ATFX Market Outlook 24th January 2025

ATFX Market Outlook 24th January 2025

Bank of Japan's Rate Decision: Navigating the Japanese Yen and JPN225 Future

Opinion Today:

US Initial claims increased slightly, but the labor market remains solid. The S&P 500 reached a record high, with the Dow up 0.92%, the S&P 500 rising 0.53%, and the Nasdaq gaining 0.22%. 

The dollar dipped after President Trump called for lower interest rates, with the dollar index falling 0.19% to 108.00. The euro rose to 1.0422, GBP/USD increased to 1.2354, and the yen gained to 155.99 ahead of the BoJ's interest rate decision. 

Spot gold was slightly down 0.05% at $2,753.69, while oil prices fell 1% as Trump urged OPEC to lower prices, adding uncertainty to global economic growth and energy demand.

The Bank of Japan is set to announce its first rate decision of the year on Friday, with markets anticipating a possible increase in the key short-term rate from 0.25% to 0.5%. This would mark the first rate hike since July and raise borrowing costs to their highest level since the 2008 financial crisis. With a hike primarily expected, traders focus on Governor Kazuo Ueda's post-meeting press conference for insights on future rate increases.

Key Data:

11:00 BoJ Interest Rate Decision *** 

14:30 BoJ Press Conference *** 

16:30 EU GERMANY Manufacturing & Services PMI Flash JAN ** 

17:00 EU Manufacturing & Services PMI Flash JAN ** 

17:30 GB Manufacturing & Services PMI Flash JAN **

22:45 US Manufacturing & Services PMI Flash JAN *** 

23:00 US Michigan Consumer Sentiment Prel JAN *** 

Key Data and Events Next Week:

Australia, China and Hong Kong Holiday

BoJ Minutes, FOMC, BoC, ECB Interest Rate Decision and Press Conference

US Initial Jobless Claims, Germany CPI and US PCE Price Index

EUR/USD

1.0466/1.0497 Resistance

1.0366/1.0336 Support 

EUR/USD remained stable around 1.0400 on Thursday after a strong beginning to the week. Low trading volume continued due to a lack of economic data. Bulls struggled to gain momentum near the 50-day EMA at 1.0460. Although technical indicators show bullish trends, sustained momentum is still uncertain. This has led traders to await confirmation of a higher low pattern before entering the market.  In addition, the latest manufacturing and service PMIs from Germany and the eurozone will provide guidance today.

GBP/USD

1.2393/1.2450 Resistance 

1.2211/1.2153 Support 

Sterling rose against the US dollar yesterday, finding support at 1.2300. After testing the 20-day moving average for two days, it faced resistance at 1.2376. Failure to break through this level could lead to a decline below 1.2300, while a breakout could push it above 1.2400. Focusing today, the latest UK manufacturing and service PMIs will provide guidance today.

USD/JPY

156.90/157.30 Resistance

155.18/154.78 Support 

The USD/JPY briefly reached a one-week high yesterday but quickly reversed direction. The resistance level above 156.70 continued to hold firm. Additionally, the US dollar did not provide the expected support, and the market is anticipating a rate hike from the Bank of Japan today. From a technical perspective, the exchange rate has faced resistance from the 10-day moving average, indicating a bearish bias in the market. We will need to wait for the Bank of Japan's position following the rate hike to see if it can further guide the market's direction.

USD/CAD

1.4456/1.4487 Resistance

1.4327/1.4297 Support

The USD/CAD pair saw a three-day rally, supported by falling oil prices. Currently, oil is around 1.4370, where daily moving averages converge. A breakout could boost momentum toward 1.4400, while resistance may lead to a retreat to about 1.4300.

U.S Crude Oil Futures (Mar)

74.91/75.85 Resistance 

72.82/71.90 Support

Trump urged Saudi Arabia and OPEC to lower oil prices, leading to a more than 1% drop in crude oil during the US trading session. This marked a six-day decline and the most significant drop over a week, with the 20-day moving average now acting as resistance at $75. Oil prices hit a two-week low in the morning, with the $73 level expected to provide support.

Spot Gold

2767/2772 Resistance

2750/2746 Support

Spot Silver

30.82/30.97 Resistance

30.20/30.08 Support 

Gold fell overnight and then recovered most of its losses. The Bulls may try to move up again after a short break. This morning, the gold price tested this week's high to see if it could break through and further point above $2,770. This means that as it moves closer to the record high, support shifts to $2,750 and below.

US30

45078/45452 Resistance 

44228/43847 Support 

The Dow rose and continued to rise, achieving a new high on December 9 last year. It is essential to steadily approach these high levels, as positive news will be necessary to sustain this momentum. Investors should continue to monitor the bull's momentum; without favourable developments, there may be a full or partial adjustment risk.

NAS100

22127/22312 Resistance

21708/21520 Support 

Large tech stocks were mixed overnight, with Netflix and Meta posting significant gains while others showed mild performances. The Nasdaq opened low but closed at a new high since December 18. Investors should consider consolidating at this level, as the 22,000 mark is crucial for bulls to overcome next.

BTC (Bitcoin)

105600/107500 Resistance

100929/99458 Support

Bitcoin (BTC) trades at $103,000 following President Trump's executive order to form a Presidential Working Group on digital assets. The market shows bullish sentiment, particularly on the Chicago Mercantile Exchange, with a 20:1 ratio of bullish to bearish bets on BTC futures. A breakout below $102K could establish a demand zone as BTC consolidates between $90,000 and $110,000.

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