Daily F.X. Analysis, February 20 – Top Trade Setups In Forex – U.K. Retail Sales In Highlights! 

On the forex front, U.S. Dollar Index gained 0.2% on the day to 99.59, as the Fed’s FOMC minutes confirmed that officials “viewed the current stance of policy as likely to remain appropriate for a time.”

The European Commission will release the eurozone’s January Consumer Confidence Index (-8.2 expected). The German Federal Statistical Office will report January PPI (-0.4% on year expected). The GfK Consumer Confidence Index for March will be released (9.8 expected). 

France’s INSEE will post final readings of January CPI (+1.5% on-year expected). The U.K. Office for National Statistics will report January retail sales (+0.7% on month expected).

Economic Events to Watch Today 

 

 

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EUR/USD – Daily Analysis

The EUR/USD currency pair still found on the bearish track below the 1.08 handles ahead of the German data, having hit the high of 1.0815 in Asian trading hours. The EUR/USD currency pair is currently trading at 1.0798 and consolidates in the range between the 1.0792 – 1.0816. However, the traders are still struggling to keep the gains above the key hurdle ahead of the forward-looking German data. 

The currency pair got another failure to keep the pair above the 50-hour moving average located near 1.0810 during the Asian session. 

On the fundamental side, the German Gfk Consumer Confidence Survey, which is scheduled to release at 07:00 GMT, is expected to show a slight decline in the consumer sentiment in March. The index is anticipated to edge lower to 9.8 from February’s 9.9 figures. 

It should be noted that the euro may take further losses and drop towards the psychological support at 1.0750 if the German GFK Consumer Confidence Survey data disappoint expectations. 

On the other hand, the currency pair may hit the corrective bounce above the 50-hour M.A., currently placed at 1.0805 if the German data cheer expectations. Moreover, Germany will also report the Producer Price Index for January at 07:00 GMT. However, that data isn’t a big market mover. 

Daily Support and Resistance

• S1 1.074
• S2 1.077
• S3 1.0788

Pivot Point 1.08

• R1 1.0818
• R2 1.083
• R3 1.0859

EUR/USD– Trading Tips

The EUR/USD pair is mostly trading the same technical levels, as mentioned in the previous report. The EUR/USD pair appears to have formed neutral candles as the investors still didn’t find any solid reason to trigger bearish breakout at 1.0825 level. 

Today’s candle is slightly bearish, but it’s still no violating the previously placed low of 1.0775. It is pretty much likely to drive upward correction. Today, if the EUR/USD pair manages to drop below 1.0840, we may see EUR/USD prices going towards 1.0760. Let’s look for buying trade today above 1.0806. 

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GBP/USD– Daily Analysis

The GBP/USD currency pair hit the 7-days low and dropped to 1.2910 ahead of the Retail Sales data. The GBP/USD is trading at 1.2912 and consolidates in the range between the 1.2901 – 1.2929. However, the European Union and the United Kingdom trade war, as well as the broad-based greenback strength, is keeping the pair under pressure and sent below the 7-day low.

Whereas the European Union’s chief Brexit negotiator Michel Barnier refused the U.K.’s signal for the Canada-style trade deal with the region. He is already aware that the Toris will stand ready to criticize this move. Moreover, the U.K.’s diplomats challenged the E.U. diplomat’s demand to return the Elgin Marbles under the post-Brexit trade deal. 

On the other hand, the opposition is using all the way to reject Home Secretary Priti Patel’s latest immigration plan, whereas the European Union stuck in the budget’s tension before the 1st E.U. summit post-Brexit.

Apart from U.K. politics, the greenbacks still flashing green and keep its gains higher because not only the risk-sentiment but the upbeat data is also sending the greenback higher. According to the latest update, the coronavirus numbers again shocked markets by using the re-revised methodology. Although, this doesn’t stop negative comments from the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva and rating giant S&P. Eventually, these are keeping the risk sentiment off. 

It is worth to mention that the fresh easing from the Peoples Bank of China (PBOC) and Australian employment data also gave support to the greenback, Moreover, the U.S. ten-year treasury yields, and Asian stocks again flashing red after rising the previous day.

Daily Support and Resistance

• S1 1.2719
• S2 1.2835
• S3 1.2879

Pivot Point 1.2951

• R1 1.2995
• R2 1.3067
• R3 1.3183

GBP/USD– Trading Tip

The GBP/USD pair slipped lower to test the next support level of 1.2880 and has formed bearish engulfing candle around, which is confirming the bearish breakout of 1.2974 support. Now his level is working as resistance, and it may keep the GBP/USD pair bearish. 

Zooming out on the 4-hour chart, the GBP/USD has formed a descending triangle pattern that typically breaks on the lower side. Currently, this pattern is extending support at 1.2885, but the breakout of this level can extend selling until 1.2785 and even below this level. Therefore, 1.2885 is going to be one of the crucial trading levels. 

The GBP/USD is trading at 1.3036, below the 1.3065 resistance level. Closings of candles below this level may help secure a sell trade around 1.3065, whereas, a bullish breakout of 1.3065 can lead the Cable towards 1.3200. 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 1.3018 today. 

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USD/JPY – Daily Analysis

The USD/JPY is flashing green, but the recovery from the session lows might be temporary because the U.S. equity index futures are now flashing red. The USD/JPY is trading at 111.70 and consolidates in the range between the 111.11 – 111.72. However, the currency pair hit the 9-months high of 111.59 during the previous sessions.

The pair’s buyers are struggling to lift the pair back to 111.80, possibly due to the uptick in the U.S. equity index futures. The S&P 500 traded bullish by around 0.25% in early Asia. 

The bid tone around the currency pair was declined in the past few minutes despite China passing an interest rate cut as anticipated. During press conference time, the futures are shedding 0.25%. Moreover, the U.S. 10-year yield is also reporting a two basis point drop at 1.55%. 

It’s worth mention that the Shanghai Composite index is soaring by 0.4%. Thus, the positive action in the Chinese stocks can also help support the U.S. index futures, and therefore the USD/JPY pair may hit fresh multi-month highs even above 112. 

Daily Support and Resistance

• S1 107.85
• S2 109.42
• S3 110.4

Pivot Point 111

• R1 111.97
• R2 112.57
• R3 114.14

USD/JPY – Trading Tips

The bullish trend of the USD/JPY continues to hit the market as the pair has surged dramatically to trade at 111.800 level. Most of the bullish trend came after the USD/JPY violated the upward channel on the daily chart. This channel was extending resistance around 111 level, and now this is going to extend support to the USD/JPY currency pair. 

On the higher side, the pair has the potential to go after the next resistance level of 112.300. The MACD has also started forming histograms above 0, signaling bullish bias for the USD/JPY pair. Let’s consider staying bullish above 111.450 today to target 112.200. 

All the best for today!