What happened across the Asia session?
Most major currencies continued to lose ground against the DXY during the Asia session, with Gold trading significantly lower as the DXY strengthened.
What does it mean for Europe and US Sessions?
Look for a possible brief retracement on the DXY with increased volatility across the major currencies pairs.
The Dollar Index (DXY)
Key news events today
USD CB Consumer Confidence
What can we expect from DXY today?
Despite a lack of major news events, the DXY climbed strongly to the upside, bouncing off the 101.50 price level to climb toward the 102 price level. This move higher was driven by the weakness in the EURUSD, rather than the strength of the DXY. If the DXY breaks above the 102 price level, further upside could be anticipated, with the key resistance level at 102.50. This move higher could be brief with choppy price action as the markets remain poised for the US Federal Reserve Interest Rate decision on Thursday.
Central Bank Notes:
- Federal Reserve hiked rates by 50bps taking interest rates to 4.50%
- Next meeting is on 2 February 2023
- Further rate increases are expected to slow
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold traded between the price range of 1921 and 1932 through the trading session yesterday, with no clear directional bias, despite the brief recovery in strength of the DXY. However, as the price was supported at the 1921 price level, Gold could rebound higher toward the high of the current price range at 1932. Gold is likely to continue trading within this range for the interim, in the lead-up to the US Federal Reserve interest rate decision on Thursday. Alternatively, as Gold trades lower to the 1915 price level, look for Gold to test the key support level of 1900.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No Major News Events
What can we expect from EUR today?
The EURUSD climbed strongly to the 1.09 round number resistance level overnight. However, as the price reached the resistance level, the EURUSD reversed strongly to the downside, offsetting gains for the day to end the trading session along the 1.0850 price level. Early in the trading session today, the EURUSD continued to trade lower due to the downward pressure and is currently trading at the 1.0830 level. Look for the EURUSD to break below the 1.08 round number support level to signal further downside potential, with the next key support level at 1.0770.
Central Bank Notes:
- Main Refinancing Rate is currently at 2.50%
- Significant and consistent rate hikes expected from the ECB
- Next meeting on 2 February 2023
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No Major News Events
What can we expect from CHF today?
As the DXY strengthened overnight, this dragged the USDCHF steadily higher from the 0.9190 price level up to the 0.9250 price area. As the DXY signals further upside potential, look for the USDCHF to break above the 0.9270 price level to signal a continuation of the upside, with the next key resistance level at 0.9345.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
No Major News Events
What can we expect from GBP today?
Similar to the other major currency pairs, the GBPUSD traded lower, rejecting the 1.24 resistance level, down toward the 1.2345 price level. The GBPUSD could continue to trade lower if the DXY strengthens further. However, confirmation of the downside will require the price to break strongly below the 1.2330 price level, with the next key support level at 1.2280.
Central Bank Notes:
- Interest rate is currently at 3.50%
- Peak inflation revised to more than 15% in 2023.
- Next meeting on 2 February 2023
Next 24 Hours Bias
Weak Bearish
The Canadian Dollar (CAD)
Key news events today
CAD GDP m/m
What can we expect from CAD today?
The USDCAD climbed strongly from the 1.33 support level up toward the 1.3415 price level overnight. With the Canadian GDP due to be released today (Forecast: 0.1% Previous: 0.1%) the USDCAD could continue to trade higher, especially if the DXY continues to strengthen. If the price breaks strongly above the 1.3430 price level, the USDCAD could continue to trade higher toward the next key resistance level of 1.3530.
Central Bank Notes:
- Increased interest rates to 4.50%
- Indicated that the BoC was likely to pause on future rate hikes.
- Next meeting on 8 March 2023
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No Major News Events
What can we expect from Oil today?
Energy prices continued to trade lower overnight, with WTI currently trading at the 77.50 price level and Brent at the 84.00 key support level. This downward move was due to the overnight strength of the DXY and the continual concerns over a possible global recession. Look for WTI to break below the current price level to trade lower, with the next support level at 76.00. Similarly, if Brent breaks below the current key support level, the price could trade significantly lower toward the next key support level of 82.50.
Next 24 Hours Bias
Weak Bearish
