The kickstart video above gets the US session going by taking a technical look at the 3 -major currency pairs – the EURUSD, USDJPY and GBPUSD.
The EURUSD found support near its 100 hour MA for the 3rd day in a row. That keeps the buyers in play and control in the short term, but buyers still need to show that they can keep control. Staying above the 200 hour MA at 1.0392 would the best case scenario, but if the price can still remain above the 100 hour MA at 1.02777, they are still in the game, but it is a battle. PS EU CPI came in as expected.
The USDJPY moved lower yesterday (and on Wednesday too), and that move to the downside reached a key target area we were looking toward at the 38.2% of the move up from the December low, AND the 200 bar MA on the 4-hour chart both are at 154.939 now. The low reached 154.97 (within 4 piips) and bounced. The 155.94 to 156.00 is now reistance. The 154.939 is key support for both buyers and sellers today and going forward. PS Central bank decision next week tilting to a hike.
The GBPUSD has been misbehaving technically, but sellers remain the dominant despite the rally on Wednesday (off US CPI). The high this week could only get briefly above the 38.2% of the January trading range on Wednesday at 1.22808. Since then the high yesterday could only reach 1.2259. Today the high was within a swing area between 1.2238 and 1.2250 (close resistance today). The price is below the 100 hour MA at 1.22053. Can sellers keep the price below that level? in the US session and set the stage for a retest of the lows for the year and going back to Nonvember 2023? Watch those levels. PS UK retail sales were weaker than expected today.
In central bank news coming into the NA session:
- Cleveland Fed President Beth Hammack emphasized the Federal Reserve’s cautious approach to future rate cuts, stating that monetary policy remains only moderately restrictive despite significant progress on inflation. She noted that restrictive policy is still necessary to address lingering inflationary pressures and the rate-of-change problem. Hammack said she supported a 75 bps rate cut for 2024 as of September(they did 100 for the year) but she did not support the 25 cut in December (dissenting) saying “The data had all come in stronger” and “Just because something’s priced into the market, to me, is an insufficient reason to do it”. She acknowledged that tariffs could complicate the inflation outlook further.
iN other central bank commentary:
- ECB policymaker Yannis Stournaras highlighted the need for continued rate cuts in upcoming meetings, advocating for a gradual and cautious approach based on available data. He noted that larger rate cuts could be considered if warranted by incoming data. Stournaras expressed confidence in the latest forecasts, which project inflation reaching the 2% target sustainably by Q2 2025.
- ECB policymaker Joachim Nagel urged a more cautious approach to rate cuts, citing significant uncertainty in the inflation outlook. He emphasized the importance of not rushing decisions during the process of monetary policy normalization but remained open to discussing a larger rate cut in December as part of the broader strategy.
The BOJ meets next week and Goldman Sachs Asset Management anticipates a Bank of Japan interest rate hike next week, aligning with market expectations that view the move as highly likely. The firm is bullish on the yen, expecting the potential rate hike in January to provide support for the currency.
In other markets to start the new day:
- Crude oil is near unchanged at $77.79
- Gold is down -$3.10 or -0.12% at $2710
- SIlver is down -$0.37 or -1.20% at $30.40
- Bitcoin is running higher and back above $100K at $102,853
European shares are higher:
- German Dax +1.01%
- France’s CAC +1.01%
- UK FTSE 100, +1.38%
- Spain Ibex +0.58%
- Italy’s FTSE MIB +1.15%
US stock futures are implying higher levels
- Nasdaq up 123 points
- S&P up 24.56 points
- Dow up 177 points
In the US debt market:
- 2 year yield 4.227%, down 1.0 bps
- 5 year 4.375%, -2.5 bps
- 10 year 4.570%, -3.6 bps
- 30 year 4.800%, -4.3 bps
The 10 year yield peaked at 4.809% this week.
This article was written by Greg Michalowski at www.forexlive.com. Source