An exciting trading week with a lot of central bank meetings is behind us and now we have to deal with the last trading week of the year with respect to liquidity. From Christmas to New Years inclusive the moves can get extreme. That might offer nice opportunities but can burn money either.
The Dollar trades (96.555 -0.13%) at the upper end of its recent 95.60/96.60 range. To that extent neither Powell nor Lagarde changed anything at the bigger picture. In comparison the FED was more hawkish than the ECB what should push EURUSD lower finally in medium term.
At the end of the last week we could observe the risk sentiment to deteriorate (mentioned here). Therefore I like to have a deeper look into two currency pairs with higher beta today:
USDJPY -- 113.63
Although the Dollar-Index trades bid the pair failed to pass the big resistance zone at 114/115 again. Yen pairs in particular have the peculiarity of turning up at the end of the year. I therefore advise to keep the hands off without no real conviction. I like the pair lower until end of year anyway. With respect to the daily chart the double top at 114.25/27 should work as resistance for now. And with the thinning liquidity in mind it makes no sense to watch the pair grinding much higher.
AUDUSD -- 0.7110
After the reclaim of the former support at 0.7106 the pair was heavy bid and has gone up to 0.7224 last thursday. Since then the Aussie is offered and trades just above the 0.7106 again. If markets keep its nervous stance the pair should remain weak. From a technical perspective longs above the recent lows including todays (0.7090/82) for a short-term relief rally could be profitable. But below the low of the year at 0.6993 the long scenario is is definitely over for now.
Good luck,
Sebbo