LOOK AHEAD: Eurozone Timeline of Key Events (Times GMT)

• RES 4: 1.1936 2.382 proj of the Nov 5 - 13 - 21 price swing   
• RES 3: 1.1919 - High Sep 17 and a key M/T resistance
• RES 2: 1.1848 High Sep 18
• RES 1: 1.1813 76.4% retracement of the Sep 17 - Nov 5 bear leg
• PRICE: 1.1777 @ 06:14 GMT Dec 30
• SUP 1: 1.1721 20-day EMA 
• SUP 2: 1.1673 50-day EMA 
• SUP 3: 1.1615 Low Dec 9 
• SUP 4: 1.1591 Low Dec 2

The trend in EURUSD is unchanged, it remains bullish and the pair is trading closer to its recent highs. The first important support lies at 1.1721, the 20-day EMA. A clear breach of this average would signal scope for a deeper retracement, allowing an overbought condition to unwind. Key short-term resistance at 1.1804, the Dec 16 high, has been pierced. Clearance of this hurdle would confirm a resumption of the uptrend.

• RES 4: 128.75 High Dec 3 and a key resistance   
• RES 3: 128.40 Low Dec 2    
• RES 2: 128.08 High Dec 8 
• RES 1: 127.86 20-day EMA           
• PRICE: 127.73 @ 05:55 GMT Dec 30 
• SUP 1: 127.31/126.75 Low Dec 29 / 22 and the bear trigger          
• SUP 2: 126.53 Low Mar 11 (cont.) and a key support  
• SUP 3: 126.35 3.236 projection of the Nov 12 - 20 - 26 price swing
• SUP 4: 126.20 3.382 projection of the Nov 12 - 20 - 26 price swing

Despite recent gains, Bund futures remain in a clear downtrend and the latest move higher appears corrective. Recent weakness confirmed a resumption of the downtrend, signalling scope for a move towards 126.53, the Mar 11 low (cont.). Initial firm resistance is seen at 127.86, the 20-day EMA. A break of this average would signal the start of a stronger correction. The bear trigger is 126.75, the Dec 22 low.

MNI (AUSTRALIA): Moves in EM Asian currencies have generally been muted but the major development has been the continued strengthening in the yuan with onshore, which has a 2% trading band, falling to its lowest level against the dollar since May 2023. USDCNY is down 0.1% to 6.9973, close to the low. While this suggests that the PBoC is comfortable with a gradually strengthening currency, the break below 7.00 is likely to prompt further warnings not to take currency bets as stability is preferred. 

• Offshore USDCNH while flat has broken below 7.00 and is currently around 6.9934 after reaching a high of 7.0025 following the yuan fixing earlier which at 7.0348 was slightly higher than Monday’s 7.0331 signalling stabilisation after the recent downtrend.
• There has been little reaction from USDTWD to news reports of PLA drills (Bloomberg) around Taiwan this week, which the latter has protested about. It traded around 31.43 on Monday and remains around this level today after strengthening to 31.404 earlier.
• After strengthening on Monday, USDKRW is slightly higher today rising 0.1% to 1435.55 off the intraday high at 1437.30. Data released earlier showed a pickup in December business sentiment but a softer-than-expected rise in November IP.
• In terms of ASEAN, MYR is outperforming with USDMYR down 0.1% to 4.0550. USDTHB continues its reversal rising 0.2% to 31.52 and is now up 1.5% this week. The BoT would like to see the baht weaken as it is tightening financial conditions despite rate cuts.
• Later the December FOMC minutes are published. In terms of data, US 13 December ADP employment, December MNI Chicago PMI, December Dallas Fed services and October house price data print. Also preliminary December Spanish CPI data are released.