forecast for an in-depth analysis of the euro’s outlook! EUR/USD TECHNICAL ANALYSIS EUR/USD corrected downwards from late December to early January, but managed to stabilize and bounce after finding support near 1.0875, which corresponds to the lower boundary of a short-term ascending channel, as shown in the chart below. If the rebound gains momentum in the coming days, technical resistance appears at 1.1020, followed by 1.1075/1.1095. On the flip side, if sellers return and drive prices lower, the first line of defense against a bearish assault can be spotted at 1.0930. On further weakness, the focus shifts to 1.0875. Bulls must protect this floor at all costs; failure to do so could usher in a move towards the 200-day simple moving average, followed by a descent towards the 1.0770 area. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView GBP/USD TECHNICAL ANALYSIS GBP/USD extended gains for the third straight trading session, coming within striking distance from overtaking overhead resistance at 1.2765. With bullish impetus on its side, cable could clear this technical barrier soon, paving the way for a possible retest of the December highs slightly above the 1.2800 handle. Continued strength would draw attention to the psychological 1.3000 level. Alternatively, if GBP/USD gets rebuffed from its current position, a retracement toward 1.2675 could unfold in short order. Bulls are likely to staunchly defend this floor; however, a breach may open the door for a drop toward channel support at 1.2630. Continued weakness could encourage sellers to set their sights on the 200-day simple moving average. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView For a complete overview of the Japanese yen’s prospects, request your complimentary Q1 trading forecast now! USD/JPY TECHNICAL ANALYSIS USD/JPY initiated a strong rally at the beginning of the year, but its climb abruptly stalled when it couldn't break through the psychological resistance at 146.00, with sellers returning and pushing prices back down towards the 200-day simple moving average. The integrity of this support is pivotal; otherwise, a return to December's lows could be in the cards. On the other hand, if bulls regain decisive control of the market and manage to propel the exchange rate higher, resistance looms at 144.75, followed by 146.00. Previous attempts to push past this ceiling have been unsuccessful, so history could repeat itself in another test, but in the event of a sustained breakout, a rally toward the 147.00 handle could develop. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-reverses-lower-before-us-cpi-setups-on-eur-usd-gbp-usd-usd-jpy-20240108.html

2024-01-08 17:11

WTI, Brent Crude Oil Analysis Saudi’s signal challenges to the oil market during seasonally lower demand Brent crude oil prices drop at the start of the week – retest of the low in sight WTI tests $70 with $67 on the horizon. Geopolitical developments may limit downside The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Saudi’s Send Signal of Oil Market Challenges During Seasonally Lower Demand At the start of this week oil prices appear to be eating into last weeks gains despite continued geopolitical tensions and rerouting of cargoes typically travelling through the Red Sea amid attacks from Houthi rebels. The recent Houthi attacks theoretically have a bullish effect on oil prices as cargoes have been rerouted to avoid potential hotspots, which can cause delays and hence supply shortages. Nevertheless, at the start of this week oil prices have declined around 4% on both the Brent and WTI benchmarks. A number of fundamental factors have aligned to see oil prices approach a new low. Saudi Arabia lowered its official selling price for February shipments destined for Asia, suggesting a deteriorating appetite from China – a major player in the oil market. From a seasonality standpoint, Q1 represents the weakest demand period, adding to the possibility that the oil market may be oversupplied. In addition, dropping prices to a 27-month low also confirms the effect of competition from non-OPEC producers which have gained market share at a time when OPEC has been cutting supply into the market. Brent Crude Oil Prices Drop at the Start of the Week – Retest of the Low in sight Oil prices failed to breach the 50 simple moving average (blue line) last week and have been sent sharply lower on Monday. The longer-term downtrend bears testament to global growth concerns and a challenging economic outlook in China. Therefore, the rejection of the 50 SMA provides another indication of a bearish continuation that now highlights $71.50 as a major level of support. The level prevented further selling throughout May and June in 2023. The RSI has just turned south of the midway mark meaning there is still further potential for extended selling pressure. The main challenge to the current direction of travel is of course the developing situation in the Middle East which could prevent prices from plummeting. Brent Crude Oil Daily Chart Source: TradingView, prepared by Richard Snow WTI tests $70 with $67 on the horizon. Geopolitical developments may limit downside The WTI chart provides a similar picture to that witnessed on the Brent chart and as of 17:00 GMT reveals a drop of as much as 4.8% on the day thus far. The $70 mark provides immediate support with the $67 marker not too far off. $67 was a pseudo level of support before the Biden administration walked back on its prior statement that it would look to refill the Special Petroleum Reserve (SPR) when oil prices stabilized between $67 and $72 for a reasonable amount of time. More recent communication form the Department of Energy suggests this process will take a lot longer to play out meaning the market is unlikely to expect a mass amount of buying taking place at the prior mentioned levels. Nevertheless, $67 is still an area of interest from a technical perspective WTI Oil Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/wti-brent-drop-as-demand-concerns-outweigh-geopolitical-tensions-20240108.html

