On the forex front, the U.S. dollar retreated from the strongest level in nearly three years, as the ICE Dollar Index lost 0.6% on the day to 99.26. Germany’s IFO Institute reported its indexes for February (business climate at 95.0, current assessment at 98.4 and expectations at 91.6 expected). However, the actual figure surprised the market with a 96.1 gain.
In the U.S., the Federal Reserve Bank of Chicago will post January National Activity Index (-0.16 expected). The Federal Reserve Bank of Dallas will release its Manufacturing Activity Index for February (0 expected).
Economic Events to Watch Today
EUR/USD – Daily Analysis
The EUR/USD rose 0.6% to 1.0845. Research firm Markit reported that the eurozone’s manufacturing PMI bounced to 49.1 in February (47.4 estimated) from 47.9 in January and Services PMI climbed to 52.8 (52.3 expected) from 52.5. Later today, the German IFO Business Climate Index will be released (95.0 expected).
The Euro is getting badly hit in the wake of coronavirus. At the virus front, the number of coronavirus cases in Italy’s Lombardy region rose from 54 on Sunday to 89, leaving the country with 150 confirmed infection, the highest in Europe and around 5-times that of Germany whereas the news came as the total number of virus cases rose past 77,000 in China.
Daily Support and Resistance
- S1 1.0686
- S2 1.076
- S3 1.0804
Pivot Point 1.0834
- R1 1.0878
- R2 1.0908
- R3 1.0982
EUR/USD– Trading Tips
The EUR/USD pair soars higher to trade around 1.0865, making a bullish engulfing pattern on the daily chart. This pattern suggests the odds of bullish trend continuation.
The 50 periods EMA is also likely to extend support at 1.0815, and we may see a bounce off above this level. The same level also marks the 50% Fibonacci retracement, while 61.8% Fibo support prevails at 1.0815. On the higher side, resistance can be seen around 1.0845.
GBP/USD– Daily Analysis
The GBP/SD currency pair failed to continue its recent gains and dropped to 1.2940, representing 0.20% declines on the day mainly due to uncertainty and worries regarding the Brexit deal. The broad-based greenback strength also keeps the pair under pressure. At this moment, the GBP/USD currency pair is trading at 1.2938 and consolidates in the range between the 1.2934 – 1.2955.
The United Kingdom Prime Minister Boris Johnson will likely push for the U.S. trade deal by March 02, according to the Telegraph. The U.S. gave warning to the Tory government to avoid the greed checks on the good in the Irish Sea to secure the US-UK trade deal.
Besides, the on-going bearish pressure on the Cable is a reason for Greenback’s broad-based strength. The USD is getting gains due to the broad risk-off market sentiment in the wake of deadly coronavirus intensifying fears. As in result, the traders prefer the safe-haven assets like gold and dollar.
Looking forward, the traders will keep their eyes on the Brexit headlines because the British ministers are to approve the initial offer by Tuesday. On the other hand, the 2nd-tier project numbers from the US Dallas Fed and the US Chicago Fed will be the keys to watch.
Daily Support and Resistance
- S1 1.2749
- S2 1.2845
- S3 1.2902
Pivot Point 1.2942
- R1 1.2998
- R2 1.3038
- R3 1.3134
GBP/USD– Trading Tip
The GBP/USD is trading at 1.2898, below the 1.2965 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.
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 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 from the session high mainly due to the risk-off market in the wake of escalating coronavirus fears. At press time, the USD/JPY pair is trading right now at 111.52 and consolidates in the range between the 111.34 – 111.69. However, the USD/JPY is struggling to keep the recent gans above the 111.50.
Investors prefer safe-haven assets, mainly due to a rise in the number of coronavirus cases outside China, especially in South Korea and Italy. As per the latest report, the number of coronavirus cases in Italy’s Lombardy region rose from 54 on Sunday to 89, leaving the country with 150 confirmed infection, the highest in Europe, and around 5-times that of Germany whereas the news came as the total number of virus cases rose past 77,000 in China.
The USD/JPY currency pair may drop to levels below 111.30 if the German IFO data, which is scheduled to release at 09:00 GMT, prints below estimates, increasing recession fears and growing demand for the anti-risk Japanese yen.
It should be noted that China is declining some limitations in the Wuhan province and may allow non-local citizens to leave the city at the center of the outbreak. Whereas Guangdong province in China, which has the most infected sectors by virus after the Hubei region, decreased its coronavirus emergency response level from its highest this morning.
Daily Support and Resistance
- S1 110.57
- S2 111.13
- S3 111.35
Pivot Point 111.69
- R1 111.91
- R2 112.25
- R3 112.81
USD/JPY – Trading Tips
On Monday, the USD/JPY prices are trading with a bearish bias above 38.2% Fibonacci retracement level of 111.280. Closing of candle below this level can extend selling until 110.850. Earlier, most of the bullish trend came after the USD/JPY violated the upward channel on the daily chart.
This channel extended resistance around 111.01 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. Let’s consider staying bearish below 111.69 today to target 110.860.
All the best for today!