Kickstart the FX trading day for Jan 22, w/ a technical look at the 3 major currency pairs

In the kickstart video above, I take a technical look at the 3 major currency pairs – the EURUSD, USDJPY and GBPUSD.

• The EURUSD is trading higher on the day, but respecting a key technical target on the topside between 1.0448 and 1.0461.That is tough resistance on the topside that needs to be broken to increase the bullish bias. ON the downside a break below 50% retracement levels on daily and hourly charts (different ones), is a key barometer around 1.0403
• The USDJPY is modestly higher and continues to test a swing area between 155.94 and 156.21. It would take a move above and stay above to increase the bullish bias. Stay below and move below the 100 hour MA at 155.72 increases the bearish bias.
• The GBPUSD broken above the 100 bar MA on the 4-hour chart and 50% of the January range near 1.2337. That is close support for traders today. ON the topsdie, the 38.2% of the move down from the December high comes in at 1.23689 and if broken and stay broken gives the buyer more confidence for more buying. A battle is on for the buyers and sellers.

There was a lot of central bank comments to sift through today:

• ECB President Christine Lagarde, in remarks to CNBC, stated she expected no immediate US tariffs but noted potential selective actions in the future, urging Europe to stay prepared. She expressed confidence that inflation would reach the target by 2025, with a possible reduction in services inflation early in the year. Lagarde dismissed concerns about falling behind on policy, emphasized the euro’s exchange rate as a factor of interest, and suggested gradual rate adjustments remain the current approach.
• European Central Bank (ECB) hawk Klaas Knot indicated minimal obstacles to a potential rate cut next week, citing encouraging data that supports a return to the inflation target. While expressing hope for an economic recovery, Knot acknowledged downside risks from trade policy on growth, with unclear inflation impacts. He noted comfort with market expectations for the next two meetings but suggested that sustained recovery might negate the need for further stimulative measures.
• European Central Bank (ECB) hawk Klaas Knot indicated minimal obstacles to a potential rate cut next week, citing encouraging data that supports a return to the inflation target. While expressing hope for an economic recovery, Knot acknowledged downside risks from trade policy on growth, with unclear inflation impacts. He noted comfort with market expectations for the next two meetings but suggested that sustained recovery might negate the need for further stimulative measures.
• European Central Bank (ECB) member Yannis Stournaras stated that interest rates should approach 2% by the end of the year, signaling a measured approach to monetary policy adjustments aimed at achieving the ECB’s inflation and economic stability targets.
• ECB hawk Joachim Nagel expressed confidence that inflation will return to the 2% target by mid-year, citing normalizing wage momentum and subdued economic developments in Europe as key contributing factors.
• ECBs Rehn says they are now confident that inflation will stabilize at its target as predicted
• ECB Makhlouf says high levels of uncertainty in global macrofinancial environment calls for prudence in monetary policy.

There were comments from SNBs Schlegal as well today:

• Swiss National Bank (SNB) Chairman Martin Schlegel stated that while inflation is within the target range and currently manageable, the possibility of reintroducing negative interest rates cannot be excluded if necessary. Speaking at Davos, he highlighted the Swiss franc’s role as a safe haven, expressed concerns about trade conflicts impacting Switzerland, and reiterated readiness to intervene in the foreign exchange market, though another currency cap is not under discussion.

Central Bank policy decisions are ahead. Below are the dates of rate decisions between now and the end of the year.

• Bank of Japan (BoJ): The BoJ’s Monetary Policy Meeting is set for January 23-24, 2025.

• Federal Reserve (Fed): The Federal Open Market Committee (FOMC) will meet on January 28-29, 2025.

• European Central Bank (ECB): The ECB’s Governing Council is scheduled to meet on January 30, 2025.

• Bank of Canada (BoC): The BoC is expected to announce its interest rate decision on January 29, 2025.

Along those lines, here are some market expectations announced today:

• A CNBC poll reveals that 18 out of 19 economists expect the Bank of Japan (BOJ) to raise its benchmark interest rate by 25 basis points during its January 23–24 meeting, bringing the key rate to 0.5%, its highest since 2008. Recent public statements by Governor Kazuo Ueda and Deputy Governor Ryozo Himino have signaled the BOJ’s readiness to implement the hike.
• New Zealand’s Q4 CPI data indicates inflation is firmly within the Reserve Bank of New Zealand’s (RBNZ) target range of 1-3%, aligning with its medium-term goal of a 2% midpoint. This inflation stability has led markets to price in a 67% probability of a 50 basis point rate cut at the RBNZ’s next meeting on February 19, reflecting the central bank’s mandate to balance price stability with sustainable economic growth.
• In the US there is not a chance for a cut this month. The expectation for March is around 26% and for May about 37%,a nd June 45%

In the US stock market, Netflix impressed after the close and its shares are up $126 or 14.55% at $996.20. United Airline, Interactive Brokers and Seagate all announced as well and their shares are up 3.60%, 4.72% and 6.91% as they all beat. Travelers announced today and their shares are up 4.11%. P&G shares are up around 3% on better earnings this morning as well.

Oracle shares moved higher yesterday on the back of an announcement of a AI initiative by Pres Trump with Softbank, OpenAi and Oracle members of the Joint Venture. Shares of Oracle closed up 7.17% and are up 11.21% in trading today to $191.90. THe all time high price on December 9 reached $198.31.

Shares closed higher yesterday with the Dow and the Russell 2000 leading the way. The futures this morning are implying:

• Dow up 153 points
• S&P up 30 points
• Nasdaq up 203 points

In the US debt market, yields are also open after the holiday yesterday, and are lower:

• 2 year 4.278%, -0.3 basis points
• 5 year 4..4043%, +0.7 basis points
• 10 year 4.582%, 0.9 basis points
• 30 year 4.807% 0.4 basis points.

IN other markets:

• Crude oil is up by $0.12 or 0.18% at $75.99.
• Gold is up $10.02 or 0.38% at $2753.90
• Silver is near unchanged at $30.75
• Bitcoin is trading at $105,012. The high reached $106,370.

This article was written by Greg Michalowski at www.forexlive.com.