December 27, 2023 – The U.S. Dollar Index (USD/DXY) fell back from 101.70 to 101.45 in a holiday-affected week, its lowest level since July. The foreign exchange market performed differently, with major currencies showing the following trends:
USD/JPY:
USD/JPY edged higher to 142.45 from 142.35 after Japan’s unemployment rate was unchanged at 2.5% in November.
The dollar hit an overnight high of 142.67 yen before easing slightly.
AUD/USD:
The Australian dollar (AUD/USD) broke through the 0.68 cent resistance level and closed at 0.6822.
AUD/USD hit an overnight high of 0.6827 and recorded an overnight low of 0.6797.
EUR/USD:
The euro (EUR/USD) rose 0.23% to 1.1043, hitting a four-month high.
The currency experienced a high of 1.1045 and a low of 1.1009 overnight.
GBP/USD:
GBP (GBP/USD) rose above 1.2700 to settle at 1.2722, above 1.2685.
GBP/USD has an overnight high of 1.2721 and a low of 1.2684.
market Overview:
The U.S. dollar index hit its lowest level since July, falling to 101.45.
Stocks were higher on Wall Street, with the S&P 500 nearing a record high of 4,785.
Global bond yields changed little, with the U.S. 10-year Treasury yield at 3.89%.
Data released included the U.S. PCE price index for November, which fell to 0.1%, missing expectations of 0.2%.
Looking to the future:
Trading is expected to remain thin with lower volumes during the holiday-affected week.
Data scheduled for release include a summary of the Bank of Japan‘s opinion, November’s annual housing starts and construction orders.
China announced industrial profits for November, and the United States announced the Richmond Fed Manufacturing Index and the Dallas Fed Services Index.
Trading perspective:
The dollar continues to fall slightly and is expected to stabilize at current levels.
USD/JPY is likely to find support at 142.30 and 142.00, with resistance at 142.70 and 143.00. Trades are likely to range between 142.00-143.00.
AUD/USD may consolidate in the range of 0.6790-0.6840, with direct support at 0.6790 and resistance at 0.6840.
GBP/USD is likely to trade in the 1.2650-1.2750 range, with support at 1.2680 and 1.2640 and resistance at 1.2715, 1.2730 and 1.2760.
