TIN TỨC FOREX

Here is what you need to know for January 25:

The US Dollar edged lower against the euro và was vulnerable across the board despite solid US manufacturing data that gave some life khổng lồ otherwise consolidation markets ahead of key events for the days ahead. The markets are in anticipation of inflation data from the antep

Firstly, eurozone business activity made a surprise return to lớn modest growth in January, which helped to lớn boost the Single currency. EUR/USDwas 0.09 % higher at $ 1.0881, just shy of the 9-month high of $ 1.0927 touched on Monday backed by survey data supporting the view that the eurozone economy was fairing well despite intense price pressures. At the start of the week, the eurowas bid on the back ofEuropean Central ngân hàng (ECB) officials suggestingthat the ECBis set to raise interestratesby 50 basis points in both February và March and will continue to raise rates in the months after.

The US Dollar rose khổng lồ a near 1-week high against the yen, before giving up those gains but staying aboveits weakest since May which it visited ahead of a ngân hàng of nhật bản policy review. However, the BoJleft policy unchanged enabling a move higher in USD/JPY that touched 131.11 on the day.

GBP/USD was one of the worst-performing pairsand dropped by 0.34 % on the day khổng lồ 1.2263after a survey showed British private-sector economic activity fell at its fastest rate in two years in January.

USD/CADwas ending nearflat on the day after travelling between a low of 1.3346and a high of 1.3413 so far while USstockshave been volatile making for choppy trading conditions in the forex space on Tuesday.

Meanwhile, the US 10-year yield was 4bp lower at 3.47% & WTI was down 1.8% at USD80.15/bbl. Gold dropped0.3% lớn $1,933.3/oz. Bitcoinwas little changed on the day at $22,973, steadying after having jumped by about a third in value since early January.

For the day ahead, Aussie and New Zealand inflation data will be key.

As per the pre-open analysis at the start of this week, when there were reports by Reuters thatthe European Central bank (ECB) officials were suggestingthat the ECBis set to raise interestratesby 50 basis points in both February và March và will continue to raise rates in the months after, the triệu euro has stuck tot he forecasted schematic as follows:

EUR/USD prior analysis

(Bearish schematic could be playing out)

It was stated that the euro was in the barroom brawl, chopping around tư vấn and resistance. The analysis argued that if the bulls commit, then the 1.0870/90s & potentially the 1.09 psychological level could be attractive to the bears who are in anticipation of a premium for the opening sessions of the week.

EUR/USD update

The bullish rallyhasfaded. There is still plenty lớn go, however, until critical US calendar events and the US dollar remains capped at resistance. Therefore, there are no dramatic moves expected over the course of the day ahead Nevertheless, a topping pattern is in play in EUR/USD and that leaves the bias to the downside while below 1.0950.

The Gold price is making progress on the day into the final push on Wall Street andrallied from a low of $1,917.22 khổng lồ a high of $1,942 on the day so far.

Gold price rose khổng lồ the highest in nine months as the US Dollar and bond yields came under pressure following the start of the week's 1% drop in leading economic indicators in December which solidified the dovish sentiment surrounding theFederal Reserve, Fed, that is now expected lớn announce another interest-rate hike when its policy committee meets next week.

The US Dollar was weakening, making the metal more affordable for international buyers while theFedofficials are out on the blackout week ahead of the highly anticipated Fed interest rate decision. TheGold price flourished withinvestors now awaiting USeconomic data due this week that could impact the Federal Reserve's policy path.

Federal Reserveis eyed, sentiment mixed

Investors are banking on the Federal Reserve raising rates by 25 basis points (bps) at the January 31 - February 1 policy meeting, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. Meanwhile, the Gold price tends khổng lồ benefit due to lower interest rates that otherwise decrease the opportunity cost of holding the non-yielding asset.

The most hawkish of comments came from St. Louis Federal Reserve's President James Bullard who said US interestrateshave to lớn rise further to lớn ensure that inflationary pressures recede.

''We’re almost into a zone that we could hotline restrictive - we’re not quite there yet,” Bullard said Wednesday in an online Wall Street Journal interview. Officials want lớn ensure inflation will come down on a steady path to the 2% target. “We don’t want to lớn waver on that,” he said.

