- Anticipation of U.S. CPI Data Impact: The currency pairs EUR/USD, AUD/USD, and USD/JPY are all significantly influenced by the anticipation of the upcoming U.S. consumer price inflation (CPI) data release. This highlights the crucial role of economic indicators in forex market dynamics.
- EUR/USD Stability Above SMA: The EUR/USD pair maintains its position above the 55-day simple moving average (SMA) at $1.0638, indicating a stable medium-term bullish trend. This suggests that as long as the SMA provides support, the pair could continue its upward trend, with potential movement influenced by the U.S. CPI data.
- AUD/USD’s Reaction to RBA Rate Hike: Following the Reserve Bank of Australia’s (RBA) decision to hike rates by 25 basis points to 4.35%, the AUD/USD experienced a downturn, indicating the market’s sensitivity to central bank policies and their broader economic implications.
- USD/JPY’s Climb and BoJ Intervention Risk: The USD/JPY pair’s approach to its October 2022 peak coincides with Japan’s lowering inflation rates, highlighting the interplay between domestic economic conditions and currency value. Additionally, this movement brings into focus the possibility of intervention by the Bank of Japan to stabilize the yen.
- Key Resistance and Support Levels Identified: The article outlines significant resistance and support levels for each currency pair, providing insights for traders on potential future movements. For instance, for the EUR/USD, the resistance at the 200-day SMA at $1.0803 and support at the late September high of $1.0618 are key levels to watch post-CPI data release.
EUR/USD: Eyes on U.S. CPI Figures
Currently, EUR/USD is operating within a specific range, hovering just below its almost two-month peak at $1.0756, yet above the 55-day simple moving average (SMA) at $1.0638. This positioning is in anticipation of the forthcoming release of the U.S. consumer price inflation (CPI) data. Market analysts are projecting that October’s core inflation will stay at 4.1%, while they anticipate a reduction in year-on-year headline inflation from 3.7% to 3.3%.
Should the 55-day SMA continue to provide support, the medium-term outlook for EUR/USD remains optimistic. A breach below this level, especially on a daily chart closing basis, might prompt a revisit to the late September high of $1.0618.
To maintain the current upward trajectory, it’s crucial for the pair to close above the recent high of $1.0725 seen on Thursday. Surpassing Monday’s high at $1.0756 could set sights on the 200-day SMA at $1.0803 and the July low at $1.0834.
AUD/USD: Seeking Equilibrium
The AUD/USD pair experienced a downturn from its near three-month high of $0.6523 following the Reserve Bank of Australia’s (RBA) rate increase by 25 basis points to 4.35%. This move, perceived by analysts as potentially the last in the current cycle, led to the pair dropping to the previous week’s low of $0.6339. The pair is now attempting to find stability above this level.
The 55-day SMA at $0.6392 might pose immediate resistance, alongside the late October peak of $0.6399. Overcoming these hurdles could lead the pair towards the October 11 high at $0.6445.
Significant support is located below last week’s low at $0.6339, specifically between the early and late October lows, ranging from $0.6286 to $0.6271.
USD/JPY: Nearing Historic Heights
The USD/JPY pair has witnessed a rise over six consecutive days, inching close to its October 2022 high of ¥151.95. This comes as Japan’s inflation approaches a three-year nadir. Recent data revealed that Japan’s producer prices in October rose by only 0.8% year-over-year, marking the lowest inflation since February 2021’s deflation and the tenth consecutive month of deceleration.
With USD/JPY flirting with its October 2022 peak, the probability of intervention from the Bank of Japan (BoJ) remains significant.
The ongoing one-week uptrend line at ¥151.63 is currently supporting USD/JPY. Beneath this level, minor support is found at the October 26 high of ¥150.78, with the significant psychological mark of ¥150.00 lying further down.