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Wednesday 24 January 2024
Daily Technical Trading Strategies
We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.
Tuesday 23 January 2024
Bank of Japan Maintains Status Quo, Downgrades Inflation Forecast, Euro Rebounds Amid Dollar Weakness
In its first meeting of the year, the Bank of Japan (BOJ) predictably maintained its ultra-loose monetary policy.
The BOJ unanimously agreed to hold interest rates at -0.1% and continued to adhere to its yield curve control policy. This policy caps the 10-year Japanese government bond yield at an upper limit of 1%, according to a policy statement released after a two-day meeting.
Market Reactions and Predictions
Following the announcement, yields on the 10-year JGBs saw a slight decrease, while the Japanese yen strengthened by 0.1% against the dollar. The Nikkei 225 equity benchmark momentarily reached a new 33-year high before gains were reduced.
The market consensus currently anticipates that the BOJ will terminate its negative rate regime by April, provided that annual spring wage negotiations indicate a significant increase in wages.
The USD/JPY pair saw some buying activity following the BOJ’s policy announcements, trading at 148.37, an increase of 0.22% on the day.
USDJPY Daily Chart
Inflation Forecasts Revised
The BOJ cut its core inflation forecast for the upcoming fiscal year. The board members adjusted their median growth forecast for core consumer prices (excluding food prices) down to 2.4% for fiscal 2024, which starts in April. This is a decrease from the 2.8% estimated in October. Additionally, the central bank slightly raised the core CPI inflation estimate for fiscal 2025 to 1.8% from the previous forecast of 1.7%.
Economic Projections and Statements
The BOJ believes that wage increases could stimulate consumer spending, leading to more sustainable and steady inflation driven by domestic demand. Despite a slowdown in Japan’s core CPI to 2.3% in December, it has remained above the BOJ’s 2% target for 21 consecutive months.
The BOJ released several statements indicating a balanced economic activity risk, a need to monitor the relationship between wages and prices, and a commitment to continue monetary easing as needed. The bank also reiterated its intention to take additional easing steps if necessary.
USD/JPY Experiences Intraday Rebound
USD/JPY Regains Ground
The US Dollar (USD) against the Japanese Yen (JPY) has managed to regain some ground following recent losses, according to recent data. The currency pair has staged a corrective rebound from its 5-month low of 140.25, which was recorded on December 28, 2023.
Technical Outlook
The technical outlook suggests that the USD/JPY’s rebound could extend through 146.40, although the upside is expected to be limited by a 61.8% retracement. The Relative Strength Index (RSI), a key technical indicator, has moved above 30, indicating a potential continuation of the upward momentum.
Market Speculation
Despite the rebound, the USD/JPY pair remains under pressure, down over six percent from November’s peak.
Intraday Trading Recommendation
For intraday traders, the current market conditions suggest a BUY recommendation for the USD/JPY. The entry price (pivot) is set at 147.60, with target and take profit levels (TP) at 148.55 and 148.80 respectively. Traders should be prepared to risk 2% per trade.
Please note, these recommendations are subject to change due to market volatility.
Euro Rebounds Amid US Dollar Weakness
The Euro (EUR) has made a noticeable recovery against the US Dollar (USD), moving above the 1.0900 mark in the early hours of European trading on Tuesday. The currency pair’s rebound comes after marginal losses posted on Monday and is largely attributed to a renewed weakness in the USD.
Impact of USD/JPY Decline
A sharp decline in the USD/Japanese Yen (JPY) exchange rate has contributed to the weakening of the USD and subsequently aided the EUR/USD’s upward movement. This decline was triggered by relatively hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda, following the BoJ’s decision to maintain its current policy settings.
Limited Bullish Momentum for EUR/USD
Despite the weakened USD helping to propel the EUR/USD upwards, the pair may struggle to breach the 1.0930-1.0935 resistance area unless there is a significant improvement in risk sentiment later in the day. The bearish pressure on the EUR/JPY, which also resulted from capital outflows from the USD, has limited the potential for further bullish momentum in the EUR/USD.
