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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
The volatility for USDJPY increased after the Bank of Japan kept its interest rate targets unchanged. It left its short-term interest rates at -0.1% and the target for its 10-year bond at zero. The BoJ reiterated it will defend the 10-year yield at 0.5%.
The averages earning index for the UK (3m/y) came in hotter than expected at 6.4% (6.2% forecast). This is higher than the previous print of 6.1%. Tomorrow sees the annual CPI release, and depending on the number, another 50bps hike on 2 February by the BoE remains a possibility.
The pair set new eight months earlier, but finds support, as markets gear up for Wednesday’s monetary policy decision by the central bank of Japan
The pair is having a good week on expectations of a less aggressive Fed, but loses steam today, as markets brace for the US CPI inflation update that can affect the central bank’s next move
The USDOLLAR is trading in its bear channel, between the lower blue and red bands, ahead of tomorrow’s CPI release. Its RSI is also on the bearish side of 50.
Australian headline inflation printed at 7.3% y/y. This was higher than the expected 7.2% y/y and more than the last months 6.9% y/y. After two months of declines, food prices pushed higher. Poor weather was much to blame and is largely reflected in the increase in fruit and vegetable prices. Motor fuel was another larger contributor up 5.6% m/m (it was also up 7% m/m for October).
The hourly chart is bullish. EURUSD’s EMAs have crossed up (black ellipse), as has its momentum based stochastic (aqua ellipse). A movement by stochastic to the 80+ area (blue arrow) will denote an underlying positive momentum. Holding in this area will suggest that the shorter-term traders are aligning with the daily bullish participants.
The pair stays on the offensive after Friday’s rally sparked by the US Jobs report, while forming a potentially important technical pattern
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