Daily F.X. Analysis, February 25 – Top Trade Setups In Forex – Coronovirus Dominates Market Sentiment! 

Later today, the Conference Board’s Consumer Confidence Index for February is expected to increase to 132.1. The number of confirmed coronavirus cases in South Korea has jumped to 833 with eight fatalities. Japan has recorded 850 cases (4 deaths), Italy announced there were 229 incidents (7 deaths). Singapore has also addressed 90 instances.

Save-haven assets, like U.S. government bonds and gold, kept receiving bids. The benchmark 10-year Treasury yield slid from 1.470% Friday to 1.377%, the lowest level since July 2016. And the 30-year yield shed 6.8 basis points to 1.849%.

Economic Events to Watch Today 

  

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EUR/USD – Daily Analysis

On Tuesday, the EUR/USD remains lightly positive, +0.08%, while taking steps to 1.0860. The dollar slid on Tuesday following a recent bullish momentum amid heightened expectations that the expected hit to economic extension from the spread of the coronavirus will urge the U.S. Federal Reserve to decrease interest rates.

Expectations for the Federal Reserve interest rate cut have grown in the last few days to price in a 50-50 probability. Today is likely to be a quiet day ahead on the economic docket. Key economic figures will include Germany’s 2nd estimate GDP figures for the 4th quarter.

Lack of major deviation from 1st forecast is not likely to have too much of an influence on the EUR. Any drop in the U.S consumer confidence figure and risk sentiment could help capture a movement in the EUR/USD currency pair later during the U.S.s session today. 

Daily Support and Resistance

• R3: 1.0977
• R2: 1.091
• R1: 1.0882

Pivot Point 1.0844

• S1: 1.0815
• S2: 1.0777
• S3: 1.071

EUR/USD– Trading Tips

On Tuesday, 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.

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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 1.2978 and consolidates in the range between the 1.2934 – 1.3000.

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.

Yesterday, the British pound sank along with most currencies as traders blended out of assets considered riskier for the Greenback. Most of the economic analysts see the U.S. economy as nearly well-shielded should the coronavirus damage global economic growth heavily. Eyes will remain on the UK CBI Realized Sales for more trends in the GBP/USD pair.

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 1.2975, above the 1.2965 resistance become a support level. Closings of candles above this level may help secure a buy trade around 1.2975 with a target of 1.3070. Whereas, a bearish breakout of 1.2965 can lead the Cable towards 1.2930

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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 1.2965 and bullish above the same level today. 

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USD/JPY – Daily Analysis

The USD/JPY sank 0.7% to 110.81 on increasing safe-haven demand. The USD/JPY pair failed to maintain its bullish momentum as investors started taking profit in the U.S. dollar, which leads the USD/JPY prices lower. The Japanese yen has now dropped back to the lower end against Greenback, and the pair now continues to trade around the 110.65-60 region.

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.

Daily Support and Resistance

• R3: 113.5
• R2: 112.2
• R1: 111.46

Pivot Point 110.9

• S1: 110.16
• S2: 109.6
• S3: 108.29

USD/JPY – Trading Tips

The USD/JPY prices are trading with a bearish bias above 61.8% Fibonacci retracement level of 110.450. Closing of the candle above this level can extend buying until 110.850. Earlier, most of the bearish trend came after the USD/JPY violated the 38.2% Fibonacci retracement level on the 4-hour chart. On the lower side, the pair has the potential to go after the next support level of 109.650 in case of a bearish breakout of 110.250 support. Let’s consider staying bullish above 110.2 today to target 110.860. 

All the best for today!