Daily F.X. Analysis, December 14 – Top Trade Setups In Forex – European Events in Highlights!  

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

Economic Events to Watch Today  

  

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EUR/USD – Daily Analysis

During Monday’s Asian trading session, the EUR/USD currency pair succeeded in extending its overnight winning streak and remained well bid around the 1.2140 level mainly due to the risk-on market sentiment. That was supported by the optimism over treatment for the highly infectious coronavirus, which tends to weaken the safe-haven U.S. dollar and contributes to the currency pair gains. 

Moreover, the upbeat market tone was further boosted by the increasing expectations of a further U.S. stimulus package, which boosted the currency pair. On the contrary, the fresh jump in infections and death toll in Europe keeps fueling the doubts over the Eurozone economic recovery, which becomes the key factor that kept the lid on any additional currency pair gains. The EUR/USD is trading at 1.2134 and consolidating between 1.2116 and 1.2145.

The global equity market has been flashing green since the day started and is supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members are still progressing over the much-awaited stimulus talks. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. Across the pond, the optimism over treatment for the highly infectious coronavirus has also been favoring the market trading sentiment. These hopes were sparked after the U.S. Food and Drug Administration’s (FDA) officially authorized the Pfizer-BioNTech covid vaccine for emergency use. Thereby, the upbeat market mood has been playing its major role in underpinning the currency pair.

The broad-based U.S. dollar declined to obtain any positive traction and drew an offer on the day as doubts persist over the global economic recovery from COVID-19. That was witnessed by the U.S. previous week’s downbeat U.S. data. Meanwhile, the risk-on market sentiment also weighed on the U.S. currency. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

On the contrary, the intensifying coronavirus woes across the globe and intensifying lockdowns restrictions in Europe and the U.S. keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. In the meantime, Germany also extended national activity restrictions. Meanwhile, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two largest markets in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

Looking forward, the traders will keep their eyes on the U.S. employment data for November along with Euro German Factory Orders data, which will likely entertain market players amid a light calendar. All in all, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is trading choppy at the 1.2131 mark, meeting immediate resistance at 1.2160 and 1.2196 marks along with a support mark of 1.2085. Formation of candles beneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Industrial Production and German Buba Monthly Report will remain in highlights. Let’s wait to trade a breakout setup during the European or the U.S. session today. 

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GBP/USD – Daily Analysis

During Monday’s Asian trading session, the GBP/USD currency pair managed to stop its previous week’s bearish bias and refresh the intra-day high around above the mid-1.3300 level, mainly due to reports suggesting that the UK PM. Boris Johnson and the European Commission (E.C.) President Ursula von der Leyen agreed to extend the Brexit talks for one more week, which eased fears of a no-deal Brexit and contributed to the currency pair gains. On the other hand, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3325 and consolidating in the range between 1.3291 – 1.3354.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, boosted the sentiment around the British Pound and contributed to the currency pair gans. In contrast, the British PM Johnson repeats, “I’m afraid we’re still very far apart on some issues.” However, this negative statement failed to leave any meaningful impact on the Pound. 

Despite the lingering doubts about global economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheering the optimism over a possible vaccine for the highly infectious coronavirus disease. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. However, the positive developments over the covid vaccine keep favoring the market risk-on mood. Apart from this, the global equity market was further supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

As in result, the broad-based U.S. dollar failed to stop its bearish bias and remained depressed on the day. Moreover, the doubts over the global economic recovery from COVID-19 remains on the card. That was witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

Conversely, the intensifying coronavirus woes in the U.K. and the U.S. and intensifying lockdown restrictions keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the U.S. and U.K. policymakers were forced to impose the local lockdowns once again. In the meantime, Germany also extended national activity restrictions. 

Looking forward, the market traders will keep their eyes on the developments surrounding the Brexit story for some significant direction in the pair. Furthermore, the updates covering the virus and the US-China tussle will also be key to watch.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant; therefore, we should be looking for a sell trade only upon the violation of the 1.3265 level. The lagging technical indicators like 50 EMA suggest selling bias. Thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

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USD/JPY – Daily Analysis

During Monday’s Asian trading session, the USD/JPY currency pair failed to gain any positive traction. They witnessed some modest selling moves near below the 104.00 level, mainly due to the upbeat market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair losses. However, the market trading sentiment was supported by the optimism about the coronavirus treatment and progress in the U.S. stimulus talks. Simultaneously, the market’s upbeat mood weakens the safe-haven Japanese yen, which could be considered one of the key factors that help the currency pair limit its deeper losses. In contrast, Japan’s Tankan data for the 4th-quarter (Q4) marked upbeat figures, which boosted the Japanese yen’s sentiment and contributed to the currency pair losses.  

At the data front, Tankan Large Manufacturing Index for Q4 grew from -27 to -10, against expectations of -15, while the Non-Manufacturing Index increased from -6 market consensus to -5 during the stated period. Moreover, Tankan Large Manufacturing Outlook and Non-Manufacturing Outlook also recorded upbeat numbers of -8 and -6 respectively, against -11 and -7 forecasts in that order.

Despite the lingering doubts over the U.S. economic recovery and the escalating tension between the world’s two biggest economies, the market players continue to cheer the optimism over a potential vaccine for the highly dangerous coronavirus infection. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. In turn, the New York Times got help to say that the White House staff members will be among the first to be vaccinated. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and contributed to the currency losses by undermining the safe-haven U.S. dollar.

Apart from this, the global equity market upticks were further fueled by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish traction and edged lower on the day. Moreover, the doubts over the U.S. economic recovery from COVID-19 remains on the card, as witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

The rising tensions between the United States and China keep challenging the market risk-on tone and might suffer the currency pair into deeper losses. It’s also questioning the market risk-on mood could be the intensifying coronavirus woes in the U.K. and U.S., which leads to the intensifying lockdown restrictions. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

During the previous week, the USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck