The greenback traded higher against a basket of currencies after the opening bell on Tuesday as the investors put back their trust on the currency. In the past holidays, most of the market players turned extra cautious despite the forecasted strength of the USD due to the upcoming rate hikes.
USD/ JPY Movement
As the market remained closed in Japan for the holidays, the US dollar edged higher against the Japanese yen as it settled at 118.12, advancing 0.54 percent as of 12:00 UTC. USD/JPY opened at 117.375 with a session high of 117.427 and a session low of 117.278.
The pair traded above its 20-day SMA of 117.027 and 50-day SMA of 117.256, supporting the uptrend momentum. USD/JPY found support at 117.365 and went close to its resistance at 118.187. In case of a breakthrough, the new resistance would be at 118.510 and a fall through would result in a new support at 117.075.
From a wider perspective, the USD/JPY is on the bullish tone as the pair retains its position at 118.000 levels, close to its peak at 121.000 last February. Since the Bank of Japan will likely maintain its rates despite the slow-to-moderate growth outlook for the Japanese economy. In this case, the yen will lack support, considering the US central bank is pushing for three more rate hikes this year.
As of 12:15 UTC, the euro dropped 0.41 percent against the greenback as it closed at 1.0406. EUR/USD opened at 1.03999, away from 1.04564 after the overnight trading on Monday. The pair had a session high of 1.04137 and a session low of 1.03950.
Apparently, EUR/USD moved beyond the lower barrier, indicating a downtrend for the pair in the rest of the session. The pair traded below its 50-day SMA of 1.04975 and 20-day SMA of 1.04605.
EUR/USD found support at 1.03709 and resistance at 1.04374. If the bearish tone continues, it will have a new support at 1.03487; however, if the market confidence comes back to the euro, it will probably recover which will result in a new resistance at 1.0500.
Considering the current turn of candles, EUR/USD will likely end between 1.04100 to 1.03900 levels at the end of the session. The euro was knocked down when the Fed increased rates last December-it slid from 1.08000 to 1.0300 levels. The same scenario might happen ahead of the highly expected rate hike. Adding to the headwind, the mixed sentiments over the post Brexit negotiations alters the supposedly recovery of the Euro-region.
Meanwhile, the Swiss Franc plummeted against the US dollar as it traded 0.43 percent lower as of 12:43 UTC. USD/CHF opened at 1.02809 with a session high of 1.02809 and a session low of 1.02711. The pair found support at 1.02178 and resistance at 1.03186.
USD/CHF traded above its 20-day SMA of 1.02350 and 50-day SMA of 1.02106. Also, the pair went above the upper barrier, signaling an upward momentum. A breakthrough will result in a new resistance at 1.03421 and a fall through will give the pair a new support at 1.01910.
The pair will likely stay close to its December peak at 1.03400 levels. If the trend persists, it is reasonable that USD/CHF may end the session between 1.03100 to 1.02900 levels.
Happening This Week
After the financial markets were closed for the New Year holiday, the market players are expecting the UK construction activity and service sector activity survey data. The Federal Reserve will also release its December meeting minutes as the US publishes its ADP nonfarm payroll report and jobless claims report.
China will disclose its Caixin services PMI while the Institute for Supply Management (ISM) will release its non-manufacturing activity data. The Eurozone is scheduled to release its preliminary data on inflation, while Germany will publish its factory orders and retail sales.
At the end of the week, the data on US nonfarm payrolls together with the trade and factory orders report will be published.