“Policy has lớn stay on the tighter side during 2023” as the disinflationary process unfolds, Bullard added.

Bullard has pencilledin a forecast for a rate range of 5.25% to 5.5% by the kết thúc of this year.

However, economic reports, such as Producer Price Index và Retail Sales have recently showndisinflationary tendencies, reinforcing expectations that the Fed will continue khổng lồ reduce its tightening pace in upcoming meetings.

With that being said, analysts at ANZ ngân hàng recently wrote a note, entitled, ''Fedtightening not done yet.''

''So far in early 2023, US data releases have indicated a mild easing in inflationary pressures và softer demand. This indicates theFed’s aggressive tightening last year is starting to lớn take effect,'' the analysts explained. ''Weakness in housing is evident (existing home sales fell 17.8% last year), manufacturing activity has faltered & Retail Sales are returning lớn trend.''

Meanwhile,analysts at Brown Brothers Harriman have also of the opinion that the market is underestimating the potential for a higher for longer Federal Reserve.''CorePersonal Consumption Expenditures, PCE, has largely been in a 4.5-5.5% range since November 2021,'' they said. ''We think theFedneeds to lớn see further improvement before even contemplating any sort of pivot.''

EUR/USD và Europen Central bank sentiment in the mix

Meanwhile, the triệu euro has been a little cheerier of late, also pressuring the US dollar and helping to tư vấn risk appetite & a bid into the Gold price. European Central policymaker, Peter Kazimir, said on Monday that inflation easing was goodnewsbut added that it was not a reason to slow the pace of interest rate hikes, as reported by Reuters.

Governing Council member and Governor of Austria's central ngân hàng Olli Rehn made some comments on the European Central Banks' interestratespolicy during theirappearances over the weekend also as didECB governing council thành viên Klaas Knoton Sunday, advocating steep rate hikes."Expect us khổng lồ raise rates by 0.5% in February & March and expect us khổng lồ not be done by then and that more steps will follow in May và June," Knot said.

Analysts at TD Securities argued that the gold pricecould struggle to lớn firm further in the absence of the single-largest buyer of gold over the past months. On the downside, a break below the $1,900/oz range is required khổng lồ spark trend-follower liquidations.

Gold technical analysis

The Gold price is on track for a crash should the US dollar bust khổng lồ life given the placement of the price in the market structure. The US Dollar has been testing the daily trendline resistance as follows:

If this were to lớn break then the Gold price will likely be headed lower, but there is red news scheduled for Thursday so any moves prior khổng lồ that might be limited và a distribution schematic và higher highs could be more likely in the lead up:

Bullish trendline for Gold price is vulnerable.

A break of Gold price structures is eyed for the days ahead so long as resistance holds.

A sell-off và capitulation of the Gold price bulls could lead to lớn a significant run towards $1,900.

The AUD/USD remains firm late in the thành phố new york session, albeit a mixed market mood keeps traders bracing for safe-haven assets. The US Dollar (USD) has recovered some ground late in the session, putting a lid on the AUD/USD steadily advance. At the time of writing, the AUD/USD is trading at 0.7045.

AUD/USD climbs sharply ahead of Australia"s inflation data

Wall Street remains mixed, as shown by the Dow Jones Industrial, remaining firm, while the S&P 500 & the Nasdaq fluctuate. The US economic calendar featured a business activity report issued by S&P Global. US December’s PMIs improved, with the Services PMI jumping to lớn 46.6 vs. 44.7 expected, while Manufacturing PMI advanced to 46.8 vs. Estimates of 46.2.

The S&P Global Composite, which measures both indices, climbed 46.6, higher than the foreseen 45 figure. It should be said that even though business activity continues khổng lồ deteriorate in the US economy, the downward trend moderated some.

On the Australian side, the docket will feature inflation data. According lớn Reuters, expectations for the Consumer Price Index (CPI) for Q$ are 1.6%, while on an annual basis, it meanders at 7.5%. Analysts at TD Securities noted that “the trimmed measure that will draw more attention. TD is at 1.6% q/q vs. The RBA, và consensus at 1.5% q/q. Our forecast pegs annually trimmed to hit the highest levels since 1990 at 6.6% vs. The RBA & consensus at 6.5%, above the prior 6.1% y/y print. We expect annual trimmed between 6.1% & 6.5% khổng lồ lock in a 25bps hike next month.”

