Forex Analysis – January 18, 2023


Our previous Forex analysis can be viewed here

Technical Analysis

FOREX ANALYSIS: AUDUSD – Up-trending. Possible indecision?

AUDUSD price chart
AUDUSD 1 Hour Chart

As suggested in yesterday’s Forex analysis, price reversed off the longer-term moving average and has since been bullish.

AUDUSD is up-trending within a bullish channel but the moving averages are starting to tighten, signalling that price may become indecisive.

Opportunities to go long could exist around the moving averages, around the bullish channel support area and around the horizontal levels at 0.6985, 0.6940, 0.6925 and 0.6880. A bullish move may stall or reverse around the recent highs at 0.7015 and around the channel resistance area.

FOREX ANALYSIS: EURGBP – Market indecision

EURGBP 1 Hour Chart
EURGBP 1 Hour Chart

Price has been bearish, as suggested in yesterday’s analysis.

EURGBP was showing signs of a potential uptrend but is now looking indecisive again. The moving averages have been crossing frequently and are currently tight, so the market indecision could continue.

Trading opportunities may exist around the moving averages and around any of the identified horizontal levels at 0.8775, 0.8780, 0.8835 and 0.8845. If EURGBP moves below 0.8775, price could start down-trending.

FOREX ANALYSIS: EURUSD – Ranging

EURUSD Forex analysis
EURUSD 1 Hour Chart

As suggested in our previous Forex analysis, EURUSD was bullish and reversed around 1.0865.

Price was up-trending but is now ranging between 1.0790-1.0865. The moving averages confirm the current indecision – they are moving sideways.

Trading opportunities could exist around the support and resistance areas of the range and if EURUSD moves out of the range (break-out trade). A break to the downside may find support around any of the horizontal levels at 1.0760, 1.0710, 1.0680 and 1.0640.

FOREX ANALYSIS: GBPUSD – Up-trending

GBPUSD Forex analysis
GBPUSD 1 Hour Chart

GBPUSD has been bullish off the bullish channel support area and is now finding resistance around the channel resistance area, as suggested in our previous analysis.

Price is up-trending and is currently forming a swing higher. Price action has formed a bullish channel and the moving averages are bullish, so the uptrend could continue.

Long opportunities may exist around the dynamic support of the moving averages, around the bullish channel support area and around the horizontal levels at 1.2235, 1.2165 and 1.2105. GBPUSD could continue to find resistance around the channel resistance area.

FOREX ANALYSIS: USDCAD – Ranging

USDCAD Forex chart
USDCAD 1 Hour Chart

As suggested in our last analysis, price reverse around 1.3440 and has become indecisive.

The USDCAD was down-trending but is now indecisive and ranging between 1.3335 and 1.3440. Price action has formed a horizontal channel. The moving averages confirm the current indecision – they are tight and moving sideways.

Trading opportunities could exist around the support and resistance areas of the horizontal channel and if USDCAD moves out of the channel (break-out trade). A break to the upside may find resistance around 1.3475, 1.3495 and 1.3525.

FOREX ANALYSIS: USDCHF – Indecisive. Possible downtrend?

USDCHF price action
USDCHF 1 Hour Chart

Price has been bearish.

The USDCHF is indecisive but has formed a series of lower swing highs and a bearish channel, suggesting a potential downtrend. The moving averages confirm the potential downside – they have crossed bearish.

Opportunities to go short may exist around the bearish channel resistance area, around the dynamic resistance of the moving averages and around the horizontal levels at 0.9220, 0.9280 and 0.9310. A bearish move could find support around the channel support area and around the recent lows at 0.9180.

FOREX ANALYSIS: USDJPY – Down-trending

USDJPY Forex chart
USDJPY 1 Hour Chart

The USDJPY has been moving sideways.

Price is down-trending and is currently in a retrace move. The moving averages are bearish and steady, so price may attempt a bearish move lower.

Shorting opportunities could exist around any of the key Fib levels, around the trend resistance area, around the dynamic resistance of the moving averages and around the horizontal levels at 129.00, 129.60, 130.20 and 131.30. A bearish move may find support around the recent swing low at 127.35.

METAL ANALYSIS: XAUUSD – Clear uptrend

GOLD chart analysis
XAUUSD 1 Hour Chart

As suggested in our last chart analysis, GOLD has been bullish off the 38.2% Fib level.

Price is clearly up-trending and is currently in a retrace move. The moving averages are bullish and steady, so the uptrend could continue.

Buying opportunities may exist around any of the key Fib levels, around the longer-term moving average and around the horizontal levels at 1885, 1879, 1870 and 1861. A bullish move could find resistance around the recent swing high at 1928 and around the shorter-term moving average.

Fundamental Analysis

Key Analysis

Today’s Major Scheduled News

0300 UTC – JPY – BOJ Interest Rate Announcement,
0700 UTC – GBP – Inflation Rate
1330 UTC – USD – PPI, Retail Sales
2350 UTC – JPY – Balance of Trade

Interest Rate Analysis

A summary of recent central bank rate changes and statements…

Australia (AUD)

The Reserve Bank of Australia (RBA) has increased rates again by another 0.25%, so rates are now set at 3.10%. The rate increases throughout 2022 have been to tackle rising inflation. The RBA have said that inflation is still too high, so further hikes are expected.

Canada (CAD)

The Bank of Canada (BOC) has hiked the interest rate by another 50bps, increasing the official bank rate to 3.75% – it’s seventh consecutive rate hike. The BOC noted that they will continue with quantitative easing and that economic growth remains strong, although it expects growth to stall for the first half of 2023.

Euro Area (EUR)

The European Central Bank (ECB) has increased it’s rates by 50bps, so the official rate is now at 2.50%. Europe is potentially entering recession. Projected inflation for 2023 is 6.3%.

Japan (JPY)

The Bank of Japan (BOJ) continues to keep interest rates at the record low of -0.10%. The BOJ does not currently plan to increase rates to tackle high inflation, which has been revised to 2.90% from 2.30%.

Switzerland (CHF)

The Swiss National Bank (SNB) have hiked rates by 50bps, bringing the official rate to 1.0% – it’s third rate hike after more than a decade of negative interest rates. The SNB signalled that rates could move higher, so further rate hikes are expected.

United Kingdom (GBP)

The Bank of England (BOE) have increased it’s official bank rate again. This time by 50 bps, so the official rate is now set to 3.50%. The BOE are expecting recession in the UK and forecast that CPI inflation has now peaked.

United States (USD)

The Federal Reserve has raised the official funds rate by an additional 50bps, so the rate is currently now set at 4.50%. The Fed expect rates to peak at 5.1% in 2023.

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