EUR/USD, GBP/USD, USD/JPY Analysis: Dollar Reaches a Monthly Maximum

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The dollar rate rose yesterday as a market reaction to the statement by Christopher Waller, a member of the Federal Reserve Board, who advocated for a more measured approach to the launch of the monetary easing cycle. According to the official, inflation in the country has indeed reached the upper bounds of the target range of 2.0–3.0%. However, at the moment, it is necessary to ensure that prices remain within these limits or continue to decline in the longer term. Meanwhile, markets still believe that the regulator may begin adjusting borrowing costs at the March meeting. Currently, more than 70.0% of analysts expect such a scenario, compared to 80.0% last week. In the United States today, December statistics on retail sales and industrial production volumes will be published, as well as the monthly economic review from the Federal Reserve, known as the "Beige Book."

EUR/USD

The EUR/USD pair shows a slight decrease, consolidating near the 1.0870 mark and local lows from December 13. According to EUR/USD technical analysis, immediate resistance can be seen at the 1.0933 mark, and a breakthrough could trigger an increase to 1.0987. On the other hand, the nearest support is seen at the 1.0856 level, and a break below could lead the pair to 1.0825.

Macroeconomic statistics from Germany did not provide significant support for the single currency. Thus, revised inflation data for December showed no changes compared to November's statistics when the consumer price index was 0.1% on a monthly basis and 3.7% on an annual basis. Yesterday, the head of the National Bank of Austria, Robert Holzmann, stated that the European regulator may refrain from correcting monetary policy in 2024. This position was supported by the president of the German Bundesbank, Joachim Nagel, and the director of the Bank of France, Francois Villeroy de Galhau, who noted that it is too early to discuss a reduction in the interest rate since inflation rates exceed preliminary estimates. At the same time, the business sentiment index in Germany in January from the Center for European Economic Research (ZEW) rose from 12.8 points to 15.2 points, while analysts expected 12.0 points. The indicator of current economic conditions decreased from -77.1 points to -77.3 points, with a forecast of -77.0 points. Investors will focus on December inflation data in the eurozone today, but no significant market reaction is expected. In addition, ECB President Christine Lagarde will speak later in the day.

A new descending channel has formed at the week's lows. Currently, the price is in the middle of the channel and may continue to decline.

GBP/USD

The GBP/USD pair is trading lower, developing a bearish impulse formed earlier this week. On the GBP/USD hourly chart, immediate resistance can be seen at the 1.2712 level, and a breakthrough could trigger an increase to 1.2785. On the other hand, the nearest support is seen at the 1.2596 level, and a break below could lead the pair to 1.2560.

Significant pressure on the pound's positions was exerted yesterday by British labour market data: average wages including bonuses slowed down from 7.2% to 6.5% in November, with expectations at 6.8%, and the indicator excluding bonuses decreased from 7.2% (revised from 7.3%) to 6.6%. Unemployment remained at 4.2%, and total employment increased from 50.0 thousand to 73.0 thousand, while the number of unemployment benefit claims in December sharply increased from 0.6 thousand to 11.7 thousand. A more rapid slowdown in wage growth could put pressure on the Bank of England's positions regarding an upcoming reduction in borrowing costs this year. Investors' attention today is focused on the December inflation report in the UK, which accelerated for the first time in 10 months.

A new descending channel has formed at the week's lows. Currently, the price has moved away from the lower boundary and may continue to rise.

USD/JPY

The USD/JPY pair shows moderate growth. On the USD/JPY hourly chart, strong resistance can be seen at the 147.94 mark, and a breakthrough could trigger an increase to 148.50. On the other hand, the nearest support is seen at the 146.42 level. A break below could lead the pair to the 144.35 mark.

The USD/JPY pair shows moderate growth, testing the 147.40 level for an upward breakout. The US dollar is developing a bullish impulse formed earlier in the week, receiving support from the weakening expectations of the Federal Reserve's swift transition to dovish rhetoric. Tomorrow, November data on industrial production dynamics will be presented in Japan, with a further expected decline of 0.9%.

A new ascending channel has formed at the week's highs. Currently, the price is near the upper boundary, where a correctional decline may occur.

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