GBP/JPY could continue to rise if it breaks above key technical resistance levels.

Forex

Summary:

GBP/JPY is trading around 197.68, recovering slightly after hitting key support at 197.50. The pound received support from expectations that the Bank of England (BoE) will maintain a steady monetary policy, while the Japanese yen was pressured by weak manufacturing PMI data from Japan...

BUY GBPJPY

Close Time

CLOSED

197.620

Entry Price

198.500

197.200

192.593 +0.489 +0.25%

42.0

Pips

Loss

197.200

197.191

Exit Price

197.620

Entry Price

198.500

As of December 30, 2024, GBP/JPY is trading around 197.68, rebounding from strong support at 197.50. The yen’s weakness was driven by Japan’s December manufacturing PMI data, which came in at 49.6 – below the 50 threshold that reflects a contraction in manufacturing activity. This reinforced expectations that the Bank of Japan (BoJ) will continue to maintain its ultra-loose monetary policy in the near term.

On the other hand, the pound received support from expectations that the BoE will keep interest rates unchanged as UK inflation remains above target. However, low liquidity at the end of the year could amplify price swings.

Market psychology

Current market sentiment shows a bias towards the pound as investors view the UK’s economic outlook more positively than Japan’s. The Japanese yen continues to be under pressure from weakness in the manufacturing sector and expectations that the BoJ will not raise interest rates in the near term.

Trading data on the M15 chart shows increased buying pressure around the support zone at 197.50, reflecting investors' expectations for a short-term technical recovery.

Technical analysis

GBP/JPY could continue to rise if it breaks above key technical resistance levels._1

On the M15 chart, the price is currently hovering near the middle Bollinger Bands at 197.68 and is likely to move towards the upper band around 198.00 if the bullish momentum continues.

The Stochastic indicator (5,3,3) has left the oversold zone and is crossing above the signal line, signaling a possible short-term price increase.

The price has broken above the Ichimoku cloud on the M15 timeframe, confirming the short-term uptrend. If the rate breaks above the resistance at 198.00, the next target will be the strong resistance zone at 198.50 – where the MA200 on the H1 timeframe converges.

Trading Recommendations

Overall, GBP/JPY is in a technical recovery phase after hitting key support at 197.50. However, low liquidity at the end of the year could lead to larger-than-usual volatility and affect the price trend.

Based on technical and fundamental analysis:

Entry: Buy at current levels around 197.68 or when price retests strong support at 197.50.

Take Profit: Set profit target at nearest resistance zone at 198.50 or higher at 199.00 if bullish momentum is strong.

Stop Loss: Place stop loss below the important support level at 197.20 to protect capital in case price breaks down.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The AUD/USD pair is trading around 0.6224, recovering slightly after hitting key support at 0.6200. The AUD was supported by Australian government bond yields rising to their highest level in a month, while the USD was pressured by falling US bond yields and low trading volumes at the end of the year...

BUY AUDUSD

EXP

EXPIRED

0.62000

Entry Price

0.62550

0.61550

0.62854 +0.00133 +0.21%

Pips

EXPIRED

0.61550

0.62128

Exit Price

0.62000

Entry Price

0.62550

On December 30, 2024, AUD/USD was trading around 0.6224, up slightly from the previous session after hitting a key support zone at 0.6200 – the lowest level since October 2022. This recovery took place in the context of the market trading with low liquidity at the end of the year, when large investors withdrew from the market to prepare for the holiday season.

The yield on the 10-year Australian government bond rose to 4.50%, near its highest level in a month, helping the AUD find some support. At the same time, the yield on the 10-year US bond fell to 4.59%, putting pressure on the USD and facilitating a recovery for AUD/USD.

However, the long-term outlook for AUD/USD remains under pressure from negative factors such as the weakening economy of China – Australia’s largest trading partner – and the expected easing of monetary policy from the Reserve Bank of Australia (RBA) in 2025.

Market psychology

The current market sentiment reflects caution as investors assess the near-term outlook for AUD/USD amid low liquidity and a lack of momentum from key economic data. The dollar remains under pressure after the Fed signaled that the pace of rate cuts will slow through 2025, although the Fed maintained a hawkish stance on the inflation outlook.

On the other hand, the AUD received support from rising bond yields and expectations that the RBA will maintain steady monetary policy until at least the second quarter of 2025. However, market sentiment was still dominated by concerns about weak demand from China and the possibility of the USD strengthening again if US economic data improves in the coming weeks.

