Daily F.X. Analysis, February 27 – Top Trade Setups In Forex – Brace for U.S. Economic Events!

On the forex front, the U.S. dollar stabilized on Wednesday, with the ICE U.S. Dollar Index gaining 0.2% on the day to 99.14. The European Central Bank will report the Eurozone’s M3 money supply in January (+5.3% on-year expected), February Economic Confidence Index (102.8 expected), and final readings of Consumer Confidence Index (-6.6 previously). Let’s take a look at trade ideas…

Economic Events to Watch Today 

  

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EUR/USD – Daily Analysis

The EUR/USD pair managed to cross the high level of 1.0890 as 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 profit on the record low of 1.32%. 

Overall, the Greenback has traded near a three-month high against the Euro as worries over the outbreak of Coronavirus has driven sharp volatility in the market, mostly driving dollar prices higher. 

The Euro has tried to rally higher during the Asian trading session on Thursday but continues to encounter resistance above. We are in a strong downtrend, and the EUR/USD is exhibiting correction of that downtrend as it could lead the EUR/USD prices towards the next target level of 10925. 

On Thursday, there won’t be any meaningful macroeconomic data releases from the Eurozone. Still, the markets will remain focused on coronavirus headlines and the U.S. economic figures, especially the Prelim GDP q/q and Durable Goods Orders m/m.

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 is consolidating near 1.0916, as the pair seems to go for completing 50% Fibonacci retracement at 1.0930. The pair appears to have initiate correction as it has previously achieved 38.2% Fibonacci retracement at 1.08930. The MACD is crossing above 0 level, which suggests.

Chances of further buying in the EUR/USD. The pair may find immediate support around 1.08540, which is mostly extended by the 50 EMA and a bullish trendline. On the higher side, the EUR/USD may find resistance around 1.0930 and 1.0980. Consider taking bullish trades above 1.0900 today. 

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GBP/USD– Daily Analysis

On Thursday, the GBP/USD is trading at 1.2935, falling below the 1.2965 resistance to become a support level. The GBP dropped a day before as forecasts of the Bank of England (BOE) rate cut fueled over-optimism that expansionary fiscal policy would support the U.K. economy.

The outbreak of the Coronavirus has directed some traders to think central banks will be required to go after dovish monetary policy to support the economy against the potential threat of a coronavirus. The Sterling is still trading with a bearish bias as the interest rate cut sentiment from 0.75% to 0.50% remains pretty solid. 

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

By comparison, when Prime Minister Boris Johnson’s Tories succeeded December’s election, extending his hold on parliament and pushing some Brexit risk, the Sterling was trading near 83 pence per Euro, and it also gained some support against the U.S. dollar.

Daily Support and Resistance

• S1 1.2802
• S2 1.2893
• S3 1.2949

Pivot Point 1.2937

• R1 1.304
• R2 1.3074
• R3 1.3165

GBP/USD– Trading Tip

On Thursday, the GBP/USD continues trading with a mixed bias, following a narrow trading range of 1.2980 – 1.2880. As we can see on the 4-hour chart above, the Cable has formed a descending triangle pattern which is supporting the Sterling around 1.2880. It’s one of the most crucial trading levels as a violation of this can open further room for selling until 1.2795 area. 

On the other hand, the GBP/USD has the potential to go after 1.3070 if it manages to trade above 1.2960 support. The MACD and RSI are holding in the selling zone, supporting bearish bias for the GBP/USD pair. Let’s look for selling trades below 1.2966 and bullish above the same level today. 

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USD/JPY – Daily Analysis

The USD/JPY currency pair is flashing red, falling below the 110.350 resistance. The USD/JPY is holding at 110.14 and consolidates in the range between the 110 – 110.58. However, a stable market tends to weaken the Japanese yen’s safe-haven demand.

The Coronavirus is growing in the Middle East, Europe, and another area of the world, as Brazil verified its initial case in Latin America, while other regions of China found to lower their emergency response level as the number of fresh cases recorded there proceeds to reduce.

The Greenback is now trading with a slightly bearish bias amid forecasts that the U.S. Federal Reserve may lower the interest rates this year to control downside influence on the economy produced by China’s coronavirus outbreak.

The dollar initially traded bullish as the virus outbreak further around the globe, with traders eyeing all U.S. assets as safe-haven investments. Nevertheless, money managers now assume the Fed would be more prone to dovish monetary policy and cut rates, considering the ongoing uncertainties of Coronavirus. 

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 traded mostly in line with the previous forecast and stayed below the horizontal resistance level of 110.350. On the 4 hour timeframe, an upward trendline is extending resistance at 110.350, as the USD/JPY pair failed to break above this mark yesterday. 

For now, the USD/JPY has formed a bearish engulfing pattern below 110.350, which may trigger further selling until 109.50. We need to keep an eye in the USD/JPY as the closing of candles below 110.350 level can help us secure a selling trade with a take profit of around 109.650.  

All the best for today!