The U.S. government reported a budget deficit of 32.6 billion dollars for January, significantly above the expected deficit of 10.0 billion dollars.
Later today, the Labor Department will post Consumer Price Index for January (+0.2% on month expected), and Initial Jobless Claims for the week ended February 8 (210,000 expected). European stocks were broadly higher, with the Stoxx Europe 600 Index rising 0.6%. Germany’s DAX gained 0.9%, France’s CAC rose 0.8%, and the U.K.’s FTSE 100 was up 0.5%.
The U.S. government bond prices eased for a second session, as the benchmark 10-year Treasury yield settled higher at 1.629%.
Economic Events to Watch Today
EUR/USD – Daily Analysis
The EUR/USD slid 0.4% to 1.0874, the lowest level since May 2017. Official data revealed that the Euro zone’s industrial production contracted 2.1% on month in December (-2.0% expected), the most significant decline in nearly four years.
The EUR/USD pair is prolonging the losses, and today, we are on the weakest levels since May 2017. On the news front, that is a blend of dovish ECB and concerns about retardation in the Eurozone, especially in Germany.
In addition to this, the U.S. Fed Chair Powell kept his stand in testimonies to Congress, verifying that the Fed does not see to cut rates any time shortly. Nonetheless, the money markets proceed to price in another interest rate cut in the second half of the year.
The EUR currency will likely continue to flash red, having found acceptance under the critical support at 1.0879. Whereas, the bearish common currency could find bids if the U.S. Consumer Price Index (CPI) for January, which is listed to deliver at 13:30 GMT, exceeds the expectations by a significant margin. As better than expected CPI data will enable markets to price out probabilities of an additional interest rate cut by the Federal Reserve.
Daily Support and Resistance
- R3: 1.1009
- R2: 1.0949
- R1: 1.0911
Pivot Point 1.0888
- S1: 1.0851
- S2: 1.0828
- S3: 1.0767
EUR/USD– Trading Tips
The EUR/USD is consolidating in a bearish zone around 1.0912 in the wake of a stronger dollar and weaker Euro. Presently, the pair is very near to the strong support mark of 1.0879, and the EUR/USD has also concluded a daily candle over this level. The pair has also formed a Doji candle accompanied by a robust bearish trend, which implies the odds of a downward reversal unto 1.0945 and 1.0980. Alternatively, the violation of 1.0925 can push buying in Euro; elsewhere, it may extend trading bearish unto 1.0880.
GBP/USD– Daily Analysis
The GBP/USD marked a day-high of 1.2991 before retreating to close at 1.2955, relatively flat on the day. At the USD front, the greenback getting support as a safe-haven flows from the coronavirus fears. Moreover, the United States economy is performing almost strong, as shown last week’s nonfarm payroll report.
As in result, the U.S. 10-year Treasury yields decreased nearly 3-basis points to 1.60%, whereas most of the Asian shares are also in negative territories.
Looking forward, the Brexit and political updates from the U.K., and the U.S. Consumer Price Index data for January will be the keys to watch whereas; the traders also keep their eyes on the coronavirus headlines.
Daily Support and Resistance
- R3: 1.3047
- R2: 1.3008
- R1: 1.2984
Pivot Point 1.2968
- S1: 1.2944
- S2: 1.2928
- S3: 1.2888
GBP/USD– Trading Tip
The GBP/USD broke above 1.2950 resistance level, which is now looking to test the next resistance around 1.3045. The following support level is likely to be found around 1.2950 for now. On the 4 hour timeframe, 1.3000 is the most crucial level for the GBP/USD as a violation of this level can lead Sterling prices further higher towards 1.3045 and 1.3065 in the coming week. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for bullish trades above 1.3000 today.
USD/JPY – Daily Analysis
The safe-haven-metal prices got support and representing 0.30% gains on the day mainly due to risk-off market sentiment in the wake of coronavirus intensified fears. The yellow metal is currently trading at $1,570 per Oz, representing a 0.30% gain on the day.
The coronavirus is back in action, as the latest report in coronavirus infected and dead people from Hubei registered a sharp rise due to the change in the updated diagnostic standard. The numbers mention 14,840 new coronavirus cases, with the death toll rising by 242 to 1,310 at the end of February 12, 2020.
However, the renewed coronavirus fears could be the reason behind the risk-off sentiment, caused by the big jump seen in the coronavirus cases in China. As in result, the futures on the S&P 500 are currently down 0.30%, and so is the price of WTI oil. Japan’s Nikkei is also representing a 0.10% drop.
Meanwhile, the Japanese yen is attracting bids against commodity dollars, AUD, NZD, and CAD currencies. The markets might review the historical data with the new methodology. If the trend is found to be slowing, the risk sentiment could improve, and ultimately decreasing the bid tone around the gold.
Daily Support and Resistance
- R3: 110.63
- R2: 110.33
- R1: 110.21
Pivot Point 110.02
- S1: 109.9
- S2: 109.71
- S3: 109.4
USD/JPY – Trading Tips
The USD/JPY pair is trading in a narrow range of 110.025 – 109.600 due to a lack of economic events during the Asian session, but we may see movement during the U.S. session on the release of CPI data. At the moment, the USD/JPY pair is looking to cross above the horizontal resistance level of 110.025.
In case, the USDJPY manages to break above 110.025 level; we may see USD/JPY prices going towards 110.350 at first and then towards 110.850. Alternatively, the USD/JPY can drop to 109.600 in case of failure to break above 110.025.
All the best for today!