The US inflation report from the United States has affected virtually all the major FX pairs. A reduction in inflation suggests that the U.S. economy is performing better, thereby strengthening the USD. This has provided a clear direction for some of the major FX pairs. Meanwhile, some of these pairs have seen a corrective bounce in a positive direction.
EURUSD: Bearish
The EURUSD pair has been edging lower since the strong downward correction that occurred in the market on January 2nd. This downward correction has been at a reduced pace in recent sessions, but the inflation report seems to have significantly strengthened the bearish move.
This has pushed the price of this major FX pair below the baseline at the 1.0818 mark. Considering the appearance of the last price candle, bearish momentum seems quite strong, as the corresponding price candle lacks a lower shadow. Also, price action has moved further below the 21-day Moving Average (MA) line. Simultaneously, the Stochastic Relative Strength Index (SRSI) indicator has given several jagged crossovers, subsequently resulting in a bearish trajectory. Consequently, this suggests that bearish forces are dominant, and more price declines may be recorded toward the 1.0750 mark.
GBPUSD: Bearish
The GBPUSD seems to have a clear bearish path now, as its price action moves further below the 21-day MA line. Price action for this major FX pair, in previous sessions, stayed very close to the MA line consolidation. However, the strengthening of the U.S. economy has given the market a clear direction, and traders can now take sides. The ongoing session has presented minimal losses but at a notable distance from the 21-day MA line. This has brought the pair to trade below the 1.2680 mark.
Likewise, a strong bearish crossover seems to have been delivered on the RSI indicator. Consequently, this causes price action in this market to focus on retracing lower price levels. The distance between the leading and lagging lines of the SRSI suggests that bearish momentum is strong and the market may grow more volatile, strengthening the possibility of price action coming closer to support near the 1.2620 mark.
USDCHF: Bullish
The USDCHF pair is one of the major FX pairs that have benefited positively from the strengthening of the U.S. economy. This pair has gathered additional minimal profits in today’s trading session. Also, the last price candle here has been able to bring the pair above the 21-day MA line. Nevertheless, technical indicators in this market seem a bit divergent, as the Moving Average Convergence Divergence (MACD) indicator continues to descend slightly toward the equilibrium level.
However, should more favorable fundamentals concerning the U.S. economy arrive later today or this week, this pair may strengthen in its gains. Consequently, this will initiate a bullish crossover on the MACD indicator, and buying confidence will strengthen, bringing price movement to focus on more elevated price marks near 0.8750.
USDCAD: Bullish
Following a breakthrough of the price resistance level at the 1.3510 mark about six sessions ago, the USDCAD pair has only witnessed yet another minimal gain. Here, the pair has experienced a slight price rebound due to USD strength. Price action in this market remains bearish nonetheless.
The current price of the pair lies a considerable distance below the 21-day MA line. Meanwhile, the MACD indicator strongly suggests that bearish pressure is prevalent, evident from the downward trajectory of its lines and the appearance of red bars below the equilibrium level. This suggests that despite the dollar strengthening, this pair may continue its downward path should the CAD gather more strength. Therefore, with eyes on market-influencing fundamentals, traders can speculate a retracement to the 1.3350 mark.
AUDUSD: Bearish
The AUDUSD pair has finally found its way below a price baseline at the 0.6600 mark. A significant part of this move was accomplished in the previous session with a sharp correction towards the 0.6600 mark. Moving on, the ongoing session has achieved the goal of breaking below the mentioned baseline. It is worth noting that price action only crossed below the 21-day MA line in today’s trading activity.
As a result, this may strengthen bearish anticipations, and the downward correction may intensify further. However, the MACD indicator line keeps trending upward. Still, a close examination of the MACD leading indicator line reveals a minor deflection, signaling that downward forces may be strengthening in this market. Therefore, traders can anticipate price action to descend towards the 0.6550 mark.
EURJPY: Bearish
The EURJPY market continues to puzzle traders as its choppy characteristics restrain price action below the 21-day MA line. Price action had retreated below the 21-day MA line in the previous session, but this pair failed to capitalize on the eurozone’s GDP report. This has kept the pair below the 21-day MA line as of the time of writing.
The ongoing session has only printed the most minimal profits and has fallen below the close of the previous session, resulting in losses for traders in the market. Meanwhile, the MACD continues to indicate that prices may descend lower in the coming sessions. This is because the lines of this indicator continue to fall towards the equilibrium level, while its bars are solid red. Typically, this is indicative of growing bearish momentum. So, traders can target further price declines towards the support at the $159.00 price mark.
USDJPY: Bullish
USDJPY looks choppy over recent trading sessions. Despite minimal gains in price action, the market still manages to have a downward trajectory. The ongoing session has further produced another minimal gain. However, it is too early to tell if the minimal gains printed will extend further upward. This is because the MACD indicator keeps revealing that bearish momentum is on the rise as the indicator lines descend toward the equilibrium level.
Therefore, fundamentals will play a key role in deciding if the market will extend the upside correction or not. One thing we know is that the better inflation report from the United States has played a role in today’s minimal gains. Therefore, traders will closely monitor fundamentals pertaining to this market for further guidance toward the 148.20 price mark.
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