Trading data on the M15 chart shows increased buying pressure around the support zone at 0.6200, reflecting investors' expectations for a short-term technical recovery.

Technical analysis

AUD/USD Rebounds From 0.6200 Support: Is the Uptrend Sustainable?_1

On the M15 chart, the AUD/USD rate is hovering near the strong support zone at 0.6200 – this is the convergence zone of the lower Bollinger Bands and the important horizontal support line.

Price is currently hovering near the middle Bollinger Bands at 0.6224, suggesting a potential further recovery if it breaks above the nearest resistance zone at 0.6235.

The Stochastic indicator (5,3,3) has left the oversold zone and is crossing above the signal line, signaling a possible short-term price increase.

On the M15 timeframe, the price has broken the Ichimoku cloud and is retesting the MA50 at 0.6235 – this is an important resistance to overcome to confirm the uptrend. If the price breaks through the resistance at 0.6235, the next target will be the strong resistance zone at 0.6255 – where the MA200 on the H1 timeframe converges.

Trading Recommendations

AUD/USD appears to be in a technical recovery phase after hitting key support at 0.6200. However, the long-term trend remains under pressure from negative fundamentals such as China’s weak economic outlook and the long-term strength of the USD.

Based on technical and fundamental analysis:

Entry: Buy at current levels around 0.6224 or when price retests strong support at 0.6200.

Take Profit: Set profit target at nearest resistance zone at 0.6255 or higher at 0.6285 if bullish momentum is strong.

Stop Loss: Place stop loss below the important support level at 0.6185 to protect capital in case price breaks down.

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

The robust US economy has mitigated expectations for a Fed rate cut cycle, while President-elect Trump's stringent tariff threats have bolstered bullish bets on the US dollar. Consequently, the dollar is on track for its strongest year in nearly a decade.

SELL USDX

Close Time

CLOSED

107.750

Entry Price

106.730

108.500

107.640 -0.070 -0.06%

75.0

Pips

Loss

106.730

108.500

Exit Price

107.750

Entry Price

108.500

Fundamentals

Throughout 2024, the US dollar's trading performance has been mixed, yet it has demonstrated consistent strength over the past three months. The US dollar spot index has surged by over 7% year-to-date, marking its most impressive performance since 2015. All developed-market currencies have weakened against the dollar as other central banks have been compelled to support their local economies.

The primary pillar supporting the dollar this year has been economic strength. This strength implies that the Fed is forming a shallow rate cut cycle, keeping US interest rates higher than other regions, thereby helping to maintain the dollar's historical highs.

Earlier this month, following a rate cut and hints of a slowdown in monetary easing, the US Dollar Index reached its highest level in over two years. However, as Wall Street bets on further room for the dollar to rise by 2025, global economic growth is expected to improve later this year, which could support other currencies and weigh on the dollar.

So far in 2024, the Japanese yen, Norwegian krone, and New Zealand dollar have been the worst-performing currencies among the G10. As of December 27, they have all fallen over 10% against the dollar. The euro has dropped approximately 5.5% against the dollar, nearing 1.04 USD, with an increasing consensus that the euro could parity with the dollar next year.

In the lead-up to the US election, non-commercial speculative traders have steadily increased their bullish bets on the dollar. They currently hold contracts valued at approximately $28.2 billion for the dollar's future appreciation, the highest level since May.

Currently, the dollar's strength aligns with upcoming data. The market has yet to fully reflect our tariff expectations. Moreover, our forecasts face upside risks in the medium term. Particularly, despite more protectionist measures, stronger market sentiment will translate into more sustained growth for the US economy.

Correction Expected to Reach Prior Lows_1

Technical Analysis

Due to a pause in long positions during holiday trading, the dollar's short-term trajectory is consolidating and weakening below new multi-month highs of 108.28, yet the overall outlook remains bullish.

Furthermore, the US Dollar Index is poised to break above the upper boundary of the larger range of 99.20-107.03 on a monthly closing basis, a level that prices have been unable to surpass since December 2022.

On the other hand, daily momentum indicators show overbought conditions, warning of a potential pullback. A solid support level is at the former range top of 106.96. If the market can hold this level, it will provide a better entry point for bullish trades.

The next significant resistance levels are at 108.80 and the psychological threshold of 110.00. Breaking through these resistances would pave the way for a comprehensive rebound to 114.72.

