<p style=““ class=“text-align-justify“>The pair has been caught in a bit of a ping pong range for a while now, holding in between its 100 (red line) and 200-day (blue line) moving averages. After the softer US CPI data seven days ago, buyers were interested to run towards the latter but ultimately that failed as the dollar held its ground following a more hawkish Fed and a selloff in equities.</p><p style=““ class=“text-align-justify“>The BOJ surprise earlier today saw stocks come under further pressure and that saw AUD/USD fall to a low of 0.6629 as we got into the transition from Asia to Europe. But since then, a recovery in risk sentiment has helped to see the pair bounce as well to 0.6680 levels currently – with buyers holding a defense of the 100-day moving average at 0.6740 as well.</p><p style=““ class=“text-align-justify“>That is the key line in the sand for the pair as the downside pressure persists and as equities could potentially come under further pressure. The first litmus test will be how Wall Street takes to the BOJ policy tweak later today. Thereafter, it will be a case of how stocks can perform against the struggling technical outlook <a target=“_blank“ href=“https://www.forexlive.com/news/boj-policy-tweak-serves-up-more-pain-for-stocks-20221220/“ target=“_blank“ rel=“follow“>here</a>.</p><p style=““ class=“text-align-justify“>That will offer up some key drivers for both the aussie and dollar to work with before the turn of the year.</p><p style=““ class=“text-align-justify“>In looking at AUD/USD, a further drop below the 100-day moving average will then put into focus the 21 November low at 0.6584 before looking towards 0.6500 next.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>A more dovish BOE and a more hawkish Fed helped to set the tone last week, with a selloff in equities also helping the dollar recover well after the softer US CPI data just seven days ago (felt like much longer now, no?). That resulted in failed breakout attempt to the topside with price falling back below the August lows at 1.2276-93 and the 50.0 Fib retracement level of the swing lower from last year, seen at 1.2306 roughly.</p><p style=““ class=“text-align-justify“>The retreat has resulted in a push back towards the 200-day moving average (blue line) earlier today, seen at 1.2088 currently. That came amid some firmness in the dollar in Asia after a risk retreat on the BOJ but now we are seeing the pair hold higher instead. The switch comes as the greenback eases amid <a target=“_blank“ href=“https://www.forexlive.com/news/equities-recover-some-poise-in-european-trading-20221220/“ target=“_blank“ rel=“follow“>a decent rebound</a> in the equities space ahead of US trading.</p><p style=““ class=“text-align-justify“>Going back to GBP/USD, dollar sentiment remains in the driver’s seat at the moment and more so as risk sentiment is very much in play again after the BOJ delivered a surprise to markets earlier today.</p><p style=““ class=“text-align-justify“>That said, topside resistance is still seen at the key levels above while downside is also more limited closer to the 200-day moving average pointed out as well.</p><p style=““ class=“text-align-justify“>As such, something has got to give eventually but for now, GBP/USD buyers are not out of it yet despite the fall off since last week. Sellers may only look towards 1.2000 again following a break below the 200-day moving average, so that is the line in the sand at the moment.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>The push higher last week fell short at the final hurdle, with the dollar recovering well amid a selloff in equities. The push and pull is continuing this week with stocks falling yesterday and the dollar having firmed earlier amid a more risk-off transition from Asia after the BOJ tweaked its yield curve control policy.</p><p style=““ class=“text-align-justify“>But as we saw <a target=“_blank“ href=“https://www.forexlive.com/news/equities-recover-some-poise-in-european-trading-20221220/“ target=“_blank“ rel=“follow“>US futures pare losses</a>, the dollar has also lost ground on the session with EUR/USD now up 0.2% to 1.0625 on the day.</p><p style=““ class=“text-align-justify“>This sees price action keep just above the key trendline resistance (white line) at around 1.0580 as well as the 38.2 Fib retracement level of the swing lower since January last year, seen at 1.0610.</p><p style=““ class=“text-align-justify“>Those remain the two key levels to watch with buyers also putting up a modest defense of the 200-hour moving average, seen at 1.0594 currently.</p><p style=““ class=“text-align-justify“>As mentioned earlier in the week, any moves during this period will be tough to read amid thinner liquidity conditions and the best is to try and weigh up any changes in dollar sentiment to how risk trades are behaving – specifically stocks.</p><p style=““ class=“text-align-justify“>For now, equities have recovered some decent ground after the selling pressure hit in Asia but as we have seen over the past few sessions since late last week, Wall Street is a tough crowd to convince and the mood isn’t really helped by a struggling technical outlook as seen <a target=“_blank“ href=“https://www.forexlive.com/news/boj-policy-tweak-serves-up-more-pain-for-stocks-20221220/“ target=“_blank“ rel=“follow“>here</a>.</p>

This article was written by Justin Low at www.forexlive.com.