AUD/USD Technical Analysis

The AUD/USD daily chart portrays the pair as upward biased. The pair managed lớn record gains in three consecutive days, though it had struggled to lớn surpass the January 18 daily high of 0.7063. Nevertheless, the AUD/USD bias remains upward for some reasons: the 20-day Exponential Moving Average (EMA) crossed above the 200-day EMA, while the 50 and 100-day EMAs are closing by. In addition, the Relative Strength Index (RSI) remains in bullish territory. Therefore, the AUD/USD first resistance would be the 0.7063 YTD high, followed by the 0.7100 figure. Break above will expose the August 11 swing high of 0.7136.

USD/JPY is attempting lớn break out of a medium-term downtrend with prospects of a move up for the week ahead as wemove into key events on the US calendar. The Yen traders had been wrong-footed by theBank of Japan"s surprise policy tweak last month and the recent hold on policy has left the pair able lớn trend up to demo the daily trendline resistance as the following technical analysis will illustrate:

USD/JPY daily chart

The bulls have been moving in since the over of last week and we are on the verge of a breakout. However, there is still plenty of work to vày from the bulls as we head overto key events 9n the calendar as the following analysis on the 4-hour chart shows:

USD/JPY H4 chart

The price action is building a bullish case but the resistance is key. At this moment in time, there is a lack of commitment khung the bulls at the trendline resistance và the tests are feeble. Failures openrisks fo a pull back as we head over to the US calendar events on Thursday.

The EUR/GBP hit a five-day new high at 0.8846, as positive Eurozone data outweighed bad UK PMIs, which reignited recessionary fears amongst Britons. Therefore, the EUR/GBP exchanges hands at 0.8823, above its opening price by more than 0.50%.

EUR/GBP Price Analysis: Technical outlook

After bottoming around 0.8721 last Thursday, the EUR/GBP achieved three straight days finishing with gains. In addition, the EUR/GBP climbed above the 50 and 20-day Exponential Moving Averages (EMAs), each at 0.8755 and 0.8792, respectively, opening the door for further upside.

Looking ahead, the EUR/GBP might hold its reins above 0.8800. Once achieved, the EUR/GBP might challenge the January 13 daily high of 0.8897, ahead of the 0.8900 mark. A breach of the latter will send the pair rallying to the September 28 swing high of 0.9066.

As an alternate scenario, the EUR/GBP first tư vấn would be the 0.8800 figure. Once broken, the 20-day EMA at 0.8792 would be tested and might allow a bearish continuation towards the 50-day EMA at 0.8755, ahead of a one-month-old upslope support trendline at 0.8740.

EUR/GBP Key Technical Levels

The USD/CHF climbs slightly after hitting a daily low of 0.9192 và reclaims the 0.9200 figure in the mid-North American session. Nevertheless, the USD/CHF surrendered some of its earlier gains once it failed to stay above the 20-day Exponential Moving Average (EMA). At the time of writing, the USD/CHF is trading at 0.9228.

USD/CHF Price Analisis: Technical outlook

The daily chart shows that the USD/CHF remains neutral to downward biased. It was further cemented by the USD/CHF pair, which after reaching a daily high of 0.9297, it was unable to lớn stay above the 20-day EMA at 0.9248. The USD/CHF retreated further but persisted in positive territory.

If the USD/CHF registers a daily close around Tuesday’s open, that will size a doji, which could exacerbate a resumption of the downtrend, posing a threat lớn the YTD low of 0.9091. Nevertheless, on its way south, the USD/CHF would find some hurdles, lượt thích the 0.9150 February 21 daily low, followed by the 0.9100 mark, & then the YTD low.

As an alternate scenario, the USD/CHF first resistance would be the 20-day EMA at 0.9248, followed by 0.9300. A breach of the latter will expose the 50-day EMA at 0.9356, followed by 0.9400.

USD/CHF Key Technical Levels

USD/CAD is flat on the day after travelling between a low of 1.3346and a high of 1.3413 so far while US stocks have been volatile making for choppy trading conditions in the forex space on Tuesday.

