Daily F.X. Analysis, December 28 – Top Trade Setups In Forex – Boxing Day Holiday! 

Welcome back to a fresh week after a long weekend. I hope you had a fantastic Christmas. The global banks will be closed in observance of Boxing Day today; therefore, we may have thin volatility and trading volume today in the market. Let’s check out the technical side of the market. 

 

Economic Events to Watch Today  

 

EUR/USD – Daily Analysis

The EUR/USD succeeded in maintaining its overnight bullish bias and remained well bid around above the 1.2200 level. However, the currency pair’s sentiment was being supported by the latest progress over the massive U.S. government spending bill and COVID-19 relief measures, which undermined the safe-haven U.S. dollar and contributed to the currency pair gains. 

Moreover, the S&P 500 Futures sentiment was further bolstered by the recent passage of the Brexit deal and upbeat comments from the covid vaccine producers, which in turn, added further weakness to the greenback and contributed to the currency pair gains. In contrast to this, the intensifying concerns about increasing COVID-19 deaths and the possibility of economically-painful hard lockdowns keep questioning the pair’s upside momentum. As of writing, the EUR/USD currency pair is currently trading at 1.2226 and consolidating in the range between 1.2181 – 1.2227.

The S&P 500 Futures enter the 3,700 marks and refreshed intraday high near 3,710 during early Monday. The market trading sentiment recently gained bids after U.S. President Donald Trump signed the much-awaited coronavirus (COVID-19) aid package, which instantly boosted the investor’s confidence. As per the New York Post, President Trump has signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct checks of $600 for people earning up to $75,000 per year. In addition to this, the bill creates a new $300 weekly unemployment supplement and replenishes a forgivable loan program for small businesses, while there’s an additional $600 per child stimulus payment. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

Elsewhere, the gains in the currency pair were further bolstered after the passage of the Brexit deal and upbeat remarks from the covid vaccine makers. As per the latest report, the U.K.’s Foreign Secretary Dominic Raab said that the United Kingdom is now seeking trade deals with Australia, the United States, and countries in the Indo-Pacific region.” Across the pond, the AstraZeneca CEO Pascal Soriot said that their covid vaccine is effective against the new strain, which in turn exerted an additional positive impact on the market trading sentiment and contributed to the currency pair gains.

Looking ahead, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package. However, the global markets may witness a dull trading session amid the year-end celebration mood and off at major bourses. 

Daily Technical Levels

Support Resistance

1.2143 1.2231

1.2090 1.2266

1.2055 1.2320

Pivot point: 1.2178

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at the 1.2224 area, having crossed over the triple top resistance level of 1.2200, now working as a support for the EUR/USD. Continuation of an upward trend can extend the buying trend until the 1.2250 level. The EUR/USD pair violates the symmetric triangle pattern, which is likely to drive further upward movement in the market. Bullish bias seems dominant today.

GBP/USD – Daily Analysis

The GBP/USD currency pair managed to maintain its bullish bias through the first half of the Asian session and remained bullish around above the mid-1.3500 level due to the prevalent risk-on market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair gains. Hence the market trading sentiment was supported by the hopes of coronavirus vaccine and progress toward a massive U.S. government spending bill and COVID-19 relief measures. 

On the contrary, the currency pair trimmed some of its sharp gains during Monday’s European session as the renewed uncertainties over the future of the recently signed Brexit deal tend to undermine the British Pound even as markets are off in the U.K. Furthermore, the currency pair’s gains were also capped by the growing market concerns about the continuous rise in new coronavirus cases and the enforcement of fresh restrictions in the U.K. As of writing, the GBP/USD currency pair is currently trading at 1.3561 and consolidating in the range between 1.3530 – 1.3576.

Despite the recent passage of the Brexit deal, the doubts over the key issues like the level Playing Field, Finance, and Gibraltar remain on the cards as the U.K. Prime Minister Boris Johnson has admitted it is an agreement which does not have as much as he would have liked about the financial services sector and regulatory equivalence. He further added that this agreement would give the people hope that we will remain in close dialogue with our European partners regarding things like equivalence decisions. In that way, the uncertainties over the recently signed Brexit deal’s future exerted downside pressure on the GBP/USD currency pair.

