Forex

USDOLLAR showed resilience over the last few trading sessions. Yesterday showed a crack. There is a risk of heightened dollar volatility.

Heading towards the Fed release on Wednesday a sense of caution prevails. Despite the market looking for a pivot, the Fed has maintained an aggressive stance.

The pair is on the back foot ahead of the monetary policy decisions by the US Fed and the European Central Bank, despite expectations for a more aggressive move by the ECB

The BoC raised its overnight rate by 25bps to 4.5%. This was as expected and is regarded as the current cycle’s peak. The statement read that the central bank “expects to hold the policy rate at its current level.”

GBPUSD daily is trading in its bullish channel between the upper blue and red bands. The hourly chart also shows signs of positivity. Its trend-following EMAs and momentum-based stochastic have crossed up (black ellipses). If the EMAs develop angle and separation and the stochastic makes its way to its upper quintile and holds (blue arrow), an underlying bullish momentum will be present.

The pair showed signs of life as the BoJ did not build on December’s policy surprise, but the technical death cross and market optimism for a Fed pivot weigh on the greenback

Australian inflation for the quarter came in higher than expected at 1.9% (1.6%). On an annualised basis, CPI was 8.4% (7.6%: forecast). The q/q and y/y numbers were also higher than their respective previous prints.

GBPUSD is trading in its bullish channel, between the upper blue and red bands, on its daily time frame. The longer it maintains this position, the greater the likelihood of further price appreciation. The hourly chart has also turned positive. Its trend-following EMAs and momentum based stochastic have both crossed up (black ellipses). The stochastic moving into its upper quintile and holding (blue arrow) will connote an underlying momentum. This…

From July 2022, the basket has drifted sideways in an accumulation pattern (green rectangle). It has now crossed above its 30-week EMA and the EMA has turned up. This is bullish. The RSI has moved above 50 (blue rectangle), connoting an underlying bullish momentum. The longer this maintains, the greater the chance of further appreciation ahead.

EURUSD declined yesterday following a Bloomberg report saying that some ECB members were considering a slower pace of tightening. This seems premature at this stage and has been pushed back today at Davos.

The pair extends this year’s gains as UK headline CPI inflation moderated further in December and the core persisted, while hopes for a Fed pivot continue to create headwinds for the greenback