Currency markets remain choppy throughout January with moves favouring intraday targets. Medium to Long term targets remain wide open going into a new month. Lets recap;
NFP data smashed market expectations sending DXY flying - further downside in sight for USD crosses.
FOMC leave rates untouched & don’t suggest cuts in March either.
Gold in real danger of a collapse.
NFP Surprise
The first Friday of the month is past, and it was a hot one. NFP numbers nearly doubles market expectations forcing heavy buying in USD.
We expect further extension on USD crosses into higher time frame targets.
2024 consensus for USD crosses remains higher however Q1 may well see a hard dip first allowing favourable buying prices.
EURUSD downside target: 1.0730 - 1.0670, fingers crossed for a pullback to enter on Monday morning, but may just run away to the downside throughout Asia.
EURUSD 4HR
DXY 4Hr candlestick chart
FOMC doesn’t offer much
Wednesday FOMC didn’t bring many surprises. Markets remained relatively calm ahead of NFP.
US rates remain unchanged with the FED not suggesting any sign of cuts in the near term as inflation remains high, although slowing.
Okay enough of the jargon - how is this helpful?
Well it ties into the technical narrative that USD strength may continue with no sudden cuts in sight. The influx of foreign money will likely continue to flow into the USD in search for rate differentials.
Moral of the story - buy USD for the meantime until alerted otherwise by the market.
Gold tethering on collapse
SO far this year the correlating USD and gold have not went hand in hand. However, when we see red folder news, we can continue to expect movements in the same direction (Gold down, EURUSD down) as money comes from Gold into the Dollar.
We have continued to spike down and through $2030 and reject, basically all week. However, post NFP and yet another influx of sellers could just be the push gold needs.
Weekly timeframe appears extremely weak and calls for a bearish snap down towards $1978.
Stay Safe.