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Daily F.X. Analysis, January 22 – Top Trade Setups In Forex – Weaker Dollar Sentiment In Play! 

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In Asian trading hours, EUR/USD edged up to 1.1098, and GBP/USD climbed to 1.3011. The USD/JPY slid to 109.97. This morning, the Bank of Japan, as widely expected, kept its policy rate at -0.10% and a 10-year yield target at 0% unchanged. The central bank raised its 2020 Japan’s GDP growth forecast to 0.9% from 0.7% previously. Spot gold marked a day-high of $1,568.6 an ounce before easing to $1,566.0 an ounce.

The ZEW Financial Market Survey is an aggregation of the sentiments of almost 350 economists and analysts on the economic future of Germany is scheduled to release today. Germany, which is considered as the Eurozone’s manufacturing powerhouse, suffered a marked slowdown in 2019, in the wake of the Sino-US trade tensions.

Economic Events to Watch Today

 

 


EUR/USD – Daily Analysis

The EUR/USD slipped 0.1% to 1.1085. The German ZEW Current Situation Index bounced to -9.5 in January (-13.5 expected) from -19.9 in December.  

The EUR/USD currency pair bullish level above 1.11 was not long-lived. The pair closed the day with 0.11% losses, creating an inverted hammer and confirming a head-and-shoulders breakdown on the daily chart. 

Looking forward, Italy’s Business Climate, Industrial Sales, and Industrial Orders for November are scheduled to release today. However, these data could not influence the market as well as the U.S. housing data is expected to release and will likely leave the impact on the U.S. Dollar.

The ECB is not supposed to appear on Thursday, although Bloomberg announced that 90% of analysts anticipate a change to the inflation strategy. It will be the first move in 17 years if President Lagarde rules to perform the adjustment.

Daily Support and Resistance

  • S3 1.0996
  • S2 1.1051
  • S1 1.107
  • Pivot Point 1.1106
  • R1 1.1125
  • R2 1.1161
  • R3 1.1216

EUR/USD– Trading Tips

On the 4 hour timeframe, the EUR/USD is trading at 1.1086, having formed a Doji and bullish engulfing pattern above 1.1070 support level. The bullish engulfing pattern is proposing the odds of a bullish trend in the EUR/USD. The EUR/USD can show bullish correction until 1.1106. On the lower side, a breakout of the support level of 1.1077 can lead EUR/USD prices towards the 1.1045 area. 


GBP/USD– Daily Analysis

The GBP/USD rebounded 0.3% to 1.3046. Official data showed that the U.K. jobless rate for the three months to November remained steady at 3.8% (as expected), and average weekly earnings grew 3.2% on year (+3.1% estimated).

The U.K. Office for National Statistics will release December public sector net borrowing, excluding banking groups (5.3 billion pounds expected).

In the U.S., the Federal Reserve Bank of Chicago will post the December National Activity Index (0.15 expected). The National Association of Realtors will report December’s existing-home sales (5.43 million units expected). The FHFA will release November House Price Index (+0.3% on month expected).

The pound to dollar is striving to post a third continuous day of profits and is probing a vital resistance zone. GBP/USD set higher on Monday and spread gains yesterday following an upbeat U.K. jobs report.

Daily Support and Resistance

  • S3 1.2812
  • S2 1.2928
  • S1 1.2969
  • Pivot Point 1.3044
  • R1 1.3085
  • R2 1.316
  • R3 1.3276

GBP/USD– Trading Tip

On Wednesday, GBP/USD continues to trade bullish over a weaker dollar. On the 4 hour timeframe, the GBP/USD is testing the resistance level, which is extended by the bearish channel at 1.3060. At the moment, the GBP/USD pair is trading at 1.3060, and it seems to extend bullish bias until 1.3090.

The GBP/USD pair may find support around the 1.3044 area today. Whereas, the RSI and MACD support the bullish bias. Let’s look for selling trades below 1.3080 and bullish trades above 1.3010. 


USD/JPY – Daily Analysis

The USD/JPY closed at 109.859 after placing a high of 110.220 and a low of 109.760. Overall the movement of the USD/JPY pair remained strongly bearish that day.

On Tuesday, USD/JPY dropped to its one-week lowest after the Bank of Japan revised its growth projections for 2020. The Bank of Japan raised its growth estimates for the fiscal year beginning in April to 0.9%, which it previously estimated as 0.7% in October.

According to reports, the Bank of Japan kept its monetary policy on hold. It raised its forecasts for economic growth in 2020 because of the stimulus package of government and the decreasing pessimism over the global outlook. 

The Bank of Japan signaled the rising optimism over the global outlook after the United States and China agreed on the Phase-one trade deal to resolve their trade conflicts. Bank said that the risks surrounding the global perspective have decreased to some extent, and this has provided the bank with the possibility to increase its forecast for the growth of Japan’s economy in 2020.

Daily Support and Resistance

  • S3 109.73
  • S2 109.94
  • S1 110.04
  • Pivot Point 110.15
  • R1 110.25
  • R2 110.35
  • R3 110.56

USD/JPY – Trading Tips

On Wednesday, the USD/JPY pair continues to exhibit choppy trading sessions due to a lack of fundamentals. The USD/JPY has traded bearishly as it fell from 110.200 to trade at 109.950, but the pair continues to consolidate in a narrow trading range of 109.800 – 110.150.

Technically, the USD/JPY is supported above 109.850, and we can see buying above this level until 110.490. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD have crossed over in the selling zone. Today, I will be looking for buying trades over 110.15 and selling below at the same level. 

All the best for today! 

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