<p style=““ class=“text-align-justify“>I think it might be safe to say that we’re in the year-end stretch now. There isn’t much to explain the drop in the pound today, with most other major currencies not doing a whole lot – the kiwi being the outlier as noted earlier <a target=“_blank“ href=“https://www.forexlive.com/news/light-changes-among-major-currencies-for-the-most-part-20221221/“ target=“_blank“ rel=“follow“>here</a>. Equities are faring better on the day but the pound is finding itself offered with GBP/USD falling by 0.7% to 1.2100.</p><p style=““ class=“text-align-justify“>The pair is now running towards another test of its 200-day moving average (blue line) at 1.2083 and that remains a key line in the sand in terms of limiting any further downside momentum.</p><p style=““ class=“text-align-justify“>For buyers, they have to keep price above that level to stay in the game. Otherwise, a firm break below that will see sellers start to flex their muscles and target a push towards 1.2000 first in the next leg.</p>

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

<ul><li>Prior -19</li></ul><p style=““ class=“text-align-justify“>UK retail sales unexpectedly picked up in December but the sales balance for January is seen falling back to -17. That points to expectations that consumer spending will slide again to start 2023 as cost-of-living pressures continue to permeate across the UK economy.</p>

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

<p style=““ class=“text-align-justify“>It will now be a question of whether this is really where the BOJ draws the line or if they will eventually abandon their entire yield curve control policy. Kuroda might have said that they are not thinking about it yesterday but as soon as you blindside markets in the way that he did yesterday, there’s not much trust left lingering now.</p><p style=““ class=“text-align-justify“>The wider band for the 10-year JGB yields target makes sense from a market functioning perspective but if they wanted to address that, they could’ve done so much earlier and communicated it better surely. That will at least help the central bank retain some credibility in their commitment to the 2% inflation target.</p><p style=““ class=“text-align-justify“>Instead, after the fiasco yesterday, markets are not waiting for the BOJ anymore. 10-year yen swaps are on approach to 0.80% and the pressure will continue to mount for the BOJ now to defend their new red line.</p>

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

<p style=““ class=“text-align-justify“>The Kremlin adds that the continued arms supplies by Western allies to Ukraine would lead to a „deepening“ of the ongoing conflict.</p><p style=““ class=“text-align-justify“>Even though markets have learned to zone out when reading the recent headlines involving Russia and Ukraine, this still remains a risk factor to be mindful of in trading next year – in case things do escalate further.</p>

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

<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“>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.

<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>Bitcoin Market picture</p><p class=“MsoNormal“>The Bitcoin and crypto
market is waking up from a complete lull. Down just over 1% yesterday in the
$16.5K area, bitcoin hit lows since late November, triggering a wave of stop
orders during the early Asian session that dragged the price to $16.25K at one
point. This was followed by a buying spree, gradually bringing the price to
$16.8K.</p><p class=“MsoNormal“>The
relatively small moves so far have not changed the centre of gravity by
historical standards, leaving the first cryptocurrency to range narrowly for
the past month and a half.</p><p class=“MsoNormal“>During the
bull market in cryptocurrencies, a lack of growth was often seen as a precursor
to declines. Now, interest in buying on declines may signal interest from
long-term buyers. Of course, this is only true for the current fundamental
picture.</p><p class=“MsoNormal“>According to
CoinShares, investments in crypto funds fell by $30M last week, with outflows
the highest in 14 weeks. Bitcoin investments decreased by $18M, and Ethereum by
$9M. Investments in funds that allow shorts on bitcoin increased by $1M.
Trading volumes rose to $866M, up from $678M the previous week. </p><p>Bitcoin News background</p><p class=“MsoNormal“>Real Vision
founder Raoul Pal expects to see the market bottom by March 2023, after which a
slow recovery will begin. He attributes this to the end of the Fed’s rate hike
cycle. According to Pal, bitcoin is the least attractive of the major assets,
as it is more stable. Ethereum has more upside potential.</p><p class=“MsoNormal“>SEC chief
Gary Gensler said that the cryptocurrency market might operate under the rules
that apply to the securities market. However, he stressed that crypto assets
are too volatile and speculative, putting investors at significant risk.</p><p class=“MsoNormal“>According to
CoinGecko, over the past year, 3,300 cryptocurrencies (about 40%) out of more
than 8,000 at the beginning of the year – have left the market. According to
the portal’s rules, a cryptocurrency can be removed from the site due to a lack
of activity for two months or if it is confirmed that the project is
fraudulent. More than 117,000 fraudulent tokens have appeared on the market
since the beginning of 2022, Solidus Labs estimated.</p><p class=“MsoNormal“>Nigeria
intends to recognise cryptocurrency as an investment asset. A new investment
and securities bill has passed its second hearing in the country’s parliament.</p><p class=“MsoNormal“>This article was written by <a target=“_blank“ href=“mailto:https://www.fxpro.com“ target=“_blank“ rel=“follow“>FxPro</a>’s Senior Market Analyst Alex
Kuptsikevich.</p>

This article was written by FxPro FXPro at www.forexlive.com.

<ul><li>It is hard to say what the terminal rate should be</li></ul><p style=““ class=“text-align-justify“>The message from the ECB has been consistent following their hawkish tilt last week. At least until the next set of inflation numbers, the narrative is unlikely to change.</p>

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

<p style=““ class=“text-align-justify“>This looks to be a bit of a breather after the action on Thursday and Friday mostly, which saw the dollar hold its ground while stocks suffered a beating. European indices are up around 0.3% to 0.6% on the day, but that comes off the back of 2% to over 3% losses last week. Meanwhile, S&P 500 futures are up 8 points, or 0.2%, on the day currently.</p><p style=““ class=“text-align-justify“>Despite the light bounce, the technical overview for equities is quite ominous after having seen the S&P 500 broke below its 100-day moving average last week:</p><p style=““ class=“text-align-justify“>The double-top pattern near 4,100 suggests a breakdown towards 3,760 next potentially.</p><p style=““ class=“text-align-justify“>As for the dollar, some slight weakness today puts into consideration some key levels as noted earlier in the posts below:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/usdjpy-holds-lower-to-start-the-week-amid-boj-rumours-20221219/“ target=“_blank“ rel=“follow“>USD/JPY holds lower to start the week amid BOJ rumours</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurusd-eyes-upside-break-again-after-last-weeks-late-slip-up-20221219/“ target=“_blank“ rel=“follow“>EUR/USD eyes upside break again after last week’s late slip up</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/gbpusd-holds-higher-on-softer-dollar-but-gains-arent-all-that-meaningful-20221219/“ target=“_blank“ rel=“follow“>GBP/USD holds higher on softer dollar but gains aren’t all that meaningful</a></li></ul><p style=““ class=“text-align-justify“>But as we move towards the Christmas holiday, thinner liquidity conditions will make it tough to really read into the market moves as a whole. Even today, there is a bit of a mixed picture with bonds falling as we see 10-year Treasury yields hold higher by 3 bps to 3.52%.</p><p style=““ class=“text-align-justify“>The move higher in Japanese bond yields earlier in the day has helped somewhat with the move, amid chatter that the government and BOJ might look to revise its joint statement on policy and <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ target=“_blank“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa_1″ class=“terms__main-term“>inflation</a> target/outlook.</p>

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