Market Update - 02 January 2024

The Japanese Yen weakens a bit against the USD on Tuesday, albeit lacks follow-through. Bets that the BoJ will exit the negative interest rates regime should help limit further losses. Dovish Fed expectations cap the USD recovery and should act as a headwind for USD/JPY. (FXStreet)

GBP/USD seems to hold its position above 1.2730 on the hawkish stance of BoE. MACD suggests a transition to a bearish market sentiment. A breach below 1.2700 could push the pair toward the 23.6% Fibonacci retracement at 1.2643. (FXStreet)

EUR/JPY holds positive ground around 156.06 on Tuesday. After European inflation fell to 2.4% in November, traders increased their expectations of rate cuts in 2024. The anticipation that the Bank of Japan (BoJ) will exit its ultra-loose policy by the first half of 2024 might limit JPY’s downside. Investors await the Eurozone HCOB Manufacturing PMI for December. (FXStreet)

EUR/USD drifts lower to 1.1028 amid the rebound of the USD. EUR/USD maintains the bearish outlook above the key EMA; RSI indicator stands in bearish territory below the 50 midline.The key support level to watch is seen at 1.1000; 1.1080 acts as an immediate resistance level for the major pair. (FXStreet)

USD/CHF rises to near 0.8450 major level as the Greenback gains ground. US-Houthi clash in the Red Sea could reinforce the demand for the Safe-haven Swiss Franc. Traders are expected to adopt caution as recent US data indicated the slowing of the US economy. (FXStreet)

The DXY jumped towards 101.30 after bottoming near 101.20.  The only highlight during the session was December’s Chicago PMI, which came in lower than expected. US Treasury yields gained some ground but remain near multi-month lows. The DXY will post a modest 2% yearly loss, opening the 2023 above 103.00 and closing just above 101.00. (FXStreet)

The EUR/GBP suffers losses, positioned at 0.8660 with a decline of 0.30%. Daily chart indicators reveal signs of bearish momentum with RSI's negative bias and MACD's waning positive momentum. Despite a temporary bearish outlook, the broader term sees bulls in control. The Cross will close a 2% yearly loss. (FXStreet)

USD/CAD oscillates in a range and is influenced by a combination of diverging forces. Rising US bond yields act as a tailwind for the USD and lend some support to the pair. An uptick in Crude Oil prices is seen underpinning the Loonie and capping the upside. (FXStreet)

NZD/USD trades on a softer note near 0.6313 on the downbeat Chinese economic data. The Chinese NBS Manufacturing PMI came in at 49.0 in December vs. 49.4 prior, worse than expected. The markets expect that the Fed will begin its easing cycle with a quarter-point drop in March. Market players await December's Caixin Manufacturing PMI and US S&P Global Manufacturing PMI, due on Tuesday. (FXStreet)

AUD/USD trades on a negative note amid the quiet session in the first trading day of 2024. December’s Australian Judo Bank final Manufacturing PMI arrived at 47.6 from the flash reading of 47.8, weaker than expected.  The US Chicago PMI came in at 46.9 in December vs. 55.8 prior, below the market consensus. Traders will monitor December’s US S&P Global Manufacturing PMI, due on Tuesday. (FXStreet)

WTI prices gain ground on the growing possibility of Red Sea disruptions. US helicopters repelled a Houthi attack on a Maersk vessel on Sunday. Iran-led groups launched attacks on US forces and Israel in Gaza. US ExxonMobil Corp has officially transferred operations of West Qurna 1 oilfield to PetroChina. (FXStreet)

Gold price regains positive traction and stalls its corrective slide from a multi-week peak. Dovish Fed expectations and geopolitical risks continue to lend support to the XAU/USD. Rising US bond yields underpin the US Dollar and might cap any further appreciating move. (FXStreet)

Source: FXStreet

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