Daily F.X. Analysis, January 30 – Top Trade Setups In Forex – Brace for BOE Policy!

The U.S. stock indexes pared most of the early gains to close little changed. The Dow Jones Industrial Average soared higher 11 points to 28734, the S&P 500 declined 2 points to 3273, and the Nasdaq Composite added 5 points to 9275. 

The Bank of England will declare its interest rates decision (hold at 0.75% expected). The European Central Bank will post the January Economic Confidence Index (101.8 expected) and final readings of the Consumer Confidence Index (-8.1 previously).

Economic Events to Watch Today

 

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EUR/USD – Daily Analysis

The EUR/USD was broadly flat at 1.1015. The GfK Consumer Confidence Index for February rose to 9.9 (9.6 expected) from 9.7 in January.

The data is listed to deliver at 08:55 GMT is expected to show the German economy added 5K jobs in December after November’s 8K raises. Meantime, the Unemployment Rate is anticipated to have remained stable at 5%. 

During the North American session ahead, the attention will shift to the US Gross Domestic Product Price Index (Q4) PREL, scheduled for release at 13:30 GMT. 

The Federal Reserve kept interest rates stable as anticipated on Wednesday. Chair Powell brought up concerns regarding inflation, which suggests another rate cut can’t be fully controlled out at this time. 

Powell further informed about the potential for an improvement in the global market following the current development in the US-China trade war but revealed anxieties over the Coronavirus outbreak. Powell noted that if China’s economy deteriorates as a result of the virus, the U.S. economy will also be affected, although not at the same level as some of China’s bordering countries.

Daily Support and Resistance

• S3 1.0963
• S2 1.0989
• S1 1.1006

Pivot Point 1.1015

• R1 1.1031
• R2 1.104
• R3 1.1066

EUR/USD– Trading Tips

The EUR/USD is trading at 1.1001 area, having formed a bearish engulfing candle around 1.0991 support level, particularly on the 4-hour timeframe. The bearish engulfing pattern is suggesting the probabilities of a bearish trend in the EUR/USD.

The EUR/USD can show bullish correction until 1.1060 and 1.1075 if it manages to stay above 1.0990. On the lower side, a breakout of the support level of 1.0990 can lead EUR/USD prices towards the 1.0945 area. 

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GBP/USD– Daily Analysis

The GBP/USD slipped 0.1% to 1.3022, posting a five-day losing streak. The BOE is anticipated to keep its rate at 0.75% unchanged, while investors will watch closely whether there would be more officials to vote for an interest-rate cut (2 out of 9 members supported a rate cut previously).

Looking forward, there are 50-50 chances of announcing a rate cut by the Bank of England. Whereas the central bank is expected to keep the rate unchanged, meanwhile one MPC is anticipated to vote in support of a rate cut. However, Governor Carney’s speech will be closely watched afterward. 

After that, the preliminary reading of U.S. Q4 GDP will be in the trader’s eyes. The growth rate of the world’s largest economy is likely to stabilize around 2.1%. However, the latest Fed meeting indicated downside risk and hinted to stay ready for surprises. The Bank of England will publish its interest rates decision (hold at 0.75% expected).

    

Daily Support and Resistance

• S3 1.2853
• S2 1.2937
• S1 1.2982

Pivot Point 1.3021

• R1 1.3066
• R2 1.3105
• R3 1.3189

GBP/USD– Trading Tip

The GBP/USD is stuck in a symmetric triangle pattern, which is keeping the pair supported above 1.2961 along with resistance at 1.3050. Since all eyes remain in the Fed rate decision, it will be nice to wait for the outcome to have a better idea about the trend. 

The bearish breakout of 1.2961 support can lead the GBP/USD prices towards 1.2900. Taking a look at the MACD and RSI, both are holding in the selling zone, and are supporting the concept of selling. Keeping this in mind, we can go for selling trade below 1.3021 today. 

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USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and hit the 5-day low, representing 0.12 drops on the day mainly due to risk-off sentiment in the wake of persistent Coronavirus-led. As well as, the Japanese yen got support from the risk-off market sentiment as a safe-haven currency. As of writing, the USD/JPY currency pair is currently trading at 108.93 and consolidates in the range between the 108.84 – 109.06.

As in result, the Asian stocks are again flashing red with Japan’s Nikkei leading the way with a 400 point or 2% decline. Stocks in Australia, South Korea, and Hong Kong are also reporting losses alongside the 0.5% drop in the futures on the S&P 500. 

At the dealy virus front, the market attention shifted again to China’s coronavirus because the death losses rose to 170, and forecasts spread that China will refresh 20-year low due to the disease. Japan’s Chief Cabinet Secretary was said a few minutes before press time, that 6 Japanese people, who recently come back from Wuhan China, have infected by the coronavirus. 

Apart from this, another reason behind the market’s risk-off sentiment could the US-China trade tension because the White House has recently refused to help China regarding tariffs even if coronavirus weighs on its GDP.

Because the risk-off sentiment showing no signs of decreasing, the pair risks increasing the losses toward the 50-day average support at 108.72 more so, as traders have hoped for the Fed rate cut by November’s meeting. The U.S. FED kept rates constant on Wednesday but gave expectation for delivering further rate cut in the wake of higher inflation.

Daily Support and Resistance

• S3 108.14
• S2 108.59
• S1 108.87

Pivot Point 109.03

• R1 109.31
• R2 109.48
• R3 109.93

USD/JPY – Trading Tips

A couple of days ago, the safe-haven pair USD/JPY violated long-held horizontal support level has already been violated at 109.250 level, and now, the USD/JPY is holding below this level. At the same level, the USD/JPY is also getting supported by the bullish channel, which can be seen in the chart above. 

The USD/JPY may find resistance around 109.250, which is the same level that provided support to the USD/JPY earlier. We can see selling below this level until 108.520. Moreover, the RSI and MACD have crossed over in the selling zone and are supporting the selling bias. 

All the best for today!