KEY HIGHLIGHTS 

• EUR/USD Consolidates Amid Light Volumes, Focus on Fed.
• GBP/USD Subdued as Market Awaits Key Economic Data.
• USD/JPY Bullish Tone Supported by Fed’s Hawkish Stance.
• AUD/USD Declines, Focus Shifts to RBA Minutes.

INTRODUCTION

Currency markets kicked off the week cautiously, with major pairs such as EUR/USD, GBP/USD, USD/JPY, and AUD/USD consolidating amid subdued trading volumes. Investors are focusing on central bank policies, economic data, and geopolitical developments to shape near-term price movements.

EUR/USD: Consolidation Amid a Holiday-Shortened Week

The EUR/USD pair remains steady, trading near 1.0440 during Monday’s European session. This consolidation comes as markets prepare for a holiday-shortened week, with Christmas Eve and Boxing Day affecting trading schedules on Wednesday and Thursday.

Key Factors Influencing EUR/USD

• US Dollar Stabilization: After a steep decline on Friday due to weaker-than-expected US Personal Consumption Expenditure (PCE) Price Index data, the US Dollar (USD) has stabilized. Core PCE inflation, the Federal Reserve’s preferred metric, rose by 2.8% year-over-year, slightly below the 2.9% forecast. This has raised uncertainties about the Fed’s potential rate-cut cycle in 2025.
• Economic Calendar: Monday’s schedule is light, with investors turning their attention to Tuesday’s release of US Durable Goods Orders for November, expected to show a 0.4% decline after a 0.3% rise in October.

Technical Overview

• Moving Averages:
  • Exponential: MA10 (1.0446), MA20 (1.0491), MA50 (1.0619) – All indicating bearish momentum.
  • Simple: MA10 (1.0454), MA20 (1.0496), MA50 (1.0633) – Negative crossover confirming bearish trends.
• Indicators:
  • RSI: 38.87 (Sell Zone)
  • Stochastic Oscillator: 19.35 (Neutral)
• Key Levels:
  • Resistance: R1 (1.0846), R2 (1.0988)
  • Support: S1 (1.0384), S2 (1.0242)

Trade Suggestion

Limit Sell: 1.0460 | Take Profit: 1.0344 | Stop Loss: 1.0548

GBP/USD: Range-Bound with Limited Upside Potential

GBP/USD begins the week trading near the 1.2570 level, maintaining a narrow range during the Asian session. The pair struggles for upward momentum as market participants weigh conflicting factors.

Key Factors Influencing GBP/USD

• US Dollar Weakness: The USD remains under pressure following softer PCE inflation data, allowing the GBP/USD pair to rebound modestly.
• Federal Reserve Outlook: The Fed’s hawkish stance, combined with elevated US Treasury yields and geopolitical tensions, supports USD demand, potentially capping GBP/USD gains.
• Bank of England Focus: Traders await the BoE’s Quarterly Bulletin for additional insights, alongside the release of the US Consumer Confidence Index later in the day.

Technical Overview

• Moving Averages:
  • Exponential: MA10 (1.2617), MA20 (1.2658), MA50 (1.2765) – All bearish.
  • Simple: MA10 (1.2640), MA20 (1.2667), MA50 (1.2781) – Bearish trends confirmed.
• Indicators:
  • RSI: 40.72 (Neutral Zone)
  • Stochastic Oscillator: 18.88 (Neutral)
• Key Levels:
  • Resistance: R1 (1.2970), R2 (1.3102)
  • Support: S1 (1.2542), S2 (1.2410)

Trade Suggestion

Limit Sell: 1.2609 | Take Profit: 1.2472 | Stop Loss: 1.2711

USD/JPY: Bullish Momentum Persists

The USD/JPY pair maintains an intraday bullish tone, trading higher during Monday’s European session. Market participants remain cautious about the Bank of Japan’s (BoJ) rate-hike strategy.

Key Factors Influencing USD/JPY

• Yield Gap: The widening US-Japan yield gap, driven by the Fed’s hawkish policy stance, supports USD/JPY’s bullish trajectory.
• BoJ Speculations: Robust Japanese inflation data fuels speculation about a potential BoJ rate hike in early 2025, but skepticism about the central bank’s commitment limits JPY gains.
• Geopolitical Factors: Trade war concerns and potential intervention by Japanese authorities add to market uncertainties.

Technical Overview

• Moving Averages:
  • Exponential: MA10 (154.67), MA20 (153.65), MA50 (152.27) – Positive crossovers indicating bullish momentum.
  • Simple: MA10 (154.33), MA20 (152.48), MA50 (152.75) – Bullish trend confirmed.
• Indicators:
  • RSI: 64.64 (Buy Zone)
  • Stochastic Oscillator: 87.69 (Neutral)
• Key Levels:
  • Resistance: R1 (154.77), R2 (156.48)
  • Support: S1 (149.21), S2 (147.49)

Trade Suggestion

Limit Buy: 155.35 | Take Profit: 158.80 | Stop Loss: 153.19

AUD/USD: Australian Dollar Faces Resistance

The Australian Dollar (AUD) stabilizes after a brief rally, as softer US inflation data eases concerns over the Fed’s monetary policy trajectory.

Key Factors Influencing AUD/USD

• RBA Policy Outlook: Market participants await Tuesday’s RBA Meeting Minutes for clues about potential rate adjustments in early 2025.
• US Dollar Pressure: Weaker PCE inflation data continues to weigh on the USD, offering short-term relief to AUD.

Technical Overview

• Moving Averages:
  • Exponential: MA10 (0.6307), MA20 (0.6367), MA50 (0.6479) – All bearish.
  • Simple: MA10 (0.6312), MA20 (0.6387), MA50 (0.6503) – Negative crossovers confirm downtrend.
• Indicators:
  • RSI: 30.25 (Sell Zone)
  • Stochastic Oscillator: 15.38 (Neutral)
• Key Levels:
  • Resistance: R1 (0.6641), R2 (0.6701)
  • Support: S1 (0.6447), S2 (0.6387)

Trade Suggestion

Limit Sell: 0.6293 | Take Profit: 0.6199 | Stop Loss: 0.6366

Elsewhere in Forex Markets

• USD/CAD: Up 0.08% to 1.4387
• USD/CHF: Up 0.18% to 0.8947
• EUR/GBP: Down 0.14% to 0.8287
• EUR/AUD: Down 0.21% to 1.6647
• AUD/NZD: Up 0.01% to 1.1064
• USD/CNY: Up 0.04% to 7.2985
• AUD/SEK: Up 0.05% to 6.9044

Key Economic Events & Data Releases

• (GBP) GDP YoY (Q3): Forecast 0.2% (Previous: 1.0%) at 12:30.
• (GBP) GDP QoQ (Q3): Forecast 0.1% (Previous: 0.4%) at 12:30.
• (USD) CB Consumer Confidence (Dec): Forecast 112.9 (Previous: 111.7) at 20:30.

Conclusion

The forex market begins the week on a subdued note, with EUR/USD consolidating and GBP/USD remaining range-bound. While geopolitical tensions and central bank policies dominate the narrative, traders focus on key data releases for directional cues.