Upcoming Consumer Confidence Data
Later today, the European Commission will release preliminary Consumer Confidence data for January. However, this is not expected to have a notable impact on the Euro’s valuation.
Intraday Trading Recommendation
For intraday traders, the current market conditions suggest a BUY recommendation for the EUR/USD. The entry price (pivot) is set at 1.0875, with target and take profit levels (TP) at 1.0910 and 1.0925 respectively. Traders should be prepared to risk 2% per trade.
Please note, these recommendations are subject to change due to market volatility.
GBP/USD Ascends for Second Consecutive Session
Positive Trajectory for GBP/USD
The British Pound (GBP) against the US Dollar (USD) has continued its upward trajectory for the second successive session this Tuesday, nudging close to the 1.2740 mark. The Pound Sterling’s strong performance is bolstered by expectations of a status quo in the Bank of England’s (BoE) monetary policy.
Bullish Momentum Building
Early Tuesday saw the GBP/USD gaining traction and moving towards the 1.2750 level. This comes after Monday’s trading session ended virtually unchanged. The near-term technical outlook suggests that bullish momentum is accumulating.
Market Mood Boosts GBP/USD
An optimistic market sentiment has hampered the US Dollar’s ability to gather strength, aiding the GBP/USD’s upward push. A Bloomberg report stating that China is considering a rescue package for the equity market worth around 27 billion USD sparked a rally in Asian equity indexes. Hong Kong’s Hang Seng index, for instance, saw nearly a 3% gain.
Intraday Trading Recommendation
For intraday traders, the current market conditions suggest a BUY recommendation for the GBP/USD. The entry price (pivot) is set at 1.2695, with target and take profit levels (TP) at 1.2745 and 1.2760 respectively. Traders should be prepared to risk 2% per trade.
Please note, these recommendations are subject to change due to market volatility.
Australian Dollar Edges Higher Amid Positive Business Confidence
Aussie Dollar Sees Improvement
The Australian Dollar (AUD) has seen a slight increase on Tuesday, recovering from losses experienced in the previous session. This improvement is potentially due to increased confidence in businesses as reported by the National Australia Bank. Additionally, the AUD has likely been supported by an upturn in the performance of Australia’s share market.
However, the US Dollar (USD) continues to strengthen despite lower US Treasury yields, which could put some pressure on the AUD/USD pair.
Potential Early Interest Rate Cuts
The Australian currency faces challenges due to speculation about potential early interest rate cuts from the Reserve Bank of Australia (RBA). This speculation is fueled by recent indicators such as low Aussie Consumer Confidence and Employment Change figures, leading to concerns about the economic outlook.
Intraday Trading Recommendation
For intraday traders, the current market conditions suggest a BUY recommendation for the AUD/USD. The entry price (pivot) is set at 0.6565, with target and take profit levels (TP) at 0.6615 and 0.6630 respectively. Traders should be prepared to risk 2% per trade.
Please note, these recommendations are subject to change due to market volatility.
Crude Oil (WTI) Intraday: Positive Momentum Expected
Crude Oil’s Market Performance
Crude Oil (WTI) is showing signs of a positive momentum in the intraday trading session. After experiencing a period of volatility, the commodity seems to be finding support around the 74.30 level.
Intraday Trading Recommendation
Given the current market scenario, there is a BUY recommendation for Crude Oil (WTI). The entry price or pivot point is set at 74.30. The target and take profit levels (TP) are projected at 75.30 and 75.80 respectively. Traders should be prepared to risk 1% per trade in this intraday trading scenario.
Market Indicators
The Relative Strength Index (RSI), a key momentum indicator, has just landed on its neutrality area at 50% and is turning upwards. This indicates a potential uptick in buying pressure, which could drive prices higher in the near term.
Please note, these recommendations are subject to change due to market volatility.
Disclaimer:
All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.
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We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.