Stockstook a breather after a two-day rally, with earnings from major companies starting to lớn roll in. Market participants also digested economic data on manufacturing which led to volatility while the thủ đô new york Stock Exchange saw an unusual number of halts at the open.

Meanwhile, we have important events coming up in the forex commodities complex in NZ and Aussie CPIahead ofcritical US economic data later in the week. The main focus is on the bank of Canada, Wednesday, và the Federal Reserve at the start of next week.

There area lack of catalysts outside of teeth data with the Fed officials out on the blackout week ahead of the highly anticipated Fed interest rate decision.The market is running on Fed-official-fumes following the speakers that commented on their outlooks for monetary policy in the build-up to lớn next month"s Fed meeting.

The most hawkish of comments came from St. Louis Federal Reserve"s President James Bullard who said US interestrateshave to lớn rise further to ensure that inflationary pressures recede.

""We’re almost into a zone that we could gọi restrictive - we’re not quite there yet,” Bullard said Wednesday in an online Wall Street Journal interview. Officials want khổng lồ ensure inflation will come down on a steady path khổng lồ the 2% target. “We don’t want to waver on that,” he said.

“Policy has khổng lồ stay on the tighter side during 2023” as the disinflationary process unfolds, Bullard added.

Bullard has pencilledin a forecast for a rate range of 5.25% khổng lồ 5.5% by the kết thúc of this year.

However, there have been bearish tendencies in the US data of late for the US Dollar which has remained under pressure for the best part of the last couple of weeks. Economic reports, such as Producer Price Index and Retail Sales haveshowndisinflationary tendencies, reinforcing expectations that the Fed will continue to lớn reduce its tightening pace in upcoming meetings.

However, analysts at ANZ bank recently wrote a note, entitled, ""Fedtightening not done yet.""

""So far in early 2023, US data releases have indicated a mild easing in inflationary pressures & softer demand. This indicates theFed’s aggressive tightening last year is starting khổng lồ take effect,"" the analysts explained. ""Weakness in housing is evident (existing home sales fell 17.8% last year), manufacturing activity has faltered và Retail Sales are returning lớn trend.""

""This is exactly what theFedwants as it tries lớn steer inflation sustainably back to lớn target. But it is early days, & theFedwill not declare victory on inflation yet,"" the analysts reminded its readership.

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""However, the Federal open Market Committee is entering a more nuanced phase of the tightening cycle. The lagged effects of last year’s policy tightening still have further to bite, và so far, there is no widespread evidence that the labour market is weakening significantly""

""High visibility layoffs at some major tech & financial firms are grabbing the headlines, but the layoffs are global & US initial claims data are not indicating that labour demand is weakening. We think theFedwill continue to lớn emphasise the tightness of the labour market in its deliberations & err towards further tightening. We expect a 25bp rate hike at the next meeting and guidance that rates will need lớn rise further.""

Meanwhile, as for the ngân hàng of Canada, money markets see a roughly 70% chance that the bank of Canada will raise its benchmark interest rate by 25 basis points to a 15-year high of 4.50% at a policy announcement on Wednesday, Reuters reported.

Analysts at TD Securitieslook for the BoC khổng lồ hike by 25bp in January. ""We expect this will be the last hike this cycle, though the forward-looking component will not preclude future hikes.""

For the CAD. The analysts argue that the currency may not receive much directional bias from this meeting with markets focused on the other side of this interest rate cycle. ""CAD may be more sensitive to lớn any dovish elements should the BOC emphasize elements from the BOS. CAD"s correlation with risk is high so that may take on added importance.""

GBP/USD surrenders 1.2400 và drops towards the 1.2310 regions amid a mixed mood trading session, as US equities fluctuate between gainers/losers. Nevertheless, the American Dollar (USD) is losing traction and edging lower, capping the GBP/USD’s fall. At the time of writing, the GBP/USD is trading at 1.2320 after hitting a high of 1.2413.

GBP/USD fell as low as 1.2260s on better-than-expected US PMIs & weak UK data

Wall Street portrays a mixed picture, but it’s a matter of time before it turns positive. S&P Global reported that December’s PMIs for the United States (US) improved, with the Services PMI coming at 46.6 vs. 44.7 expected, while Manufacturing rose by 46.8 vs. Estimates of 46.2. The S&P Global Composite, which measures both indices, increased by 46.6, higher than the foreseen 45 figure. Although business activity continues to lớn show deterioration in the US economy, the downward trend moderated some.