With inflation still elevated and expectations for more proactive economic support measures from the Trump administration, the Fed's monetary policy outlook is shifting towards a hawkish stance. As a result, the dollar continues to be well-supported. In the coming months, USDX is expected to rise further, with short-term downside retracements.

Trading Recommendations

Trading Direction: Sell

Entry Price: 108.00

Target Price: 106.73

Stop Loss: 108.50

Valid Until: January 14, 2025, 23:55:00

Support: 107.47/107.00/106.73/106.17

Resistance: 108.28/108.80/109.35/110.00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

Market consensus anticipates that the policies of the upcoming Trump administration will bolster the US dollar, with expectations that these initiatives will stimulate economic growth and inflation. Consequently, the USDJPY has reached a five-month high, surpassing the 158.00 mark.

SELL USDJPY

Close Time

CLOSED

157.537

Entry Price

154.930

159.750

155.839 +0.357 +0.23%

75.0

Pips

Profit

154.930

156.787

Exit Price

157.537

Entry Price

159.750

Fundamentals

USDJPY continued its upward trajectory on Monday. Japanese Finance Minister Kato Katsunobu reiterated concerns over the yen's depreciation and warned against excessive currency volatility, stating at a press briefing, "The Japanese government is alarmed by the currency's trend and will take appropriate measures to prevent excessive fluctuations."

Prior to Kato's statement, the USDJPY had touched a five-month peak at 158.09. The risk of Japan intervening by purchasing yen escalates if the USDJPY breaches the 160.00 threshold. The last occurrence of spot rates at or above 160.00 was in July, when rates climbed to a 34-year high just below 162.00, prompting Japan to intervene by purchasing yen.

In the lead-up to US President-elect Trump's inauguration next month, it is unlikely that he would object if Japanese authorities decide to intervene against the yen's strength. Trump advocates for increased purchases of American goods by other nations, thus any measures enhancing the competitiveness of US exports should be welcomed by him.

Market Overbought Signals Looming Correction_1

Technical Analysis

USDJPY retreated after testing the 158.00 level again on Monday, currently trading near 157.80, yet maintaining a bullish momentum within the daily chart's ascending channel. The Relative Strength Index (RSI) is slightly below the 70 threshold, underpinning the bullish trend. However, if this momentum surpasses the 70 mark, it could signal overbought conditions, potentially leading to a downward correction.

The uptrend from 139.57 is ongoing, with the next target at 159.25. Should this level be sustained, it could pave the way for a price recovery to the high of 161.94.

We anticipate that, with momentum hovering near the oversold territory, the interim high may cap at the 158.00 level. Concurrently, the US dollar also has a correction requirement, with the target at the previous starting point of 154.93.

Trading Recommendations

Trading Direction: Sell

Entry Price: 157.80

Target Price: 154.93

Stop Loss: 159.75

Valid Until: January 14, 2025, 23:55:00

Support: 156.88/155.99/155.21

Resistance: 158.22/158.88/159.46

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Japanese Yen holds firm against the US Dollar as traders brace for a potential interest rate hike by the Bank of Japan (BoJ) in January, buoyed by strong inflation data out of Tokyo.

BUY USDJPY

Close Time

CLOSED

157.901

Entry Price

161.000

156.000

155.839 +0.357 +0.23%

44.4

Pips

Profit

156.000

158.345

Exit Price

157.901

Entry Price

161.000

The Japanese Yen (JPY) is holding steady against the US Dollar (USD) as investors weigh the likelihood of a monetary policy shift from the Bank of Japan (BoJ). The USD/JPY pair remains anchored, driven by market speculation that the BoJ might implement its first interest rate hike in years at the January meeting. This sentiment follows the release of stronger-than-expected inflation figures in Tokyo, which have fueled anticipation of policy tightening.

In December, Japan’s Jibun Bank Manufacturing Purchasing Managers' Index (PMI) edged up to 49.6, surpassing the preliminary estimate of 49.5 and improving from 49.0 in November. Although still below the critical 50-mark, signaling contraction in the sector, the data marks the highest reading since September. This incremental improvement suggests that while factory activity remains under pressure, the pace of decline is easing. Notably, this reflects six consecutive months of contraction, underscoring the persistent fragility in Japan's manufacturing landscape.

Adding to the bullish outlook for the Yen, Tokyo's headline Consumer Price Index (CPI) inflation climbed to 3.0% year-over-year (YoY) in December, up from 2.6% in November. The core inflation rate, which excludes fresh food and energy, rose to 2.4%, indicating underlying inflationary pressures that could compel the BoJ to pivot away from its long-standing ultra-loose monetary policy. While the figures came slightly below market forecasts, the steady increase points to rising costs that could challenge the BoJ’s dovish stance.

On the other side of the Pacific, the US Dollar remains under pressure as Treasury yields continue to drift lower. The benchmark 2-year yield fell to 4.30%, while the 10-year yield slipped to 4.59%, reflecting market sentiment that the Federal Reserve might adopt a less aggressive stance on rate cuts next year. The US Dollar Index (DXY), which measures the currency against a basket of major peers, hovers near the 108.00 level, unable to sustain upward momentum.

Markets are grappling with the Fed’s latest projections, which suggest only two rate cuts in 2025, signaling a cautious approach despite moderating inflation. The Fed's December rate cut of 25 basis points was accompanied by a hawkish tilt in the Dot Plot projections, indicating that policymakers are not rushing to loosen financial conditions.

The Yen's resilience is further bolstered by comments from Japan's Finance Minister Katsunobu Kato, who noted heightened vigilance over "one-sided and sharp" movements in the foreign exchange market. Kato hinted at potential interventions if excessive fluctuations persist, adding a layer of policy-driven support for the Yen.

Japan’s benchmark Nikkei 225 index fell to around 39,950 on Monday, snapping a two-day winning streak. The decline mirrored a slight dip in US futures, reflecting cautious market sentiment after Wall Street closed lower on Friday. This downturn was driven by rising Treasury yields and growing indications that the Fed's path to rate cuts may be more restrained than previously anticipated.

The Bank of Japan’s December Summary of Opinions revealed a growing consensus among board members for a gradual shift towards tightening. Some members emphasized the importance of monitoring wage growth, which could serve as a crucial indicator for future policy moves. The minutes from the BoJ’s October meeting also underscored the possibility of a modest rate hike, potentially reaching 1.0% by late 2025, contingent on inflation aligning with expectations.

BoJ Governor Kazuo Ueda reiterated the central bank's outlook that inflation is on track to sustainably reach the 2% target in the coming year. Ueda emphasized that any policy adjustments would depend on economic and price developments, suggesting a flexible yet vigilant approach to monetary normalization.

Technical Analysis

From a technical standpoint, USD/JPY hovers around the 157.92 level, facing resistance in its bid to breach the 158.00 mark. A successful breakout above this key level could pave the way for a continuation of the bullish trend, with the next target set at 160.00. Conversely, immediate support lies at 156.70. A break below this threshold would expose the pair to corrective downside pressure, potentially dragging it to the 155.75 region.

For the trading session ahead, the anticipated range for USD/JPY is projected between 157.00 support and 158.70 resistance, with the broader trend favoring bullish momentum, provided key support levels remain intact.

TRADE RECOMMEDNATION

BUY USDJPY

ENTRY PRICE: 157.900

STOP LOSS: 156.000

TAKE PROFIT: 161.000

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

The daily, 4-hour, and 1-hour candlestick charts for gold all show weakness under the suppression of the 60-day SMA, indicating a bearish resonance signal.

SELL XAUUSD

Close Time

CLOSED

2615.21

Entry Price

2565.00

2632.50

2756.95 +12.37 +0.45%

172.9

Pips

Loss

2565.00

2632.50

Exit Price

2615.21

Entry Price

2632.50

Fundamentals

As the gold market nears its close for 2024 with only two trading days remaining, its performance throughout the year has been noteworthy. Spot gold prices have repeatedly set new historical highs during the year, recording an annual increase exceeding 35%.

Despite having retreated from the high point of $2,790.15 per ounce reached in October, gold prices are still up by 27% so far this year, and they have been on track to achieve their best yearly performance since 2010. This strong performance is attributed to multiple drivers including continued central bank accumulation of gold reserves, heightened geopolitical tensions, as well as major global central banks gradually adopting more dovish monetary policies.

In the short term, President Trump's re-election triggered uncertainties regarding economic policy. Analysts generally fear that his tariff policies may exacerbate inflationary pressures within the US, potentially disrupting the Fed's interest rate cut plans in 2025. Despite Federal Reserve Chairman Jerome Powell's efforts to avoid direct conflict with Trump's policies, the hawkish tone of the December rate cut signals concerns among some officials about potential inflation pressures. In this context, the gold market recently faced profit-taking pressure, leading to short-term price fluctuations tending down.

