January 25, 2022
EUR/USD: EUR/USD showed a mixed dynamic yesterday despite the market’s risk-off tone. Bulls bought the dip after it hit the 1.13 level and recovered to trade flat during the day. Unlike other G10 currencies, the major currency pair keeps holding above the uptrend that has supported it since late November. This, mixed with expectations for a tomorrow hawkish Fed meeting and that further risk-off mood supports the safe-haven US dollar, suggests downside risks for EUR/USD. Macroeconomic data appears not to be the key driver of the price action during past days. Mixed Eurozone PMI data for January that came out better than expected hardly impacted the euro.
USD/CHF: After finishing the last week in the negative zone, the USD/CHF is recovering after Friday’s losses amid a risk-off market mood. The potential Federal Reserve’s monetary policy tightening boosts the greenback despite the fact that CHF is considered a safe-haven currency. The US dollar may receive greater support amid the rate-hiking this year. In the meantime, the US Dollar Index, a gauge of the greenback’s performance against a basket of other currencies, rose 0.2%.
WTI: Crude oil prices were bearish yesterday during a broad risk asset pullback that has also pressured the US equities, risk-sensitive currencies and cryptocurrency markets. All these markets showed a sharply bearish dynamic. Safe-haven assets such as USD, JPY, CHF and bonds have become outperformers and generally seeing huge demand and some are attributing the stronger US dollar as additional factor pressured crude oil prices on Monday. A stronger dollar makes USD-denominated crude oil more expensive for the holders of international currencies, weighing on its demand.
SELL 83.50/TP 81.50/SL 84.20