Tomorrow, January inflation data in the United States will be presented: the consumer price index in monthly terms is projected to slow from 0.3% to 0.2%, and in annual terms from 3.4% to 3.0%, the upper limit of the target range of the US Federal Reserve. The indicator excluding food and energy prices may be adjusted from 3.9% to 3.8%. With the opening of the American session, the focus will shift to January inflation data in the United States. Analysts do not expect significant fluctuations in the indicator, but still hope that the publication will become a new impetus for the early easing of monetary policy by the US Federal Reserve. Thus, experts expect that the consumer price index will decrease from 3.4% to 3.0% on an annual basis and from 0.3% to 0.2% on a monthly basis. Markets have almost completely revised expectations for the regulator's March meeting and are now inclined to believe that the interest rate will be adjusted by 25 basis points in May.
The EUR/USD pair is showing moderate growth, developing upward dynamics since February 6. The euro is testing the 1.0790 mark for an upward breakout, updating local highs from February 2. Immediate resistance can be seen at 1.0805, an upward breakout could trigger an increase to 1.0897. On the downside, immediate support is seen at 1.0767, a break below could take the pair towards 1.0750.
At the same time, activity on the market remains quite restrained, and trading participants are in no hurry to open new positions ahead of the publication of macroeconomic statistics. On Wednesday, investors will evaluate the final data on eurozone GDP for the fourth quarter of 2023, as well as December statistics on industrial production. Forecasts suggest the region's economy will gain another 0.1% annual growth, while industrial output could fall 4.1% from -6.8% in the previous month. Last Friday, the eurozone published data on inflation in Germany: the consumer price index in January was 0.2%, the same as a month earlier, which coincided with market expectations, and in annual terms the figure remained at 2.9%.
Technical analysis of EUR/USD shows that a new upward channel has formed based on last week’s highs. Now the price has moved away from the upper limit and may continue to decline.
The GBP/USD pair shows mixed trading dynamics, holding near the 1.2630 level and maintaining an upward direction after a noticeable correction at the beginning of last week. Immediate resistance can be seen at 1.2667, a break higher could trigger a rise towards 1.2772. On the downside, immediate support on the GBP/USD chart is seen at 1.2598, a break below could take the pair towards 1.2560.
Market activity remains quite low ahead of the publication of macroeconomic statistics from the US and UK. Tomorrow investors will evaluate the UK labour market report for December-January. Average hourly wages including bonuses are projected to slow sharply from 6.5% to 5.7%, and the rate excluding bonuses from 6.6% to 6.0%. In addition, the unemployment rate could decrease from 4.2% to 4.0%. According to preliminary estimates, the consumer price index will lose 0.3% in January after rising 0.4% in the previous month, with the core index correcting from 5.1% to 5.2%. Bank of England Governor Jonathan Haskell said last week that signs of easing inflation in the domestic economy were encouraging, but more evidence of a sustained decline was needed to begin a shift to dovish rhetoric. At the regulator's last meeting, Haskell was one of the two officials who voted for another rate hike. In addition, economists in the City of London have changed their forecasts for the number of cuts in borrowing costs this year from six to three.
Based on the highs of last week, a new ascending channel has formed. Now the price has moved away from the upper limit and may continue to decline.
The USD/JPY pair shows mixed dynamics, holding near the 149.00 mark. Strong resistance can be seen at 149.57, a break higher could trigger a rise towards 150.00. On the downside, immediate support is seen at 148.78. A break below could take the pair towards 147.61.
Market activity remains subdued as traders are in no hurry to open new positions ahead of tomorrow's release of US inflation statistics. The Bank of Japan is considering the possibility of tightening monetary policy. Last Friday, the head of the Japanese department, Kazuo Ueda, noted that soft financing conditions were likely to continue after officials abandon their policy of negative interest rates. The market expects that the value could be increased as early as March. However, further development of the trend is not yet expected. On Thursday, Japan will publish GDP data for the fourth quarter of 2023, as well as December statistics on industrial production. Forecasts call for the economy to gain 0.3%, after contracting 0.7% in the previous quarter, and for the year to grow 1.4%, following a -2.9%.
The ascending channel on the USD/JPY chart remains. Now the price is in the middle of the channel and may continue to decline.
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