USDJPY, GBPUSD, AUDUSD
US CPI --> USDJPY
The latest economic data shows a mixed picture. Nonfarm payrolls increased by 256k in December, beating expectations and lowering the unemployment rate to 4.1%. However, inflation remains persistent, with annual US CPI expected to rise to 2.8% from 2.7% before. The Federal Reserve's struggle to bring inflation closer to its 2.0% target continues, influencing monetary policy decisions. Markets are pricing in fewer rate cuts for 2025, making the upcoming CPI readings crucial.
USDJPY has been on the sidelines over the past month, failing to create strong days, but it successfully posted a new six-month high of 158.86 on Friday. In case of a steeper bearish movement, then the price could hit the 20-day simple moving average (SMA) at 156.80 ahead of the 156.00 round mark. Below that, the 50-day SMA at 154.35 and the medium-term uptrend line may halt bearish actions. On the other hand, a move beyond the 158.60 resistance could send traders until 160.20. The MACD and RSI indicate a bearish correction.
UK CPI --> GBPUSD
This week's data will be significant for the economy, especially the UK CPI figures on Wednesday. Should the headline rate remain unchanged at 2.6% y/y or rise further in December, it could hurt Bank of England rate cut predictions for February. Additionally, core and services CPI rates will be watched. Investors, though, may wait for Thursday's GDP statistics to see if growth improved in November. Stronger GDP growth and a solid CPI number could ease stagflation fears, helping the pound rebound.
GBPUSD plunged to a fresh 15-month low earlier today, creating the fifth consecutive red day and endorsing the strong negative scenario. Further losses could see the market testing the 1.2070 support level, taken from the lows in October 2023. Even lower, the 1.1840 support (the bottom from January 2023) may pause bearish actions, but traders should be cautious of a retracement near psychological marks such as 1.2000 and 1.1900. However, a potential rebound in the market cannot be excluded from the equation as the technical oscillators look to be oversold.
Chinese GDP --> AUDUSD
Chinese authorities face deflation and slow growth, while the Fed faces a strong economy and persistent inflation. Despite Beijing's recent economic stimulus measures, the forecast for GDP growth is to rise to 5.0% y/y in the fourth quarter from 4.6% in Q3. There will be a press briefing on Friday to explain the GDP report and December's industrial output and retail sales data. Before that, Monday's monthly trade numbers will be examined.
AUDUSD is slightly higher from the nearly five-year low of 0.6130 that was posted earlier in the day, with the first resistance coming from 0.6180. Even higher, the medium-term falling trend line at 0.6235, near the 20-day SMA, may halt bullish movements. On the other hand, steeper decreases may send the market below the 0.6100 and 0.6000 psychological marks, testing the 161.8% Fibonacci extension level of the upward wave from 0.6347 to 0.6940 at 0.5980. The Stochastics and MACD indicate a strengthening of the negative momentum in the price.