2024-01-08 15:03

Bitcoin (BTC) Prices, Charts, and Analysis: Bitcoin pressing against $45k. Is an ETF approval a ‘buy the rumor, sell the fact’ event? Bitcoin ETF fever is pushing the price of the largest cryptocurrency by market capitalization back to highs last seen in April 2022. At least 10 companies have handed in amended and updated Bitcoin ETF applications and are waiting to hear from the SEC. The ARK 21Shares Bitcoin ETF will be the first exchange-traded fund ruled on by the Securities and Exchange Commission (SEC). The SEC has until January 10th to approve or reject this ETF and the thinking is that if this application is approved, then the other 10 or so applications will also be approved to prevent any first-mover advantage. The latest Bitcoin rally is being driven by reports that these applicants are all posting their ETF fee structures with two firms announcing 0% fees for the first six months. A number of these ETF applicants have also launched Bitcoin commercials over the last 10 days, adding fuel to the fire that the SEC will approve a physically-backed Bitcoin ETF this week. The near 10% sell-off candle on January 3rd was prompted by a story that these spot ETFs would not be approved this week, highlighting the current volatility in the cryptocurrency space. There is also a growing feeling in the market that an SEC approval would be a ‘buy the rumor/sell the fact’ event, especially after Bitcoin’s strong run-up over the past months. As always, the cryptocurrency space remains highly volatile and prone to wild swings on rumors as well as facts. Bitcoin (BTC) Slumps on ETF Rejection Rumor, All Eyes on the SEC From a technical outlook, the daily chart remains positive. BTC/USD remains above all three simple moving averages and higher highs and higher lows can be seen on the chart since mid-September. A break above the January 2nd high at $45.88k would leave $48.19k vulnerable before $52k comes into play. To the downside, $43k is initial support while $38k should hold if the market sells off sharply. Bitcoin Daily Price Chart Charts via TradingView What is your view on Bitcoin – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/bitcoin-btc-usd-pumping-higher-as-sec-etf-deadline-nears-20240108.html

2024-01-08 13:10

DXY, GBP/USD Analysis Major event risk this week: US inflation and UK GDP for US dollar basket hesitates ahead of major event risk GBP/USD consolidation to hold but retest of the recent high cannot be dismissed The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Major Event Risk this Week Includes US CPI and UK GDP After last week’s stellar jobs print, on paper at least, USD traders gear up for US CPI data for December. Previous NFP prints reveal a trend of downward revisions meaning the hype behind the December beat could also result in a lower final figure. The labour market is resilient but cooling – something the ISM services PMI report will attest to as it revealed a sharp decline in the employment subsection. The core measure (inflation excluding volatile food and fuel prices) is expected to drop below 4% for the first time since May 2021, while the headline measure is anticipated to rise slightly, from 3.1% to 3.2% year-on-year. Then, a day later, UK GDP data for November is due and the forecast appears pessimistic. Meagre, non-negative economic growth is desirable for most of Europe at this stage but merely avoiding a contraction is unlikely to provide the pound with a positive boost required to extend cable’s bullish run. US Dollar Basket (DXY) Hesitates Ahead of Major Event Risk The US dollar see-sawed massively on Friday after the NFP, PMI double-header. Crucially the spike higher fell short of the crucial 103.00 level, ending the day flat. Today, unsurprisingly the dollar trades around similar levels it closed out at last week as traders eye Thursday’s inflation print. Price action currently resides above the descending trendline which is acting as support but a serious lack of momentum could stifle the bullish breakout, particularly if CPI surprises to the downside. Inflation is heading lower and gaining momentum – something that has emboldened the Fed to lower the median Fed funds rate for 2024 in December’s summary of economic projections. Therefore, depending on the data, this week could see a continuation of the longer-term downtrend for DXY and a move towards 101.90. US Dollar Basket Daily Chart Source: TradingView, prepared by Richard Snow GBP/USD Consolidation to Hold but Retest of the Recent High Cannot be Dismissed GBP/USD bullish momentum appears to have stalled, something the MACD attests to. Price action also reveals reluctance to trade above 1.2736 for extended periods of time. Adding to this is the appearance of multiple upper wicks at and just above that very level. With UK GDP expected to reveal stagnant growth or even a contraction for the three months ending in November, the case for a bullish sterling is difficult to make. However, looking at the dollar, there are few bullish drivers there too and the combination of both could result in a period of consolidation for the pair. The pound still holds the upper hand from a yield perspective and meaning the pair could avoid support at 1.2585 and trade around current levels and potentially make another move to the recent high at 1.2828. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/fx-focus-dxy-and-gbp-usd-in-the-spotlight-ahead-of-cpi-and-gdp-prints-20240108.html