Across the pond, UK’s business activity disappointed investors, with business activity falling at its fastest rate in two years, according to lớn an S&P Global/CIPS Survey. “Weaker-than-expected PMI numbers in January underscore the risk of the UK slipping into recession,” S&P Global’s Chief Business Economist, Chris Williamson, said.

In the meantime, a Reuters Poll showed that 29 of 42 economists estimate the bank of England lớn raise the Bank’s rate by 50 bps to 4% on February 2, while 13 estimated a 25 bps hike. In addition, the economists expect a peak rate of 4.25%.

Also read: Reuters Poll: ngân hàng of England khổng lồ lift bank rate by 50 bps to 4.00% on February 2

GBP/USD Technical Analysis

Technically, the GBP/USD daily chart suggests the pair is consolidating around 1.2400, unable to lớn aim higher and test the 1.2500 mark. Also, in the last couple of days, successive lower lows have opened the door for further losses. Of note, the GBP/USD appears to lớn be forming a double top. However, the GBP/USD would need khổng lồ fall below the January 6 daily low of 1.1841 to lớn confirm its validity.

GBP/USD Key tư vấn levels are the 1.2300 figure, the 20-day EMA at 1.2222 và 1.2100. On the flip side, the GBP/USD key resistance levels are 1.2400, followed by the YTD high of 1.2454 and the 1.2500 mark.

The USD/JPY spiked khổng lồ 131.21, following the release of US economic data but then pulled back toward 130.00 as stocks turned positive on Wall Street. The improvement in risk sentiment weighed on the US dollar.

Data released on Tuesday showed the PMI S&P Global Manufacturing rose in January according khổng lồ preliminary numbers from 46.2 to 46.8, above the 46.1 of market consensus. The Service index climbed from 44.7 khổng lồ 46.6, surpassing expectations of 44.5. Immediately after the release, the US dollar peaked but only to retreat later.

In Wall Street, after a negative opening main indexes are flat. Risk appetite and a retreat in US yields pushed USD/JPY khổng lồ the downside. The pair is testing levels under 130.00, looking at the daily low it hit on Asian hours at 129.72.

Again, the 20-day Simple Moving Average, currently at 130.90, capped the upside. The main trend is bearish although in the short term, the Dollar is correcting higher. It continues lớn be unable to hold above 131.00. If it manages to vì chưng so, a deeper recovery seems likely.

Technical levels

European Central ngân hàng (ECB) policymaker Gediminas Simkus said on Tuesday that the ECB should continue with 50 basis points (bps) rate hikes amid growing wage pressures, as reported by Bloomberg.

Simkus further added that reaching the peak policy rate before summer 'may be unlikely' & noted that strong chip core inflation shows that their battle against inflation is not over yet.

Market reaction

EUR/USD edged slightly higher with the initial reaction to lớn these comments và was last seen posting small daily gains at 1.0875.

An improving macro backdrop and continued policy tightening from the ECB portend triệu euro strength in 2023, according to economists at CIBC Capital Markets.

ECB is looking at adjusting policy in 50 bps clips

“The improved macro backdrop comes as the ECB now details that ‘rates will still have khổng lồ rise significantly at a steady pace lớn reach levels that are sufficiently restrictive khổng lồ ensure a timely return of inflation to the 2% medium-term target.’ Breaking down the language suggests that the ngân hàng is looking at adjusting policy in 50 bps clips, at least across Q1.”

“Overall, we would be wary of EUR gains proving potentially over-extended, albeit we would expect any correction to lớn be short-lived.”

AUD/USD broke decisively above 0.7000 yesterday. Australian Consumer Price Index data for the fourth quarter could fuel the rally if figures come out sticky, economists at ING.

AUD/NZD may retest the recent 1.0950 highs soon

“Tonight’s fourth-quarter CPI data in australia will be key, as evidence of sticky inflation may force a hawkish repricing across the AUD curve (which currently embeds 40 bps of extra Reserve bank of nước australia tightening) and địa chỉ cửa hàng steam khổng lồ the AUD/USD rally.”

