In this article, we have covered the highlights of global market news about the EUR/USD, AUD/USD, USD/CHF and GBP/USD.
EUR/USD Price Analysis: The main support level is breached beyond 1.0760
During a slow Monday morning in Europe, bulls and bears compete to control the EUR/USD at 1.0800. The leading currency pair struggles to explain the latest Doji candlestick inside a three-day-old negative channel.
However, a convergence of the 200-SMA, the bottom line of the indicated channel, and the 50% Fibonacci retracement level of the January-February gain, at 1.0760, limits the short-term downside of the pair. Bearish MACD signals also tempt EUR/USD sellers.
The 61.8% Fibonacci retracement level, sometimes called the “golden level,” might serve as the last defence for the pair’s buyers if EUR/USD continues negative over 1.0760.
The possibility of a decline to the previous monthly low of 1.0483 cannot be ruled out should the price go below 1.0690.
As an alternative, rebound advances can aim for the 1.0825 area’s 38.2% Fibonacci retracement level.
However, the rising momentum is still elusive once the quotation continues within the previously identified bearish range, which is now between 1.0760 and 1.0890.
The monthly high of 1.1033 and Friday’s peak of 1.0930 may entice bulls if EUR/USD overcomes the bearish channel formation.
AUD/USD recovers about 0.6950 amid US-China tensions and RBA policy chatter.
After falling dangerously close to the round-level support of 0.6900 in the early European session, the AUD/USD pair has made an effort to make a stronger comeback. Despite rising tensions between the United States and China over the balloon incident, the Australian asset has risen to close to 0.6950. There has been tension between the two countries due to an unexpected strike authorized by US President Joe Biden on a Chinese surveillance balloon that the Chinese government has acknowledged as a civilian object.
Growing global tensions and predictions of more Federal Reserve interest rate hikes have strengthened the Aussie asset’s downward bias (Fed). Additionally, the Australian Dollar can exhibit erratic movements before the Reserve Bank of Australia’s interest rate announcement (RBA).
S&P 500 futures’ large increase in losses throughout the Asian session reflects the market’s current risk-off state. The 10-year US Treasury bonds yield has increased to around 3.55% due to market participants’ reduced appetite for risk.
USD/CHF traders ignore options market indications during the slow session.
As bulls retreat from a one-week high going into Monday’s European session, USD/CHF records slight losses at 0.9250. As a result, the Swiss franc (CHF) pair records its first daily loss in the last three days.
Even yet, the USD/CHF pair’s options market signals are the most positive in 10 weeks, indicating better odds for the quote’s continuing recovery. Despite this, the one-month risk reversal (RR), the difference between call and put options, has been printing larger weekly values since late November, reaching +0.10% at the latest.
The US Dollar’s hesitant movements before Fed Chairman Jerome Powell’s speech on Tuesday may be the underlying cause of the USD/CHF decline. The absence of significant data or events available for publication throughout the day presents another challenge for dollar purchasers.
GBP/USD seeks to breach 1.2050, although a drop is imminent due to US-China tensions.
In the Tokyo session, the GBP/USD pair tried to continue upward over the crucial barrier of 1.2050. The US Dollar Index performed poorly, and Cable detected an interim cushion around 1.2000. (DXY).
Given the extraordinarily unfavorable risk environment created by the US-China trade tensions, it would be premature to see the brief stop in Cable’s steep decline as a turnaround. Chinese authorities advised the US not to exacerbate the problematic situation as tensions between the two countries increased after US President Joe Biden ordered to shoot down of the Chinese surveillance balloon.
After the balloon occurrence, US Secretary of State Antony Blinken postponed his trip to Beijing, claiming that “nothing had been planned” by either party. This showed disdain for the Chinese government.
Losses in the S&P 500 futures increase as US-China tensions worsen, reflecting the market participants’ poor risk appetite. Although there has been a little retracement in the US Dollar Index (DXY) to roughly 102.67, the upside is still preferred.
The market anticipates that the Federal Reserve will continue to raise interest rates in light of the surge in payrolls added by the US economy in January (Fed). In a client note, the Goldman Sachs Research team predicted that the Fed would increase interest rates by 25 basis points (bps) back-to-back between March and May. The central bank will achieve the terminal rate of 5.00–5.25% in this manner.
Please click here for the Market News Updates from 3 February, 2023.