Daily FX Brief, November 19 – Major Trade Setups – U.S. China Trade War Plays! 

The U.S. Dollar Index fell 0.1% on the day to 97.82, extending its decline to a third session. The euro gained 0.2% to $1.1072, and the British pound advanced 0.3% to $1.2947. The USD/JPY slipped 0.1% to 108.67.

After Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin to discuss the economy, the Fed released a statement saying Powell’s comments were consistent with his remarks at his congressional hearings last week.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

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EUR/USD – Daily Analysis

The EUR/USD currency pair overall flashing green and consolidates in the narrow range of 1.1063 – 1.1076 due to renewed trade tensions leaving the selling pressure on the greenback. As of writing, the EUR/USD currency pair rose by 0.10% at 1.1060 and hit a high level of 1.1076.

As we all well aware that the pair extended its bullish trend for the 3rd session in a row, extending its recovery trend from the recent 5-weeks lows of 1.0990/85 range, mainly due to the selling pressure in the greenback and some fresh trade tensions.

At the Sino-US trade front, the Chinese legislators showed some attention during the earlier session regarding the singing of the Phase one deal after the United States President Donald Trump announced to ruled out the rollover of some tariffs. In the consequences, due to these concerns, the U.S. Treasury yields turned into lower and some resurgence cities in the safe-havens, weakening further the greenback sentiment.

According to the schedule, the ECBs C.Lagarde is scheduled to deliver the speech in Frankurt later in the week, whereas the investors should keep their eyes on the ECB minutes and the preliminary figures of November PMIs in core Euroland as well.

It should b noted that the pair is increasing the recovery from the last week lows in sub-1.10 range, mainly due to the renewed weakness of U.S. Dollar and hopes of the United States a China fair trade deal. 

On the other hand, the outlook in the Euroland continues weak and does nothing but justify the failure for the more extended monetary policy by the European Central Bank and the bearish outlook on the single currency in the medium term, at least. So, from this point of view, all eyes will be on the publication of flash PMIs figures for the current month later in the week.

Daily Support and Resistance

S3 1.1

S2 1.1036

S1 1.1054

Pivot Point 1.1072

R1 1.109

R2 1.1108

R3 1.1144

EUR/USD– Trading Tips

The EUR/USD displayed bullish behavior to examine the resistance mark of 1.1090. Today extension of buying biases can direct the EUR/USD prices towards 1.1125 areas. While support lingers around the 1.1065 area.

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GBP/USD– Daily Analysis

The GBP/USD currency pair trading on the bullish track and takes buying to 1.2950 in the wake of fresh hints of political stability, and the successful Brexit keeps the cable pairs strong. As of writing, the pairs consolidate in the range of 1.2944 – 1.2967 dring the Asian session.

The GBP/USD currency pairs recently got the support from the Brexit party decrease of candidates, whereas also avoiding the Bank of England’s dovish bias.

Apart from the continued support for the tory leadership during the December election, as defined by the major surveys, the recent decision regarding the ban of liberal Democrats and the Scottish National Party form the T.V.’s cross-party political discussion also speaks louder for the Conservative’s position in the United Kingdom.

Challenges are surrounding Prime Minister Boris Johnson avoid to release documents regarding Russian interference in the Brexit election stop to cuts the British locals, including Tories, highly criticize corporate tax. Moreover, the European Union stable on the decision does not change the Brexit deal gains less of market attention.

Whereas, the trade and political headlines regarding the United States and China and ITVs debate will likely keep the entertaining investors of markets, as well as, all eyes will be on the November month CBI Industrial Trends Survey data from the U.K., the U.S. Building Permits, Housing Starts and speech from the President of the Federal Reserve Bank of New York, John C. Williams.

Markets are looking for CBI industrial orders to increase from October’s multi-year low of -37 to -30 during November. We think that risks lie toward a more significant gain because the October survey hopefully didn’t capture the improvement in sentiment because Brexit success chances were increased.

The market expects housing starts to have rebounded to 1,320k in October, reflecting a firm 5.1% m/m jump. This would follow a notable -9.4% tumble in September, which was primarily driven by a sharp -28.2% m/m contraction in the volatile multifamily segment,” says T.D. Securities.

Daily Support and Resistance

    

S3 1.2826

S2 1.289

S1 1.2922

Pivot Point 1.2954

R1 1.2986

R2 1.3018

R3 1.3081

GBP/USD– Trading Tips

The GBP/USD is consolidating with a bullish bias, and it surged to test resistance mark around 1.2970 level. The GBP/USD pair is now facing a double top resistance level at 1.2975 on the 4-hour chart. Typically, the pair becomes bearish below the double top. Therefore, the GBP/USD may exhibit bearish retracement unto 1.2925 ere driving the bullish trend to 1.2975. 

The MACD and RSI are staying in the bearish zone, suggesting chances of bearish trading in the GBP/USD trading today. 

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USD/JPY – Daily Analysis

The USD/JPY currency pair consolidates in the narrow range between the 108.60 and 108.70 so far. As of writing, the currency pair is currently trading near the 108.60.

The USD/JPY currency pair has been capped due to markets presuming a soft dollar policy from the United States administration, whereas trade discussions between the United States and China are on the close track, but the tension still surrounding the market.

The USD/JPY currency pair dropped from 109.05 in early N.Y. to just above 108.50. As for United States treasury yields, the United States’ two-year yields have been on the buying from 1.60% to 1.63% before dropping back to 1.59% due to the US-China trade doubt. The 10-year yields also dropped from 1.85% to 1.80%. 

On the technical side, the USD/JPY pair now tries to re-test 50% Fibonacci retracement of April-August drops at 108.40. However, a confluence of 50 and 100-day Exponential Moving Average (EMA) around 108.30/25 will be the key to limit the pair’s further bearish sentiment. The Japanese Trade Minister was on the wires last minutes, also telling the need for an extra budget of around JPY 10 trillion.

    

Daily Support and Resistance

S3 107.63

S2 108.19

S1 108.44

Pivot Point 108.75

R1 109

R2 109.32

R3 109.88

USD/JPY – Trading Tips

The USD/JPY is trading at 108.60, completing 61.8% Fibonacci retracement level at 108.550. For now, this level also works a double bottom support level as the USD/JPY prices are pushing higher. 

On the uppers side, the USD/JPY may find resistance at 108.700, and bullish breakout of this level can extend buying until 108.900 level today. Consider taking sell positions below 108.900 to target 108.500 today. 

All the best!