Market Analysis: Dollar Corrects in Thin Market

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The American currency is strengthening slightly after Christmas. Thus, the pound/US dollar currency pair retreated from the recent high just above 1.2700 and the US dollar/yen pair found support at 142.00. The euro/US dollar pair is trying to retest Friday’s high at 1.1040. Both the Australian and Canadian currencies continue to rise against the dollar.

USD/JPY

A block of data from Japan published this morning contributed to a slight strengthening of the USD/JPY pair, as the incoming fundamentals turned out to be quite weak. Thus, the core consumer price index (CPI) from the Bank of Japan decreased to 2.7% against the forecast of 3.00%. The price index for corporate services also fell: 2.3% versus 2.4%. Also in the red zone was the ratio of vacancies to applicants: 1.28 to 1.30. Today at 21:00 GMT+3, it is worth paying attention to the publication of data on the auction for the placement of 2-year US Treasury notes.

On the daily and weekly USD/JPY chart, the pair is below the alligator lines, the priority is to sell on the breakdown of the lower fractal at 140.90. We can consider cancelling the downward scenario if the price confidently consolidates above 145.00.

USD/CAD

On the USD/CAD chart, the pair continues its medium-term downward trend. Sellers of the pair managed to break the support at 1.3300, and at the moment the price can test the important range of 1.3200-1.3100. It is worth considering that the mentioned range is quite strong, since the price at these levels consolidated in June-July, after which it increased sharply. So the probability is high to see a slowdown in the downward movement at 1.3200-1.3100.

GBP/USD

On the GBP/USD chart, the British currency continues to test support at the alligator lines on the daily timeframe. At the moment, the price is clamped in a rather narrow range of 1.2670-1.2740. A breakout of the upper boundary may contribute to a sharp rise to 1.3000. A break of the lower boundary could send the pair to retest 1.2500-1.2400. No significant fundamental data from the UK is expected until the end of the week, but on New Year's Eve, both multidirectional spikes and false breakouts in both directions are possible in the thin market.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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