Daily F.X. Analysis, February 05 – Top Trade Setups In Forex -Brace for Advance NFP Figures! 

On Wednesday, January Automatic Data Processing (ADP) Employment Change (+158,000 private jobs expected), Markit U.S. Services Purchasing Managers Index (PMI, final reading, 53.2 expected), Institute for Supply Management’s (ISM) Non-Manufacturing Index (55.1 expected), and December trade balance (deficit of 48.2 billion dollars expected) will be reported.

The number of verified coronavirus patients in China has exceeded 20,000, with the related death toll marking 425. Hong Kong reported that a 39-year-old man died of the coronavirus, the first confirmed fatality in the city. And Macau ordered casinos to shut their doors for 15 days.

Meanwhile, it is reported that U.S. biopharmaceutical firm Gilead’s coronavirus drug trials could begin next week.

Economic Events to Watch Today

 

 

 

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EUR/USD – Daily Analysis

The EUR/USD slipped 0.1% to 1.1044. Later today, the Eurozone’s December retail sales will be reported (-1.1% on month expected). The EUR/USD strived to rally in initial European trading sessions on Wednesday despite economic figures, which showed growth in the Eurozone economy.

The PMI numbers are out of the Eurozone, and these led to a growth in the marketplace with the industrial sector supporting while the services sector has held firmly extended. The final services PMI number arrived in at 52.5, beating the analyst forecast of 52.2, while the composite index climbed to highs not observed since August.

Furthermore, European retail sales figures will be published next. Later in the North American session, US Non-manufacturing and services PMI data will be published.

Daily Support and Resistance

• S3 1.091
• S2 1.099
• S1 1.1043

Pivot Point 1.107

• R1 1.1123
• R2 1.115
• R3 1.123

EUR/USD– Trading Tips

The EUR/USD is trading with a bearish bias as it is consolidating in a narrow trading range of 1.1100 – 1.1020 area. The bearish channel that we spoke about is still there, and it’s keeping the pair in a selling mode. At the moment, the EUR/USD pair is likely to face immediate support around 1.1020 level, and violation of this can lead the EUR/USD prices towards 1.0925. 

The EUR/USD pair as already retrace back 1.1098, and it has the potential to show further selling bias. On the lower side, a breakout of the support level of 1.0990 can lead EUR/USD prices towards the 1.0945 area. 

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GBP/USD– Daily Analysis

The GBP/USD bounced 0.3% to 1.3031. The Markit Construction PMI climbed to 48.4 in January (47.1 expected) from 44.4 in December.

In the U.S., the Automatic Data Processing (ADP) will report January private jobs report (+158,000 jobs expected). The Commerce Department will release the November trade balance (48.2 billion dollars deficit expected). The Institute for Supply Management will post its Non-manufacturing Index for January (55.1 expected).

Looking forward, all traders will keep their eyes on the final figures of the U.K. Services PMI for January. The Key activity gauge is expected to remain unchanged at 52.9. However, any surprise upside may convert the early-day losses into recovery.

The U.S. economic calendar also has some critical data like employment, activity, and trade that are likely to justify the greenback’s strength. In this regard, We forecast the ISM non-manufacturing index to increase slightly to 55.3 in Jan after an already-strong 54.9 print in Dec, because the Phase One deal should give a marginal boost to sentiment. On the other hand, we anticipate a strong surge in ADP employment for Jan at 230k, up from 202k.

Daily Support and Resistance

• S3 1.2795
• S2 1.2901
• S1 1.2966

Pivot Point 1.3006

• R1 1.3071
• R2 1.3112
• R3 1.3218

GBP/USD– Trading Tip

The GBP/USD bounced off to trade at 1.3050 after testing the lower limit of a trading range, which is 1.2980. As you can see in the chart, the GBP/USD pair is still maintaining a narrow trading range of 1.3220 to 1.2980. 

At the moment, the GBP/USD has formed a bullish engulfing candle above 1.2980 support level, which is suggesting a bullish trend in the GBP/USD until 1.3100. On the lower side, a bearish breakout of 1.2980 level can extend selling until 1.2945 today. Let’s look for sell trades only below 1.3100 level and buying above the same today. 

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USD/JPY – Daily Analysis

The USD/JPY was flashing green and rose to 108.60 overnight, mainly due to the risk sentiment improved in the global markets as coronavirus priced in. The greenback strength is also sending the pair higher. The USD/JPY is moving around 109.41 and consolidates in the range between the 109.37 – 109.59.

The commodity complex was firmer despite a bullish U.S. dollar, which rose around 0.2% on the day. Looking to Dr. Copper, ongoing liquidity operations from the PBoC is supporting to improve risk sentiment, and prices here were above $5,680 at some stage, +2.3% (Copper prices are a common benchmark for assessing the global market’s risk profile, usually strong when risk-on, weak when risk-off).

The market risk sentiment will likely be disturbed again due to coronavirus intensifying fears. At least 490 people in China died from the coronavirus infection, officials said on Wednesday. Also, the number of confirmed cases of infection rose to 24,324, up from 425 deaths and 20,438 confirmed cases the day before. 

There are still plenty to be concerned for, and the price of oil is compelling, sliding further overnight to a low of $49.41bbls. Chinese oil demand is already dropped by 20% because of dwindling air travel, road transportation, and manufacturing.

Daily Support and Resistance

• S3 107.62
• S2 108.44
• S1 108.98

Pivot Point 109.26

• R1 109.81
• R2 110.09
• R3 110.91

USD/JPY – Trading Tips

Since the safe-haven appeal is diminishing, the USD/JPY pair is trading with a bullish bias in the wake of weakening Japanese yen. The pair has crossed over 109.300 resistance level, and it seems to head towards 109.850. On Wednesday, the USD/JPY is likely to find resistance around 110.300 after violating 109.850. While support remains at 109.250.  

The RSI and MACD have crossed over in the buying zone and are supporting the bullish bias. Let’s look for buying trades above 109.26 today.

All the best for today!