The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headline:

  • Risk sentiment declines as ECB balance sheet growth spooks investors
  • Euro smashed back to 11-month lows against dollar; EUR/JPY approaches 10-year lows
  • Aussie dollar falls more than 100 pips on risk aversion
  • Dow snaps five-day winning streak; drops 140 points
  • Gold, oil both sharply lower
  • Tonight’s focus will be on US weekly unemployment claims, recent numbers have been better than expected

AUD/USD
The Aussie was sent sharply lower overnight thanks to the heavy selling in European markets and this has brought the pair back to support at 1.0050. A break of 1.0050 would likely trigger a move back to parity. However, while 1.0050 holds, this pullback will provide a good opportunity to re-initiate longs.

GOLD
We have been bearish on gold as we head into January and overnight, gold’s broken sharply lower after falling below support at 1590. From here, the market is now focused on major support at 1532. A break of this level could see us back to 1450 fairly rapidly. Resistance is now seen at 1560.

EUR/USD
The Euro was swiftly sold lower after breaking the uptrend line at 1.3040 and this now sets up another attempt at the yearly lows at 1.2870. A break of the yearly lows has the potential to trigger a multi-month move back towards 1.2400.

GBP/USD
Cable has now pulled back to the lower end of the trading range and traders will be considering longs from this level while support around 1.5430 holds.

USD/JPY
The dollar-yen continues to trade within the range with the best strategy looking to sell up around 78.20.

SILVER
As discussed in yesterday’s report, the picture is bearish for precious metals, and the overnight break of 28.10 has seen a rapid move lower. Any retracement back to 28.10 could be seen as a new selling opportunity with the potential for a move back to 26.10.

USD/CHF
The dollar-Swiss broke above 0.9400 overnight and this now presents a more bullish picture. Traders will be looking for a move back towards 0.9545 with stops well under 0.9400.

GBP/JPY
The sterling-yen was hit sharply lower in line with the weakness across European currencies and this now sets up a move back to 119.40. A break of 120.30 could be the trigger for the next move lower.

AUD/JPY
Trade in the Aussie-yen remains defined by the downtrend line and we would maintain our bearish view for the moment. Traders will be looking to get on the short side with the potential to move back to 77.00 in the near term.

OIL
Oil was also hit hard overnight, but overall, it remains in a clear uptrend. Traders could view the overnight pullback as chance to get long. Don’t forget we have inventories tonight - last week’s crude inventories saw the largest drawdown in a decade (which was bullish for crude).

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