EURUSD: dollar has no prospects for further strengthening
As inflation in the EU region continues to decline the currency pair EURUSD keeps neutral trading at 1.0800.
Consumer inflation in the European Union fell 0.4%, beating expectations of -0.3% and weakening the annual rate to 9.2% from 10.1% in the past, according to yesterday's publication. Economists have seen a positive trend for three months in a row, noting the effectiveness of approved decisions by the ECB (European Central Bank). Core inflation, which excludes fuel and food commodities, rose 0.6% MoM and from 5.0% YoY to 5.2% YoY, sending warning signs that economic activity is slowing.
- Resistance levels: 1.0870 and 1.1070.
- Support levels: 1.0710, 1.0510.
USDJPY: Japanese currency is recovering
The trading instrument USDJPY reflects a slight decline, developing a correction after the rapid strengthening earlier, where the "American" was able to rise to the mark of January 12, but soon the "bulls" lost the advantage.
The Japanese yen came under pressure on the decision of Japanese monetary authorities to continue the current monetary policy. Including the income curve also kept its previous monitoring level, which may indicate an impending tightening of monetary parameters, including a correction of the key indicator from the current level of -0.10%. The regulator maintained the local 10-year government bond yield window during its most recent meeting, currently displaying a range of -50.0 points to 50.0 points to the 0.0% target. The chairman of the central bank of Japan said that the issue of the index correction is overestimated and the result of approved measures should be evaluated the day before. Meanwhile, the agency expects consumer inflation to strengthen to 3.0% by March, while experts expect the next year to show a decline to 1.6%, with a target of 2.0%. An additional negative factor for the yen was the publication of data on the demand for components for the mechanical engineering sector. Thus, in November such orders decreased by 3.7% on the annualized basis, having earlier strengthened by 0.4% against the experts' estimations of the positive trend development to 2.4%, and by 8.3% on the monthly basis on the previous day having strengthened by 5.4% for October. December data showed improvement in exports from Japan to 11.5% from 20.0% while imports slowed to 20.6% from 30.3% narrowing the trade deficit to -1448.5 billion yen from -2029.0 billion yen.
- Resistance levels: 129.00, 130.00, 131.00, 132.00.
- Support levels: 128.00, 127.00, 126.34, 125.60.
USDCHF: the pair is testing a record low
During the Asia-Pacific trading session, the currency pair USDCHF displays a mixed trend, being around 0.9160.
Earlier the instrument was actively declining, reaching a low of November 2021, however by the end of the day trading the American currency successfully regained its losses, despite the negative data from the United States. Industrial production continued its negative trend and disappointed investors as it lost 0.7% in December, having earlier contracted 0.6% while the market was expecting a trend reversal to -0.1%. Retail sales were down 1.1% building on a previous 1.0% decline in November, with experts estimating a -0.8% decline.
Traders will look forward to release December Swiss industrial inflation data due tomorrow, as well as data from the U.S. housing market and manufacturing activity at the Federal Reserve Bank of Philadelphia in January.
- Resistance levels: 0.9200, 0.9250, 0.9300 and 0.9350.
- Support levels: 0.9150, 0.9100, 0.9036, 0.9000.
USDCAD: dollar has reached the level of 1.3500.
The trading instrument USDCAD is trading with multidirectional dynamics in morning trading, having reached the threshold of strong resistance at 1.3500. The American currency is strengthening, recovering losses incurred since the beginning of the week against a very mixed macroeconomic backdrop.
According to the data, the U.S. retail sales for December sagged 1.1%, previously showing -1.0% for November, while analysts were expecting a positive trend to -0.8%. Industrial production slipped slightly to -0.7% from -0.6%, with a forecast of -0.1%. Manufacturing capacity lost percentage points in December to 78.8% from 79.4%, missing analysts' expectations of a strengthening to 79.6%. The published block of macroeconomic statistics had strengthened the opinion among the market participants that the US Federal Reserve System will decide to refuse from continuing hawkish rhetoric, completing the current cycle of interest rate adjustment.
- Resistance levels: 1.3500, 1.3550, 1.3600 and 1.3650.
- Support levels: 1.3450, 1.3400, 1.3356, 1.3300.