Daily F.X. Analysis, January 15 – Top Trade Setups In Forex – U.S. Retail sales in Focus!

On the news front, it’s going to be a busy Friday as the U.K. economy is due to release its GDP figures, which are expected to perform negatively, and this may add selling pressure on the Sterling. Later during the U.S. session, the U.S. retail sales may drive further price action in the dollar related pairs.

Economic Events to Watch Today  

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EUR/USD – Daily Analysis

During Friday’s early Asian trading hours, the EUR/USD currency pair failed to stop its overnight losing streak and still trades in a sideways manner around below the 1.2150 marks due to the risk-off market sentiment underpinned the U.S. dollar and contributed to the currency pair gains. Besides this, the selling bias around the currency pair could also be attributed to the ever-increasing COVID-19 and tougher lockdown restrictions in the U.K. and Europe, which raised further doubts over the European economies and pushed the shared currency down. The declines in the EUR/USD currency pair were unaffected by the latest positive announcement from U.S. President-elect Joe Biden regarding the stimulus package. Currently, the EUR/USD currency pair is currently trading at 1.2144 and consolidating in the range between the 1.2143 – 1.2163. Moving on, the market traders seem reluctant to place any strong position ahead of European Trade Balance and French Final CPI m/m.

Besides, the new wave of the coronavirus in the U.K. and resulting in tighter travel restrictions in Europe and the U.K. keep fueling the fears over slower economic recovery as back to back lockdown restrictions tend to have an instant negative effect on economic activities, which in turn, added bearish pressure around the currency pair. As per the latest report, France recently introduced a new nationwide lockdown, while German Chancellor Merkel reportedly wants to toughen the German lockdown. Apart from this, approximately 22M people are currently under strict lockdown conditions in China’s Hebei province. This happened right after the country posted the largest number of new Covid-19 infections in over 5-months on Wednesday. This, in turn, exerted downside eight on the market risk tone and contributed to U.S. dollar gains.

As in result, the broad-based U.S. dollar managed to stop its overnight losses and edged higher during the Asian session on the day amid risk-off market sentiment. However, the U.S. dollar bullish bias was rather unaffected by the worsening coronavirus (COVID-19) conditions in the U.S., or U.S. stimulus talks progress, which tend to undermine the U.S. currency. However, the gains in the U.S. dollar kept the currency pair lower. 

Looking forward, the market players will keep their eyes on the release of U.S. Core Retail Sales m/m along with Retail Sales m/m. The French Final CPI m/ma and Trade Balance will also be closely followed. Meanwhile, the UK GDP m/m and Goods Trade Balance are also expected to release later on the day. Across the ocean, the updates surrounding the Sino-US tussle and virus woes could not lose their importance on the day.


Daily Technical Levels

Support   Resistance

1.2148      1.2178

1.2129      1.2189

1.2118      1.2208

Pivot Point: 1.2159

EUR/USD– Trading Tip

On Friday, the market’s technical side remains mostly unchanged as the EUR/USD continues to gain support at the 1.2136 level, and breaking of this can trigger an additional dip until 1.2105 and 1.2065 level. On the upside, the EUR/USD pair may find resistance at the 1.2170 level, and a bullish breakout of this level can extend the buying trend to 1.2220. The RSI and MACD have shifted their selling trends; therefore, we may see further sell-off upon the bearish breakout of 1.2136 level today.

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GBP/USD – Daily Analysis

The GBP/USD During Friday’s early Asian trading session, the GBP/USD currency pair failed to maintain its overnight bullish bias and drew some offers around the 1.3680 level mainly due to the downbeat market trading mood, which underpinned the U.S. dollar bullish and contributed to the currency pair losses. Besides this, the selling bias around the currency pair could also be associated with the ever-rising numbers of COVID-19 and tougher lockdown restrictions in the U.K., which keep raising doubts over the economic recovery. In contrast to this, the latest reports suggest that the Bank of England (BOE) will keep the interest rates unchanged at least until 2024 to avoid negative rates, which helped the currency pair limit its losses. Also capping the losses could be the latest optimism around the coronavirus better situation in the U.K. Currently, the GBP/USD currency pair is currently trading at 1.3687 and consolidating in the range between the 1.3675 – 1.3699. Moving on, the market traders seem reluctant to place any strong position ahead of UK GDP m/m and Goods Trade Balance data.

Despite the ongoing optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill, the market risk mood failed to stop its previous bearish performance and remained red amid growing market worries over the potential economic byproduct from the continuous rise in new COVID-19. The ongoing downfall around the equity market was completely sponsored by the fears of intensifying coronavirus (COVID-19) conditions throughout the world, which keeps fueling the doubts over the global economic recovery from COVID-19. 

Besides the virus woes, the reason for the bearish trading sentiment could also be associated with the long-lasting US-China tussle, which is continuously picking pace after U.S. President Donald Trump imposed new sanctions on Chinese officials and companies. All these events have been weighing on the market trading sentiment and were seen as major factors that kept the U.S. dollar prices higher.

