AUD/USD has rebounded strongly over the past trading week, breaking above the 0.68 level. It could target the 0.69 level, an area that has previous resistance and the 200-week moving average. A move above this level could lead to a move towards 0.7150. This week’s candlesticks show clear bullish sentiment, and with growing attention on the possibility of a rate cut by the Federal Reserve in 2024, it makes sense for the Australian dollar to continue rising.
Short-term setbacks may present buying opportunities, with support near 0.6650 and strong support at 0.65. Given the Australian dollar’s status as a commodities-driven currency, closely linked to the performance of Asia, particularly China’s demand for Australian commodities, it is heavily influenced by risk sentiment and global economic growth.
USD/JPY faces uncertainty. Key factors to watch include the recent weekly candlesticks and key long-term trend lines. While still in an uptrend, a break below last week’s candlestick low could bring significant downward pressure, possibly towards 130 yen.
Conversely, a breakout of the most recent week’s candlestick high (even though it is an inversion candlestick) indicates strong upside potential. Both central banks are expected to maintain loose monetary policies, resulting in limited clarity on the situation.
The pair is on the verge of a major move, but low liquidity in the coming week may make trading challenging. Looking at this period can provide insight into market dynamics in 2024, as market sentiment is largely influenced by the Federal Reserve’s interest rate decisions.
S&P 500 Index
The S&P 500 experienced a minor pullback before showing new momentum. It seems poised to approach 4800 and possibly 5000 in the longer term. However, caution is required due to overexpansion, prompting attention to buying opportunities and value.
Support could emerge around 4600, or even a drop to 4500, a historically important psychological level. Traders continue to assess the Federal Reserve’s monetary policy, anticipating the potential infusion of liquidity into stocks as Wall Street prioritizes easy money over economic fundamentals.
Market conditions are currently overbought and require a pullback to uncover valuable opportunities. The coming week, from Christmas to New Year, could bring the prospect of profit-taking in this overbought market.