With 2023 drawing to a close, holiday cheer isn’t the only thing filling the air for Forex traders. The Western holiday season, centered around Christmas and New Year, can significantly impact market schedules and behavior. While December and January offer exciting trading opportunities, navigating low liquidity and volatility periods is crucial.
The US dollar weakened against most major currencies, except for the Japanese yen. The eurozone’s declining inflation and the ECB’s hawkish stance supported the euro. The pound sterling initially rose but then declined after weaker-than-expected inflation data. The Australian dollar strengthened due to a combination of a weak US dollar and a relatively stable Australian economy.
EUR/USD:
- The pair experienced a moderate decline after reaching a high of 1.10, correcting a previous uptrend.
- Technical analysis suggests immediate resistance at 1.1023 and support at 1.0893.
- Focus is on November’s eurozone inflation data, which showed unexpected weakness, potentially impacting future ECB monetary policy decisions.
- Further decline possible, potentially reaching 1.0845.
GBP/USD:
- The pair retreated after reaching 1.2760, despite initial optimism towards the pound.
- Technical analysis suggests immediate resistance at 1.2741 and support at 1.2616.
- UK inflation data is due Wednesday, which could influence expectations for Bank of England rate hikes.
- Lowering of inflation expectations could lead to further decline towards 1.2590.
USD/JPY:
- The pair continued its corrective decline, testing the 143.50 mark for a potential breakdown.
- Strong resistance lies at 144.33, with immediate support at 142.50.
- Market expects significant changes in the Bank of Japan’s monetary policy next year.
- Further decline possible towards 141.21 if breakdown at 143.50 occurs.
AUDUSD:
- The pair rose to 0.6772, driven by a weak US dollar and a positive economic outlook for Australia.
Gold and Oil:
- Gold (XAUUSD) faced resistance near $2,045 but could rise further if it breaks through to $2,050. May consolidate before potentially rising to 2075.00 or declining to 2046.00 and then 2118.00.
- Crude Oil (XTIUSD) recovered from $71.00 to $75.00 and could continue climbing towards $78.00.
Brent:
- Developing a growth wave to 79.82. May correct to 77.60 before continuing to 83.00
S&P:
- Developing a growth wave to 4782.0. May correct to 4739.0 before potentially declining to 4666.0.
Additional insights:
- HSBC predicts a bearish outlook for the EURUSD in 2024, with the pair potentially falling to 1.02.
- The GBPUSD is expected to remain volatile in the near term, with both upside and downside potential depending on economic data and central bank policy decisions.
- Gold prices are expected to rise further, while oil prices may also recover.