Despite this, the S&P 500 Futures managed to extend its previous session’s positive performance and refreshed intraday high near 3,710 during the early European session on the day. The market trading sentiment recently gained bids after U.S. President Donald Trump signed the much-awaited coronavirus (COVID-19) aid package, which instantly boosted the investor’s confidence. As per the New York Post, President Trump has signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct reviews of $600 for people earning up to $75,000 per year. 

In addition to this, the bill creates a new $300 weekly unemployment supplement and replenishes a forgivable loan program for small businesses, while there’s an additional $600 per child stimulus payment. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

Looking ahead, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package as the global markets witnessing a dull trading session amid the year-end celebration mood and off at significant bourses. 

Daily Technical Levels

Support Resistance

1.3442 1.3562

1.3378 1.3618 

1.3322 1.3683

Pivot point: 1.3498

GBP/USD– Trading Tip

The Sterling is trading with a bullish bias at 1.376 level, heading further higher towards the next resistance level of 1.3650 level. Support stays at 1.3495 level today. This support level is extended by an upward trendline, which can be seen in the 4-hour timeframe. On the higher side, the GBP/USD pair can prolong the buying trend unto the 1.3622 level, and the bullish trend continuation can lead the GBP/USD pair towards the 1.3706 mark. 

USD/JPY – Daily Analysis

The USD/JPY failed to stop its previous-session bearish bias and remained depressed around below the 103.50 level, mainly due to the broad-based U.S. dollar weakness. The fresh optimism was pressuring the U.S. dollar that the U.S. President Donald Trump signed a $2.3 trillion COVID-19 relief and government funding bill, urging investors to retreat from the safe-haven investment riskier assets. Apart from this, the losses in the U.S. dollar could also be attributed to the lingering doubts over the U.S. economic recovery from COVID-1, which adds further burden around the U.S. dollar and contributes to the currency pair losses. 

The upbeat market sentiment, backed by the hopes of coronavirus vaccine and the U.S. covid stimulus, boosted investors’ confidence and undermined the safe-haven Japanese yen, which, in turn, was seen as one of the leading factors that helped the USD/JPY currency pair to limit its deeper losses.

Despite the worries over the coronavirus pandemic’s resurgence, the optimism over a possible vaccine for the highly infectious coronavirus disease has remained supportive of the market risk tone. Also favoring the optimism could be the recent comments from the covid vaccine producers. As per the keywords, AstraZeneca CEO Pascal Soriot said that their covid vaccine is effective against the new strain. Thus, the risk-on market mood tends to undermine the safe-haven Japanese yen, which becomes the key factor that lends some support to the currency pair to ease the intraday bearish pressure surrounding the USD/JPY currency pair.

In addition to this, the sentiment around the equity market was improved further after U.S. President Donald Trump signed a $2.3 trillion COVID-19 relief and government funding bill. It is worth noted that U.S. President Trump had signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct reviews of $600 for people earning up to $75,000 per year. Furthermore, the bill creates a new $300 weekly unemployment supplement and provides a forgivable loan program for small businesses. Besides this, there’s an additional $600 per child stimulus payment. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish trend and remained depressed on the day. Apart from this, doubts over the U.S. economic recovery remains on the cards amid rising COVID-19 deaths, which adds further burden around the greenback. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. Meanwhile, the U.S. dollar index, which measures the greenback against a bucket of currencies, dropped by 0.15% to 90.112 by 12:09 AM ET (5:09 AM GMT).

In contrast to this, the optimism around the equity market was slightly unaffected by the intensifying market worries regarding the continuous rise in new coronavirus cases in the U.S. and Europe, which keep sparking the worries over the global economic recovery through imposing new lockdown restrictions on economic and social activity. Furthermore, the equity market gains were also capped by the renewed uncertainty over the Brexit deal and intensified China-US tussles.

There isn’t any major market-moving economic data due for release on the day, which in turn, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package as the global markets seeing a dull trading session amid the year-end celebration mood and off at major bourses.

Daily Technical Levels

Support Resistance

103.47 104.02

103.25 104.37

102.91 104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY trades choppy in between a narrow trading range of 103.750 – 103.360 level. The safe-haven USD/JPY pair faces immediate support of 103.360, and the formation of candles above this level can drive the buying trend until 103.746. Whereas, bullish trend continuation can extend further buying trend until 104.090 level. The MACD and RSI are suggesting selling bias as it’s forming histograms below 0 level. While the 50 EMA also supports the selling trend. Let’s consider taking a selling trade until the 102.990 level today. Good luck!