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Daily FX Report

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Daria Efanova

Daria Efanova Head of Research

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EUR / USD

The EUR/USD currency pair is currently experiencing bearish momentum due to the divergence in monetary policy between the European Central Bank (ECB) and the Federal Reserve. Technical indicators suggest the pair is likely to remain within a tight range of 1.0450 to 1.0550 in the short term, with resistance at higher levels.

The ECB's recent rate cut to 3% and its dovish stance have weakened the euro, while the US dollar remains strong, supported by firm inflation data and higher bond yields. Disappointing German trade data and geopolitical uncertainties within the Eurozone further compound the euro's decline. Market participants are closely watching the upcoming Federal Open Market Committee (FOMC) meeting for further direction.

Overall, the euro's trajectory remains under pressure, with potential for further declines if key support levels are breached.

USD / JPY

The USD/JPY currency pair is currently experiencing significant volatility due to upcoming interest rate decisions by the Federal Reserve and the Bank of Japan. Technical analysis indicates that USD/JPY is consolidating below the 153.00 level, with potential for further upside if it breaks above 153.50. Resistance is seen at 153.80 and higher, with a bullish scenario potentially targeting the previous high around 156.63.

 The Fed's anticipated 25 basis point rate cut could influence the pair's trajectory, while rising U.S. Treasury yields continue to support the dollar, potentially driving the pair higher. The Bank of Japan's uncertain decision, with a possible rate hike, could strengthen the yen and push USD/JPY lower.

Overall, the interplay between the BoJ's monetary policy and U.S. Treasury yields will continue to shape the outlook for the USD/JPY currency pair.

GBP / USD

The GBP/USD currency pair is currently under downward pressure due to the strengthening US dollar, bolstered by better-than-expected US Producer Price Index data. The British pound's weakness is further exacerbated by disappointing UK economic indicators, such as GDP contraction and widening trade deficits. The Bank of England's anticipated decision to hold interest rates steady may offer some stability, though concerns about potential rate cuts in 2025 persist.

Technical analysis shows GBP/USD trading below key resistance levels, with immediate support around 1.25890, indicating a bearish sentiment. A break below this support could lead to further declines, while surpassing the 1.26641 pivot point might suggest a shift towards bullish momentum.

Overall, the pair is likely to remain pressured by economic uncertainties and monetary policy divergences between the UK and the US.

EUR / CHF

The recent 50 basis point rate cut by the Swiss National Bank (SNB) has led to a depreciation of the Swiss franc, impacting the EUR/CHF currency pair. This move suggests a potential strengthening of the euro against the franc, although the euro faces its own pressures from the European Central Bank's (ECB) rate cuts. Despite the franc's depreciation, its safe-haven status provides some resilience, influencing the EUR/CHF dynamics.

The pair has shown modest upward movement, fluctuating between 0.931 and 0.936, and remains above the 20-day moving average of 0.93. A bullish scenario could see the pair testing resistance at 0.944, while a bearish scenario might lead to a decline towards the support level at 0.932. Investors should closely monitor future policy decisions by both the SNB and ECB, as they will be crucial in determining the currency pair's trajectory.

Economic Calendar

13122024

Contents

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

This report was prepared with the assistance of artificial intelligence.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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