Busy Week Ahead for Traders: Key Events to Watch
This week is packed with key economic events that could cause significant movements in various currency pairs.
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Traders should brace themselves for a potentially volatile week in the markets.
Summary Table: Key Events to Watch
Date | Event | Impact |
|---|---|---|
| Tuesday, January 22, 2024 | Bank of Japan Monetary Policy Statement, BOJ Policy Rate, BOJ Outlook Report | Potential impact on the USD/JPY currency pair. |
| USA Richmond Manufacturing Index | Could influence the USD. | |
| Wednesday, January 24, 2024 | New Zealand’s CPI q/q | Likely to affect the USD/NZD currency pair. |
| French, German, Eurozone, and Britain’s Flash PMIs | Could sway the EUR/USD and GBP/USD pairs. | |
| Canada’s BOC Monetary Policy Report, BOC Rate Statement, Overnight Rate | Likely to impact the USD/CAD currency pair. | |
| Thursday, January 25, 2024 | German Ifo Business Climate Index | Potential influence on the Euro. |
| ECB Main Refinancing Rate, Monetary Policy Statement | Could impact the value of the Euro and the EUR/USD currency pair. | |
| USA Advanced GDP q/q, Unemployment Claims, Advance GDP Price Index q/q, Core Durable Goods Orders m/m, Durable Goods Orders m/m, New Home Sales | Likely to have an impact on the dollar exchange rate and associated currency pairs. | |
| Friday, January 26, 2024 | Japan’s Tokyo Core CPI y/y | Could impact the Yen and the USD/JPY pair. |
| USA Core PCE Price Index m/m | May affect the dollar and associated currency pairs. |
Tuesday, January 22, 2024: Bank of Japan Monetary Policy Statement and US Richmond Manufacturing Index
The Bank of Japan is set to release its Monetary Policy Statement that outlines the outcome of the bank’s decision on asset purchases and provides commentary about the economic conditions influencing their decisions. This announcement, alongside the BOJ Policy Rate and BOJ Outlook Report, is expected to impact the USD/JPY currency pair. Traders will be keenly watching for any changes in the policy rate or outlook report that could signal a shift in Japan’s monetary policy.
Meanwhile, the United States will release its Richmond Manufacturing Index. This indicator measures the health of the manufacturing sector in the Richmond District. As the manufacturing sector makes up a significant part of the total US GDP, a high reading suggests bullishness for the USD, while a low reading implies bearishness.
Wednesday, January 24, 2024: New Zealand’s CPI and Eurozone’s Flash PMIs
New Zealand is set to announce its quarterly Consumer Price Index (CPI), which measures the change in the price of goods and services from the perspective of the consumer. This key metric of inflation is expected to influence the USD/NZD currency pair.
In Europe, traders will be eyeing a slew of flash Purchasing Managers’ Indexes (PMIs) from France, Germany, the broader Eurozone, and Britain. These indicators measure the economic health of the manufacturing sector. A reading above 50 signals expansion, while a reading below 50 indicates contraction. These PMIs could sway the EUR/USD and GBP/USD pairs based on whether the readings meet, exceed, or fall short of expectations.
Also on Wednesday, the Bank of Canada will release its Monetary Policy Report, Rate Statement, and Overnight Rate. These insights into the bank’s view of economic conditions and inflation will likely impact the USD/CAD currency pair.
Thursday, January 25, 2024: German Ifo Business Climate and ECB Main Refinancing Rate
Germany will release its Ifo Business Climate Index, a leading economic indicator in Europe that measures current business conditions and expectations for the next six months. A high reading is seen as positive (or bullish) for the Euro, while a low reading is seen as negative (or bearish).
The European Central Bank (ECB) will announce its Main Refinancing Rate and provide a Monetary Policy Statement. These announcements often lead to market volatility and could influence the value of the Euro and the EUR/USD currency pair.
