Trade of the week
EURUSD Struggles to Push Higher
A relatively calm week ahead data-wise as traders leave for a well-deserved Christmas on Wednesday. We would expect the euro to pull back for lack of a significant catalyst. Some medium-impact data like US new home sales and initial jobless claims could stir up intraday volatility.
GBPUSD at 30-Day MA
Prime Minister Boris Johnson received the green light for his Brexit deal from a Tory-controlled parliament on Friday. However, the pound sterling gave up its election gains as the UK will now face the reality of negotiating a trade deal with the European bloc. Enthusiasm has turned into a new phase of concerns and we would expect the pound to be on a corrective course.
The price has reached the psychological level of 1.3000 on the 30-day moving average, and a rebound at that level could lift the pound towards 1.3200.
AUDJPY Tests July’s High
The Aussie has recouped losses from last summer thanks to improved economic prospects. Solid job data have eased fears of deeper rate cuts by the RBA. In the meantime, progress in the US-China trade talks may offer relief to the Australian export industries. As markets turned risk-on, the Australian dollar is likely to outperform the safe-haven Japanese yen for weeks to come. The pair is about to challenge the July high of 76.00, a break above could trigger an extended rally. On the downside, 74.00 is a key support to monitor.
WTI Meets Strong Resistance
The OPEC+ members’ output reduction policy has sustained the latest rally. Combined with the prospect of a de-escalation in the trade disputes which would boost demand, market sentiment has turned upbeat and could provide further support to the rally. Crude price is about to test the psychological level of 62 from last September. In case of a pullback towards the moving averages, 58 will be an important level to keep the optimism intact.