Technical Analysis

Resonance of Bearish Signals Across Multiple Levels _1

In the daily chart, gold had previously rallied strongly along the 60-day SMA but has recently broken below it. Now, it is continuously suppressed by the SMA, suggesting a trend leaning more toward decline in the short term.

Resonance of Bearish Signals Across Multiple Levels _2

Based on the 4H chart, gold is also persistently pressured by the 60-day SMA, indicating weakening bullish momentum and a gradual shift in market sentiment toward the bears. Moreover, there are signs of a head-and-shoulders pattern forming on the 4-hour chart, further increasing the probability of short-term depreciation.

Meanwhile, the 1H chart has also fallen below the 60-day SMA, continuing to be suppressed.

Overall, the candlestick chart movements across various timeframes are all constrained by the 60-day SMA, forming a resonant bearish signal, hinting at a greater tendency downward in the short term.

Selling at high is preferred.

Trading Recommendations

Trading direction: Sell

Entry price: 2620.00

Target price: 2565.00

Stop loss: 2632.50

Valid Until: January 13th 2025, 23:00:00

Support: 2611.56/2583.09/2536.69

Resistance: 2621.32/2636.02/2651.62

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

Favorable employment figures have spurred a climb in U.S. Treasury yields, consequently exerting downward pressure on gold prices.

BUY XAUUSD

Close Time

CLOSED

2628.63

Entry Price

2706.00

2605.00

2756.95 +12.37 +0.45%

236.3

Pips

Loss

2605.00

Exit Price

2628.63

Entry Price

2706.00

Fundamentals

During the holiday period, trading volumes were thin. Despite the upward trajectory of bond yields, gold managed to retain its position, underscoring a more substantial and positive outlook for the gold market.

Overseas news overnight, a report from the U.S. Department of Labor indicated that for the week ending December 21, the number of initial claims for unemployment benefits in the U.S. experienced an unexpected slight decline.

The report revealed that initial jobless claims descended to 219,000, a decrease of 1,000 from the unrevised 220,000 of the prior week, and below market expectations that the initial claims would rise to 224,000.

The resilient U.S. labor market continues to propel U.S. Treasury yields higher. As of publication, the yield on the 10-year Treasury note stood at 4.632%, marking the highest level since May. Concurrently, the U.S. Dollar Index remains above the 108.00 threshold.

However, despite these two headwinds, the gold market has remained buoyant, registering a 0.60% increase on the day.

Market observation. The traditional negative correlation between bond yields and gold appears to have been disrupted, potentially emerging as a key theme for investors in 2025. The gold market has historically been sensitive to higher bond yields, as it increases the opportunity cost of precious metals as non-yielding assets. The 10-year bond yield continues to react to expectations that rising inflation will compel the Fed to constrain its monetary policy measures in the coming year.

As the trading year draws to a close, gold prices are on track to finish the year with an impressive 27% gain, marking the best annual performance since 2010. However, our outlook for gold prices next year is anticipated to further decelerate, as the Fed's rate cuts are postponed. We currently project that in Q1 2025, spot gold will trade at $2,700, retreating to $2,675 in Q2, and falling to $2,625 in both Q3 and Q4.

The Dip is the Perfect Buying Opportunity_1

Technical Analysis

From a technical perspective, gold prices broke through the previous high of $2,634 overnight and continued to rise, stopping just below the next high of $2,640. Strong selling pressure indicates that a horizontal consolidation trend may persist for some time.

Meanwhile, due to the absence of institutional trading, market liquidity is lacking. Despite the sparse trading, gold prices remain above the local support level of $2,624.

We maintain our stance from the previous day, suggesting that gold prices will maintain a positive outlook in the short term. The next resistance levels are at $2,637 and $2,647. The primary resistance is likely to be between $2,655 and $2,665. The next support levels are at $2,620 and $2,610.

Trading Recommendations

Trading Direction: Buy

Entry Price: 2626

Target Price: 2706

Stop Loss: 2605

Valid Until: January 11, 2025, 23:55:00

Support: 2623/2613/2610

Resistance: 2637/2647/2655

Risk Warnings and Disclaimers

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GBP/JPY could continue to rise if it breaks above key technical resistance levels.

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Market Overbought Signals Looming Correction

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Resonance of Bearish Signals Across Multiple Levels

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The Dip is the Perfect Buying Opportunity

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Risk Disclosure