U.S. dollar is moving higher in absence of strong catalysts. USD/JPY remains volatile as traders rush to take some profits off the table after the recent strong move.
U.S. dollar managed to gain upside momentum after testing new lows.
EUR/USD pulled back from multi-month highs.
USD/JPY rebounds after major sell-off as traders prepare for the BoJ Interest Rate decision, which will be released on Wednesday.
U.S. Dollar Index Settled Back Above The 102 Level
DXY 160123 Daily Chart
U.S. Dollar Index gained upside momentum after touching new lows and managed to settle near the 102.30 level.
There are no economic reports scheduled to be released in the U.S. today due to the Martin Luther King Jr. Day, so traders will focus on general market sentiment.
Traders remain convinced that the Fed will not be able to push rates above the 5.00% level, which is bearish for the U.S. dollar. Today’s rebound looks technical as traders take some profits off the table near multi-month lows.
EUR/USD Faced Strong Resistance Near 1.0870
EUR/USD 160123 Daily Chart
EUR/USD made an attempt to settle above multi-month highs but failed to develop sufficient upside momentum and pulled back towards the 1.0825 level.
Today, traders focused on the German wholesale inflation numbers. The report indicated that Wholesale Prices declined by 1.6% month-over-month in December, compared to analyst consensus of -1.2%.
Inflation is slowing down, but it remains to be seen whether the ECB will be more dovish at the upcoming meeting.
GBP/USD Pulled Back Towards 1.2200
GBP/USD 160123 Daily Chart
GBP/USD is currently trying to settle back below the 1.2200 level. GBP/USD has already made several attempts to settle above 1.2200, but these attempts yielded no results.
RSI remains in the moderate territory, so there is enough room to gain additional upside momentum. However, GBP/USD needs more catalysts as traders remain worried about the health of the UK economy.
USD/CAD Settled Near 1.3400
USD/CAD 160123 Daily Chart
USD/CAD is mostly flat despite pullback in commodity markets. USD/CAD has recently made several attempts to settle above the 1.3400 level but failed to develop sufficient upside momentum.
Meanwhile, AUD/USD and NZD/USD pulled back from session highs. AUD/USD settled near the 0.6950 level, while NZD/USD moved back below 0.6400.
USD/JPY Rebounds After Sell-Off
USD/JPY 160123 Daily Chart
USD/JPY received support below the 127.50 level and moved towards 128.50. The rebound was likely driven by profit-taking after the recent sell-off. Traders should note that the BoJ will present its Interest Rate Decision on January 18, so USD/JPY will likely remain volatile for the whole week.
For a look at all of today’s economic events, check out our economic calendar.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.
