4 Global Market Updates- 2 January, 2023

In this article, we have covered the highlights of global market news about the GBP/USD, USD/CAD, USD/JPY and NZD/USD.

GBP/USD Price Analysis: The pair breaks a two-day rally as the 200-day EMA tests buyers.

Despite the market’s lack of activity early on Monday, the GBP/USD maintains its intraday low at 1.2070 on the first losing day in three.

In doing so, the Cable pair reverses direction from the 200-day EMA to call back the bears. The negative MACD indications also give the GBP/USD sellers optimism.

But it’s important to remember that the short-term GBP/USD downside is constrained by a rising support line that has been in place for a month and is now at 1.2020.

The last line of defense for the pair is the late November swing low at 1.1900.

If the GBP/USD pair continues to trend down beyond 1.1900, prices may fall below the 38.2% Fibonacci retracement level of the rise from September to December 2022, located at 1.1650.

Alternatively, a clear upward breach of the 200-day EMA level around 1.2115 might push the pair’s rate towards a one-month resistance line near 1.2355.

The last monthly top at 1.2450 might catch the market’s attention if GBP/USD bulls continue to dominate the market beyond 1.2335.

USD/CAD Price Analysis: Recovers from Support Confluence at 1.3520

The intraday low of USD/CAD is retraced while bids are picked up to 1.3560 on Monday during the holiday-light trading session. The 200-SMA and an upward-sloping support line from the previous Wednesday serve as a springboard for the Loonie pair.

Nevertheless, the inability of the quotation to continue above the support-turned-resistance line from November 15 in the wake of the previous week’s rebound off the 200-SMA, along with persistent trading below the 50-SMA, gives loonie sellers reason for optimism.

The pair of loonies is thus expected to break through the 1.3520 support level and go for the 1.3500 round number.

However, for the USD/CAD bears to maintain control, they must hold onto the double bottom that was just recorded at 1.3485.

After that, the previous monthly low of around 1.3385 may tempt buyers of the pair before November’s bottom of roughly 1.3225.

The pair’s reversal movements may aim for the weekly resistance line, at 1.3570, before teasing the 50-SMA level, which is close to 1.3580.

However, for the USD/CAD bulls to regain control, profitable trading must occur above the 1.5-month-old support-turned-resistance line, close to 1.3610 at the latest.

Overall, until the downside potential is severely constrained, USD/CAD is likely to be on the bear’s radar.

The USD/JPY is expected to go below 131.00 due to a lower US Dollar Index.

The pair is trading at about 131.00 following a shakier recovery from Friday’s settlement price of 130.78. The asset is looking for further weakness, which might push it down below its immediate support level of 131.00. The major is set to see intense pressure as the US Dollar Index declines (DXY).

After giving up its trading range of 103.47-104.57 on Friday, the US Dollar Index was still under the control of bears. The two-week consolidation showed a breakdown as money flowed into currencies considered riskier due to lowering inflation predictions for CY2023. Analysts at Natixis highlight the Federal Reserve’s (Fed) monetary policy as being restrictive since mortgage rates are higher than nominal wage growth in the US economy.

While trading volume on Friday was substantially reduced amid a joyful market atmosphere, the S&P 500 remained turbulent, and the day concluded on a tepid note. As the demand for government bonds decreased, the 10-year US Treasury rates increased further to 3.88%.

The publication of the Federal Open Market Committee (FOMC) minutes will be an important event this week that will help the US Dollar Index gauge a significant rise. The FOMC minutes will thoroughly justify the monetary policy choice made in December. In addition, market investors will watch for hints regarding future monetary policy actions by Fed Chair Jerome Powell and economic forecasts.

NZD/USD Price Analysis: Justifies Friday’s bearish Doji below 0.6350

During the mid-Asian session on a slow Monday, NZD/USD maintains lower ground close to the intraday low of 0.6329. The recent inactivity of the Kiwi couple may be explained by several vacations, including those in New Zealand.

Even yet, the quotation shows slight losses while supporting the bearish Doji candlestick from the day before. The negative MACD signals and the pair’s persistent trading below the earlier support line from October 13—currently resistance around 0.6400—both encourage the NZD/USD bears.

Consequently, it is expected that the Kiwi pair will continue to decline into the 0.6235 area of support for the 200-day EMA.

The round number of 0.6300 may temporarily pause during the decline, while the late-November swing low of 0.6155 might provide a test to the NZD/USD bears later.

On the other hand, the Kiwi pair might go toward the previous monthly high close to 0.6515 if it can sustain effective trading above the 0.6400 support-turned-resistance.

It’s important to note that the prolonged rise over 0.6515 in the NZD/USD pair allows bulls to target a high of 0.6575 in June 2022.

Please click here for the Market News Updates from 30 December, 2022.