On the same day, the US will release several key economic indicators including Advanced GDP q/q, Unemployment Claims, Advance GDP Price Index q/q, Core Durable Goods Orders m/m, Durable Goods Orders m/m, and New Home Sales. These releases are likely to have an impact on the dollar exchange rate and associated currency pairs.
Friday, January 26, 2024: Japan’s Tokyo Core CPI and USA’s Core PCE Price Index
Japan will release its Tokyo Core Consumer Price Index (CPI) y/y, which measures the change in the price of goods and services purchased by consumers in Tokyo. This data could impact the Yen and the USD/JPY pair, as it’s a leading indicator of nationwide inflation trends.
Finally, the US will release its Core Personal Consumption Expenditures (PCE) Price Index m/m. The Fed uses this as their primary gauge of inflation, and changes in this index can impact the dollar and associated currency pairs.
In conclusion, this week is packed with key economic events that could cause significant movements in various currency pairs. Traders should brace themselves for a potentially volatile week in the markets.
EUR/USD: A Rollercoaster Ride Below 1.0900
EUR/USD appears to be stuck in a rut, trading marginally below the 1.0900 mark during the American session. The lack of key data releases combined with a buoyant market atmosphere has hampered the US Dollar’s ability to gain momentum, allowing the pair to mitigate losses.
The EUR/USD pair remains relatively stagnant just under the 1.0900 threshold as Monday unfolds. With no significant macroeconomic announcements or high-priority events on the week’s agenda, traders are erring on the side of caution. On the other hand, the positive performance of global stocks curtails the demand for the US Dollar. Wall Street’s robustness fuels moderate optimism, especially with earnings outpacing expectations.
GBP: Riding High Despite Recession Fears
The Pound Sterling (GBP) is enjoying a weekly high as risk appetite improves. The broader appeal of the GBP/USD pair remains positive even as the UK economy teeters on the brink of a technical recession. This precarious situation has arisen due to weak household spending and severe pessimism among business owners about the economic future.
The Bank of England (BoE) is anticipated to face difficulty in making a decision owing to persistent price pressures and fears of recession. This makes it challenging for policymakers to maintain a restrictive interest rate stance. Despite this, the market mood stays upbeat as investors shift their focus to the Federal Reserve (Fed)’s May monetary policy meeting for the first rate cut, previously expected in March. Fed policymakers continue to promote higher interest rates over an extended period to ensure inflation returns to the 2% target swiftly.
BTC: A Defensive Stance Above $41,000
Bitcoin (BTC) is trading cautiously above $41,000 on Monday following a week-long decline. Actions by whales on a major crypto exchange, such as closing their leveraged positions, have led to a substantial increase in the USDT reserve. These strategic moves, which resulted in a 21% decrease in open interest on Bitfinex, indicate that BTC could experience further losses.
Bitcoin is struggling to stay afloat in choppy waters, trading at $41,000 after its value dropped last week. A reduction in open interest by large investors (known as whales) and an increase of their Tether (USDT) reserves on Bitfinex suggest that the downward trend for BTC price could continue in the near term.
GBP/USD: Holding Steady Above 1.2700
The GBP/USD pair is showing slight fluctuations in a narrow band just above 1.2700 on Monday. The rebound of the major pair is strengthened by the risk-on environment. However, escalating tension in the Red Sea could spur demand for safe-haven assets and limit the pair’s upside.
After a bearish pressure spurred by the USD rally last week, GBP/USD managed to stage a comeback in the latter half, erasing most of its weekly losses. The pair’s short-term technical outlook is yet to suggest a build-up of bullish momentum as it maintains stability around the 1.2700 mark on Monday morning in Europe.
But investors remain uncertain about the timing of the Federal Reserve (Fed) policy shift ahead of this week’s crucial US growth and inflation data. According to the CME FedWatch Tool, the likelihood of a 25 basis point rate cut in March has dropped from 70% to approximately 50%.
With no high-tier data releases scheduled for Monday, the economic calendar remains sparse.
Disclaimer:
All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.
FOLLOW US
Author
We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.