“CPI figures are released also in New Zealand and we see a larger risk they could show a deceleration in price pressures compared to lớn Australia. AUD/NZD may retest the recent 1.0950 highs soon as the NZD curve has more room for a dovish repricing.”

See:

The European Central bank should not pre-commit to lớn any specific policy move beyond February,European Central bank (ECB) executive board thành viên Fabio Panetta told German newspaper Handelsblatt on Tuesday, as reported by Reuters.

Panetta argued that they can bring inflation down with well-calibrated andnon-mechanical rate hikes & noted that he is "anxiously optimistic" about inflation after recent good readings.

Market reaction

EUR/USD managed to lớn rebound from daily lows after these comments và was last seen trading at 1.0855, where it was down 0.1% on a daily basis.

Gold price struggles khổng lồ continue its rally after hitting a new 9-month high at $1,942.51, retreats to the $1,930s area, as Wall Street prepares to mở cửa on a lower note. Factors like a risk-off impulse, và the greenback erasing earlier losses, weighs on the XAU/USD. Therefore, the XAU/USD exchanges hands at $1,928.39.

Risk aversion is underpinning the US Dollar

The US cash equity market is poised for a lower open. The XAU/USD main driver so far in the day has been the American Dollar (USD), which, according lớn the US Dollar Index (DXY), which tracks the buck’s value vs. A basket of six currencies, is bottoming around 102.000, and so far is up 0.13%, at 102.150. Contrarily, US Treasury bond yields, namely the 10-year benchmark chú ý rate, which usually influences Gold’s price, are unchanged at 3.532%.

US S&P Global PMIs were better than expected, weighing on Gold’s price

The US economic docket featured January’s PMIs, revealed by S&P Global, with the Services PMI coming at 46.6 vs. 44.7 expected, while Manufacturing rose by 46.8 vs. Estimates of 46.2. The S&P Global Composite, which measures both indices, increased by 46.6, higher than the foreseen 45 figure. Even though US business activity remains in contractionary territory, the downward trend moderated.

“The worry is that, not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of đầu vào cost inflation has accelerated into the new year, linked in part lớn upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks,” Chris Williamson, a chief business economist at S&P Global Market Intelligence, said in a statement.

After the release of US data, the XAU/USD continues khổng lồ extend its losses towards the $1,920 region.

US Federal Reserve to lớn raise rates by 25 bps on next weeks

Aside from this, the US Federal Reserve (Fed) would feature its first monetary policy meeting from January 31 – February 1, in which the US Central bank is estimated to lớn hike rates by 25 bps, which would lift the Federal Funds rate (FFR) at the 4.50% - 4.75% range. The CME FedWatch Tool, odds for a 25 bps hike are 96.6%, with eight days ahead. For the March meeting, traders expect the Fed lớn raise rates lớn the 4.75% - 5.00% range. The slowdown in interest rate increases was spurred by inflation tempering in December, after the core Consumer Price Index (CPI) edged towards 5.7%, after peaking in September of 2022 at 6.6%.

Gold Technical Analysis

From a technical perspective, the XAU/USD daily chart suggests that the yellow metal uptrend remains unchanged. The ongoing pullback toward the $1,920 area could be a respite for XAU’s bulls after the Relative Strength Index (RSI) reached overbought conditions. Once the RSI exits from the oversold area, that would be the reason to resume the uptrend. Therefore, the XAU/USD first resistance would be $1,950, followed by the $2,000 mark. As an alternate scenario, if Gold struggles, its next support would be $1,900, followed by the 20-day Exponential Moving Average (EMA) at $1,883.75.

The USD/MXN is rising on Tuesday, after a two-day correction of the rally from multi-year lows near 18.55 (January 18) lớn 19.11 (January 19). The decline found support around the 18.80 zone and bounced toward 18.90.

The pair is trading at daily highs at 18.88 following the release of the US S&P Global PMI report that came in above expectations boosting the US Dollar across the board amid higher Treasury bond yields. At the same time, Emerging Market currencies, like the Mexican Peso lost further strength on the back of a deterioration in market sentiment và lower commodity prices.

The Mexican Peso needs lớn break và hold below 18.80, in order to lớn regain strength. The next tư vấn stands at 18.65 followed by the recent bottom near 18.55.

