Daily F.X. Analysis, February 26 – Top Trade Setups In Forex – Mixed Sentiment Dominates! 

On the forex front, the U.S. dollar fell against its major peers, with the ICE Dollar Index declining 0.4% on the day to 99.00. France’s INSEE will release the February Consumer Confidence Index (103 expected).

The U.S. Commerce Department will report January’s new home sales (717,000 units expected). That’s all we have on the economic docket, so let’s take a look at the technical setups for today.

Economic Events to Watch Today 

  

 

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EUR/USD – Daily Analysis

The EUR/USD fell back towards $1.08, and the Australian dollar dropped to an 11-year low amid the extension of the coronavirus outside China prompted concerns of a pandemic and led traders to take safe-haven shelter in the Greenback.

What’s more surprising is that the safe-haven Japanese yen and the Swiss franc has also gained bullish momentum, but not by much as the U.S. dollar. It seems like the investors are giving more weightage to Greenback, which is keeping the EUR/USD bearish. 

The EUR/USD pair seems to cross the high level of 1.0890 if the U.S. yields continue to flash red in the wake of coronavirus fears. Whereas, the 10-year Treasury note is currently trading at 1.37%, representing a five basis point gain on the record low of 1.32%. 

Looking forward, there won’t be any meaningful macroeconomic data releases on Wednesday, and markets will remain focused on coronavirus headlines.

Daily Support and Resistance

• S1 1.0747
• S2 1.0807
• S3 1.0844
• Pivot Point 1.0867
• R1 1.0905
• R2 1.0928
• R3 1.0988

EUR/USD– Trading Tips

The EUR/USD pair is trading sideways due to the lack of major economic events. The EUR/USD is consolidating near 1.0850, as investors seem to do profit taking due to lack of volatility. The pair appears to have initiate correction as it has previously achieved 23.6% Fibonacci retracement at 1.08530. 

On the 4 hour timeframe, the EUR/USD pair seems to form a bearish flag that has the potential to drive further selling in the EUR/USD pair. The pair may find immediate support around 1.08540, which is mostly extended by the 50 EMA and a bullish trendline. Above this, the direct currency pair can bounce off until 1.0890, while bearish breakout can lead the pair towards the next support area of 1.0820.

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GBP/USD– Daily Analysis

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

The stronger dollar has capped the gains for the GBP/USD pair. On Wednesday, the dollar has expanded by 0.2% versus a basket of currencies to 99.62. Even though the U.S. economic figures during the previous week came in under economists’ expectations. Money markets are presently pricing in a Federal Reserve interest rate reduction sentiment as Fed is expected to cut rate by 25 basis points in June. A stronger dollar in the wake of coronavirus can hurt the exports from the United States, and Trump may put more pressure on the Fed Chair Powell to introduce the dovish policy in the future. 

On the Brexit front, the council approved a decision to allow the opening of the Brexit talks for a fresh partnership with the U.K. The Commission has also formally nominated the Commission as an E.U. negotiator. Apart from this, the council selected negotiating directives, which constitute a mandate to the Commission for the negotiations.

On the fundamental side, the Sajid Javid’s abrupt departure as Chancellor of the Exchequer recently helped the GBP currency because markets started to price in the possibilities of a significant fiscal expansion in the U.K., repealing the Bank of England rate cut trade. 

Daily Support and Resistance

• S1 1.2802
• S2 1.2893
• S3 1.2949
• Pivot Point 1.2984
• R1 1.304
• R2 1.3074
• R3 1.3165

GBP/USD– Trading Tip

Technically, the GBP/USD is trading with a mixed bias, following a narrow trading range of 1.2960 – 1.3010. At the moment, the Cable seems to head south to retest the resistance become support level of 1.2965, and closing of doji or reversal candles above this level may help support the GBP/USD pair. 

The GBP/USD has the potential to go after 1.3070 level only if it manages to trade above 1.2960 support. Bearish violation of this level can extend selling until 1.2900 level. 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 1.2984 and bullish above the same level today. 

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USD/JPY – Daily Analysis

The USD/JPY currency pair flashing green rose above the 110.00 handles, the pair continued its recent recovery rally and reached above the 110.00 level mainly due to market stability. The USD/JPY is holding 110.36 and consolidates in the range between the 110.14 – 110.58. However, a stable market tends to weaken the Japanese yen’s safe-haven demand.

The modest recovery in the global risk sentiment allowed the U.S. Treasury bond yields to stage a goodish bounce from all-time lows. This ultimately continued some support to the U.S. dollar and remained supportive of the early uptick.

The renewed strength could be the cause of the uptick in the S&P 500 futures, which are now reporting a 0.70% gain on the day. The state of confusion between the traders is mainly due to the global outbreak of the deadly coronavirus, which is driving traders towards placing bullish bets on gold and the U.S. dollar instead of Japanese yen. Therefore, it will be a good idea to wait for putting some secure follow-through buying after confirming that the recent sharp corrective slide from multi-month tops has already ended.

Looking forward, there isn’t any major market-moving economic data scheduled to release on Wednesday. So, any fresh developments about the coronavirus will play a key role in producing some meaningful trading opportunities.

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 has dropped from 112.160 level to 110.135 level just in two trading days. Earlier, we expected it to reverse after completing the 61.8% Fibonacci support level of 110.350, but this level has now been violated. 

On the 4 hour timeframe, an upward trendline was also extending support at 110.350, but the pair failed to hold above this mark, perhaps due to profit-taking in the Greenback. For now, the safe-haven pair is showing a slight bullish correction to retest the support become a resistance area of 110.350. Closing of candles below this level can help us secure a selling trade with a take profit of around 109.650.  

All the best for today!