As in result, the broad-based U.S. dollar managed to stop its overnight losses and edged higher during the Asian session on the day amid fresh risk-off market sentiment. However, the U.S. dollar gains were relatively unaffected by the worsening coronavirus (COVID-19) conditions in the U.S., or U.S. stimulus talks progress, which tend to undermine the U.S. currency. The U.S. President-elect Joe Biden recently revealed a much-anticipated coronavirus stimulus plan and promised to deliver $2,000 in stimulus cheques to Americans, infrastructure spending, social equity, and a potential minimum wage of $15 per hour. Unfortunately, Biden’s stimulus talk has failed to inject volatility in the forex markets so far. However, the gains in the U.S. dollar kept the currency pair lower. 


Daily Technical Levels

Support   Resistance

1.3555      1.3722

1.3445      1.3781

1.3387      1.3890

Pivot Point: 1.3613

GBP/USD– Trading Tip

The GBP/USD pair also trades sideways between a narrow trading range of 1.3703 – 1.3632. On the higher side, a bullish breakout of 1.3703 level can extend the buying trend until the next resistance area of 1.3744 and 1.3786. Conversely, a bearish breakout of 1.3632 support level can extend the selling trend until 1.3550. 

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USD/JPY – Daily Analysis

During Friday’s early European trading session, the USD/JPY currency pair succeeded to maintain its bullish bias and to take rounds around above mid- 103.00 regions mainly due to the market’s downbeat mood and a strong rally in the U.S. bond yield, which kept the U.S. dollar bullish and contributed to the currency pair gains. However, the market trading sentiment was being pressured by the ever-rising numbers of COVID-19 and stricter lockdown restrictions throughout the world, which keeps fueling doubts over the global economy’s recovery. Meanwhile, the equity markets’ slumps were further bolstered by the renewed Sino-US tussle, which extended some support to the safe-haven Japanese yen and capped the upside for the USD/JPY currency pair. Conversely, the optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill keeps challenging the market risk-off mood, which might change the direction for the USD/JPY currency pair. Currently, the USD/JPY currency pair is currently trading at 103.78 and consolidating in the range between 103.70 – 103.85.

The market trading sentiment failed to stop its early-day negative performance and remained pessimistic during the Asian trading session. The downfall was completely sponsored by the fears of intensifying coronavirus (COVID-19) conditions throughout the world, which keeps fueling the doubts over the global economic recovery from COVID-19. As per the latest report, France recently imposed a new nationwide lockdown, while German Chancellor Merkel is considering toughening the German lockdown. Apart from this, nearly 22M people are currently under strict lockdown conditions in China’s Hebei province. This happened right after the country posted the largest number of new Covid-19 infections in over 5-months on Wednesday. 

Besides the virus woes, the reason for the bearish trading sentiment could also be associated with the long-lasting US-China tussle, which is still not showing any sign of slowing down. The reason could be associated with the reports suggesting that the Trump administration is imposing sanctions on officials and companies for alleged misdeeds in the South China Sea and imposing an investment ban on 9 more Chinese firms with alleged ties to the Chinese military, including planemaker Comac and phone maker Xiaomi (OTC: XIACF) Corp. However, all these factors have been weighing on the market trading sentiment, which was seen as major factors that kept the U.S. dollar prices higher.

As in result, the broad-based U.S. dollar managed to extend its early-day gains and remained bullish on the day amid prevalent risk-off market sentiment. However, the gains in the U.S. dollar were rather unaffected by the U.S. stimulus progress, which tends to undermine the U.S. currency. It is worth noting that the U.S. President-elect Joe Biden promised to deliver $2,000 in stimulus cheques to Americans, infrastructure spending, social equity, and a potential minimum wage of $15 per hour. Unfortunately, this positive talk has failed to inject volatility in the forex markets so far. Notably, the gains in the U.S. dollar could be short-lived or temporary as the Fed Chairman Jerome Powell said that the time to raise the interest rates is no time soon. However, the ongoing bullish bias around the greenback kept the currency pair higher.

Looking forward, the market players will keep their eyes on the release of U.S. Core Retail Sales m/m along with Retail Sales m/m. Apart from this, the French Final CPI m/ma and Trade Balance will also be closely followed. At home, the UK GDP m/m and Goods Trade Balance are also expected to release later on the day. Across the ocean, the updates surrounding the Sino-US tussle and virus woes could not lose their importance on the day.


Daily Technical Levels

Support   Resistance

103.53      104.16

103.31      104.56

102.91      104.78

Pivot Point: 103.94

USD/JPY – Trading Tips

The safe-haven currency pair USD/JPY slipped to trade at 104.054 level amid increased demand for safe-haven assets. The USD/JPY has formed an upward channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.340 level. The 50 periods EMA supports the bullish trend, and we may have odds of taking a buying trade over the 103.570 level today. Good luck!