The daily chart shows the main trend is bearish but technical indicators are modestly biased to lớn the upside in the short term, suggesting some consolidation ahead that could be between 18.80 và 19.00, or with a higher limit at 19.11, a horizontal level and the 20-day Simple Moving Average. A break above would strengthen the US Dollar.

USD/MXN daily chart

Economists at CIBC Capital Markets see the Canadian Dollar stuck in neutral in q.1 as markets are almost fully priced for BoC và Fed action, before gaining ground over the rest of 2023 as the USD falls out of favour.

USD/CAD khổng lồ reach 1.28 in 2024

“With markets almost fully priced for both the bank of Canada và Federal Reserve over the rest of Q1, expect the Loonie khổng lồ be stuck in neutral in the near term, with USD/CAD likely ending the quarter at 1.34.”

“We expect USD/CAD to kết thúc the year at 1.31.”

“With global growth likely to lớn receive a lift as central banks outside of North America start to lớn normalize policy rates, and higher commodity prices benefitting Canada’s export sector, look for USD/CAD to reach 1.28 in 2024.”

The business activity in the US private sector continued to contract in early January, albeit at a softer pace than in December. S&P Global Manufacturing PMI edged higher khổng lồ 46.8 from 46.2 and Services PMI recovered lớn 46.6 from 44.7. Finally, the Composite PMI came in at 46.6, compared khổng lồ 45 in December. All these figures came in slightly better than the market expectations.

Commenting on the data, "the US economy has started 2023 on a disappointingly soft note, with business activity contracting sharply again in January," noted Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"Although moderating compared to lớn December, the rate of decline is among the steepest seen since the global financial crisis, reflecting falling activity across both manufacturing và services," Williamson added.

Regarding input đầu vào price pressures, Williamson explained that the rate of input đầu vào cost inflation has accelerated into the new year, linked in part lớn upward wage pressures.

Market reaction

With the initial reaction, the US Dollar gathered strength against its rivals & the US Dollar Index was last seen rising 0.25% on the day at 102.25.

EUR/USD appears to lớn have met some decent resistance in the proximity of the 1.0900 hurdle so far on Tuesday.

EUR/USD: Rally shows signs of exhaustion

EUR/USD seems khổng lồ struggle to lớn extend the January’s rally further north of the 1.0900 mark amidst vacillating risk appetite trends và the consolidative theme surrounding the greenback.

Indeed, market participants appear prudent ahead of the upcoming FOMC sự kiện and the ECB gathering, both due next week and with bets favouring a 25 bps and 50 bps rate hike, respectively.

In the domestic calendar, Consumer Confidence in Germany tracked by GfK improved to -33.9 for the month of February. Additionally, the flash prints for the Manufacturing và Services PMIs in the euro area came at 48.8 & 50.7, respectively, while the same gauges for Germany came at 47 và 50.4, respectively.

In the US, the Manufacturing PMI is expected at 46.8 và the Services PMI at 46.6 in January.

What lớn look for around EUR

EUR/USD comes under pressure soon after failing khổng lồ break above the key 1.0900 mark on Tuesday.

Price action around the European currency should continue to lớn closely follow dollar dynamics, as well as the impact of the energy crisis on the triệu euro bloc & the Fed-ECB divergence.

Back to the euro area, the increasing speculation of a potential recession in the bloc emerges as an important domestic headwind facing the euro in the short-term horizon.

Key events in the triệu euro area this week: Germany GfK Consumer Confidence, France Business Confidence, ECB Lagarde, EMU/France/Germany Advanced Manufacturing/Services PMIs (Tuesday) – Germany Ifo Business Climate (Wednesday) – Italy Business Confidence (Thursday) – France Consumer Confidence, ECB Lagarde (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region & still elevated inflation. Impact of the war in Ukraine and the protracted energy crisis on the bloc’s growth prospects và inflation outlook. Risks of inflation becoming entrenched.

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EUR/USD levels to watch

So far, the pair is losing 0.05% at 1.0862 and the breakdown of 1.0766 (weekly low January 17) would target 1.0560 (55-day SMA) en route khổng lồ 1.0481 (monthly low January 6). On the other hand, the next up barrier emerges at 1.0926 (2023 high January 23) followed by 1.0936 (weekly high April 21 2022) và finally 1.1000 (round level).