Forex Today: The dollar starts the week on the wrong foot

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This is what you need to know to trade today monday january 16:

The US dollar starts week in negative territory, while risk appetite is maintained. The US currency is consolidating around the 102.00 level against its main rivals, after hitting a seven-month low of 101.77 during the Asian session on Monday. Asian stock markets excluding Japan posted gains, following Wall Street’s rally on Friday. The American Index S&P 500 broke above the key 200-day moving average and tested the 4,000 level on Friday following earnings reports from US banking giants JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Wells Fargo & Co. Investors also do not seem concerned about the expectations of weak economic data from China, due to be released on Tuesday.

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Market optimism, combined with hopes of a slowdown in Federal Reserve rate hikes and a further decline in the USD/JPY pair, is weighing negatively on the US dollar. The markets are valuing around 80% chance of a 25 basis point (bp) Fed rate hike in March, with 25 basis point (bp) already fully discounted for February, following last week’s US inflation data. Investors, meanwhile, shrugged off upbeat University of Michigan Consumer Sentiment and Inflation Expectations data on Friday amid rising dovish expectations for the Fed.

The pair USD/JPY remains weakened by the recovery of the Japanese yen, pending the Bank of Japan’s (BoJ) monetary policy announcement this week. Japanese exporters bore the brunt of the strengthening yen, while the Nikkei 225 index fell 1%. Expectations have risen that the Bank of Japan will change its monetary policy on Wednesday, after he failed again on Monday in his attempt to defend his yield curve policy. The 10-year JGB yield rose 1 basis point to 0.510%, breaching the 0.5% ceiling of its BoJ policy range. The pair reached an eight-month low at 127.24before recovering towards 128.00.

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The AUD/USD broke above the round 0.7000 level for the first time since August 2022. Risk appetite, US dollar weakness and upbeat expectations around the Reserve Bank of Australia (RBA) keep the pair afloat near 0.7000. The NZD/USD also rallied as a whole and briefly recaptured the 0.6400 level, while the USD/CAD fell to test 1.3350 after facing rejection at 1.3400, despite the price of the WTI it failed to hold above the $80.00 level. US oil ignored UAE Energy Minister Suhail al-Mazrouei’s upbeat comments over the weekend.

After the negative evolution of prices on Friday, the EUR/USD rolled over nine-month highs at 1.0874 early Monday before pulling back to near 1.0850.

Risk appetite helped the GBP/USD to overcome the key resistance of 1.2250 to go up to 1.2290. However, sterling bulls failed to hold higher. At the time of writing, the pair was defending around 1.2240. The pair await testimony from the Governor of the Bank of England, Andrew Baileyon the Financial Stability Report (IEF) due to the Treasury Select Committee at 15:00 GMT, especially after the UK’s Gross Domestic Product (GDP) unexpectedly expanded 0.1%m/m in November.

The price of Prayed it hit fresh nine-month highs at $1,929, before pulling back sharply to $1,915 in an overbought environment on the daily chart.

The Bitcoin it also took advantage of better risk appetite and broader US dollar weakness, having tested levels as high as $21,500. The ethereum It is trading near the $1,600 level, adding more than 1% on the day.

It is worth noting that US financial markets remain closed on Monday, in observance of Martin Luther King Jr. Day. Therefore, low volume trading is likely to extend, potentially triggering volatility and wild swings across the board. the scopes.

This week we will be closely following the Bank of Japan policy decision, US retail sales, UK inflation and scheduled Fed speeches.

Source: Fx Street

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