Daily F.X. Analysis, February 21 – Top Trade Setups In Forex – U.K. Retail Sales In Highlights! 

On the forex front, the ICE U.S. Dollar Index advanced 0.2% on the day to 99.88, the strongest level in nearly three years, supported by broadly positive U.S. economic data. Official data revealed that the eurozone’s Consumer Confidence Index rose to -6.6 in February (-8.2 expected) from -8.1 in January, while the German GfK Consumer Confidence Index for March slipped to 9.8 (as expected) from 9.9 in February. Later today, research firm Markit will release eurozone’s February Manufacturing PMI (47.4 estimated) and Services PMI (52.3 expected).

Economic Events to Watch Today 

 

 

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EUR/USD – Daily Analysis

The EUR/USD currency pair continues to bearish and found near the 1.0783 ahead of the German flash service PMIs. The EUR/USD currency pair is currently trading at 1.0791 and consolidates in the range between the 1.0783 – 1.0795. Traders are cautious about placing any position ahead of the German PMIs data.

At the data front, Germany’s flash manufacturing PMI for February, scheduled to release at 0830 GMT, is seen arriving at 44.8, down from January’s final print of 45.3, whereas the index for the services sector is seen declining to 53.8 this month against 54.2 last.

The forecast for the Eurozone flash manufacturing PMI (due at 0900 GMT) shows 47.5 for February against 47.9 seen in the previous month. The Eurozone services sector PMI is seen printing a tad weaker at 52.2 in February compared to January’s 52.5 reading. Whereas, the actual figure has been mixed as, but the Flash Services PMI soared to 52.8 while economists expected a figure of 47.4.

Germany’s export-oriented sector growth has decreased sharply, mainly due to the coronavirus outbreak, a recently published Zew survey of the financial market specialists showed.

However, the slowdown fears will grow if the German data prints below expectations. As in result, the shared currency could drop further and send the EUR/USD currency pair down to 1.0750.

On the flip side, the EUR currency may get support if the German PMI betters estimates by a significant margin, while the immediate technical bias of the pair will continue to bearish as far as the pair is holding at the declining 10-day average.

Daily Support and Resistance

• S1 1.0708
• S2 1.0751
• S3 1.0768

Pivot Point 1.0795

• R1 1.0811
• R2 1.0838
• R3 1.0881

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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. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing green and registered 1st daily close under the 100-day moving average since October. The GBP/USD currently trading at 1.2896 and consolidates in the range between the 1.2878 – 1.2899. The currency pair representing modest gains on the day, having hit the 3-month low of 1.849 on Thursday.

The preliminary Markit Manufacturing PMI (Feb) is expected to print at 49.7, indicating a contraction in the activity after January’s neutral reading of 50.00. The selling interest around the GBP currency may increase if the PMI number prints below estimates. The actual results have come out and are supporting the GBP/USD pair. The U.K. manufacturing and services PMI performed slightly better than before. The Manufacturing PMI surged surprisingly to 51.3, crossing the 49.7 forecasts.

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. 

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. 

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

On the technical side, a daily closing beyond 100-day SMA level of 1.2955 can recall 1.3000 marks to the charts whereas February 13 top surrounding 1.3070 and 23.6% Fibonacci retracement at 1.3206 can entertain the buyers during further upside. 

The GBP/USD is trading at 1.2906, below the 1.2975 resistance level. Closings of candles below this level may help secure a sell trade around 1.2875, whereas, a bullish breakout of 1.2975 can lead the Cable towards 1.3070. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for selling trades below 1.2951 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and dropped to 111.69 after the 2-days of bullish trend mainly due to the renewed risk-off market sentiment supporting the Japanese yen. The USD/JPY currency pair is currently trading at 111.75 and consolidates in the range between the 111.69 – 112.19. However, the Japanese Yen recently boosted to the highest since April 2019 after the broad-based U.S. Dollar rally and weak Japanese data.

The global risk sentiment increased further on Friday after the World Health Organization (WHO) officials gave warning that the new coronavirus may break out globally at any time. After 2-days of heavy selling, the Japanese yen found some support from the renewed risk-off tone.

As the latest data front, Japan’s National Consumer Price Index (CPI) (YoY) for January matched 0.7% forecast, whereas National CPI ex-Food, Energy (YoY) dropped below 0.9% forecast and before 0.8%. Further, the preliminary reading of Japan’s February month Jibun Bank Manufacturing PMI dropped below 49.00 estimates and 48.8 before 47.6.

The USD/JPY currency pair has now dropped below the 112.00 round-figure marks. However, the bearish trend is likely to remain warm, due to the backdrop of the recent weakness in the Japanese macro data and increasing concerns of deepening economic fallout from the coronavirus outbreak. Traders will now await All Industry Activity Index (MoM) data for December, prior 0.9%, for further direction.

Daily Support and Resistance

• S1 110.12
• S2 111
• S3 111.55

Pivot Point 111.89

• R1 112.44
• R2 112.77
• R3 113.66

USD/JPY – Trading Tips

On Friday, 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 upper side, the pair has the potential to go after the next resistance level of 112.300. The MACD has also started forming histogram lines above 0, signaling bullish bias for the USD/JPY pair. Let’s consider staying bearish below 112.150 today to target 111.500. 

All the best for today!