Forex Market Analysis

Daily F.X. Analysis, January 16 – Top Trade Setups In Forex – Retail Sales In Highlights! 

On Thursday, the investors are watching strictly political events in the U.S. and Russia. The Democratic-led U.S. House of Representatives proposed on Wednesday to send impeachment charges against President Donald Trump to the Senate. Russian Prime Minister Dmitry Medvedev published the compliance of his government after President Vladimir Putin proposed some constitutional changes.

The U.S. official data showed that the Producer Price Index (PPI) increased 0.1% on month in December, less than +0.2% expected. The Empire Manufacturing Index posted at 4.8 in December, better than 3.6 expected.

Economic Events to Watch Today



EUR/USD – Daily Analysis

The EUR/USD prices closed at 1.11495 after placing a high of 1.11633 and a low of 1.11185. Overall the movement of EUR/USD remained bullish that day.

The EUR/USD pair climbed above 1.1162 level on Wednesday and posted a fresh weekly high. The general weakness of the U.S. dollar supported the move amid increased uncertainty after the release of details about the phase-one trade deal. 

The U.S. & China signed phase-one of the trade deal on Wednesday in which some tariffs on Chinese goods were retained, and this disappointed the traders. Hence, the U.S. dollar lost its demand, and the U.S. Dollar Index moved to weekly lows of 97.20.

The U.S. yields also fell and remained in negative territory on Wednesday and helped EUR/USD to move further in an upward direction. As for the data is concerned, the U.S. macroeconomic data came in mix, and the Producer Price Index (PPI) declined to 0.1% against the expected 0.2% weaker than expected PPI from the U.S. also helped EUR/USD prices to post weekly gains and rise above 1.116 level on Wednesday.

From the Europe side, at 12:45 GMT, the French Final Consumer Price Index (CPI) for December came in line with the expectations of 0.4%. AT 15:00 GMT, Industrial Production from the Eurozone in November showed a decline to 0.2% from expected 0.3% and weighed on single currency Euro.

The Trade Balance from the European Union whole bloc for November showed a deficit of 19.2B against the expectations of 22.3Band added in the pressure of single currency Euro. Though the economic data from Eurozone was against the Euro, it failed to drag the EUR/USD prices on Wednesday because of broad U.S. dollar weakness.

Daily Support and Resistance

  • S3 1.1045
  • S2 1.1086
  • S1 1.1107
  • Pivot Point 1.1126
  • R1 1.1147
  • R2 1.1166
  • R3 1.1206

EUR/USD– Trading Tips

The EUR/USD pair continues to form a higher-high pattern on the 4-hour timeframe, which signifies bullish bias among traders. The pair has recently violated the resistance level of 1.1140, and now it is testing the double top level of 1.1160. It has become the current trading range of EUR/USD for now as the pair is being traded within a limited range. It looks like the market is calm as traders await the ECB Monetary Policy Meeting Accounts and ECB President Lagarde’s speech. We may see EUR/USD trading bullish above 1.114. On the higher side, the violation of 1.1160 can extend buying until 1.1188 today.

GBP/USD– Daily Analysis

The GBP/USD pair closed at 1.30373 after placing a high of 1.30423 and a low of 1.29848. Overall the movement of GBP/USD pair remained bullish throughout that day.

The policymakers of Bank of England have pledged to vote in favor of rate cut and turned the stance of BoE dovish, which weighed on Pound. However, despite the weakness of Pound, the GBP/USD pair managed to post gains on Wednesday amid the U.S. dollar’s weakness.

The US-China trade deal finally got signed on Wednesday but failed to impress traders when the details revealed that most tariffs would remain in place. It weighed on the U.S. dollar and gave a boost to GBP/USD prices.

On the other hand, at 14:30 GMT, the Annual Consumer Price Index (CPI) in the month of December from the United Kingdom was declined to 1.3%from the expectations of 1.5% and weighed on British Pound. The Producer Price Index (PPI) Input in December from the United Kingdom also dropped to 0.1% against the forecasted 0.2%.

The Core Consumer Price Index (CPI) for the year came in short of expectations and added in the pressure of Pound. It came as 1.4% against 1.7% forecasted. 

However, the House Price Index for the year from Britain increased to 2.2% from forecasted1.1% and supported Britain Pound. The PPI Output for December came in line with the expectations of 0.0%. 

The Retail Price Index (RPI) for December also dropped to 2.2% from expected 2.3% and weighed on British Pound.

Most data from Great Britain on Wednesday came against the expectations and weighed on Pound. This confirmed that policymakers would surely vote for a rate cut in the next meeting of Bank of England. GBP/USD was weighed a little after the release of economic data from the U.K. near the level of 1.298 but failed to post losses for the day.

The broad U.S. Dollar weakness gifted the gains posted by GBP/USD on Wednesday amid weaker than expected PPI data along with disappointed details from the US-China phase-one deal.

Daily Support and Resistance

  • S3 1.2845
  • S2 1.2924
  • S1 1.2972
  • Pivot Point 1.3002
  • R1 1.3051
  • R2 1.3081
  • R3 1.316

GBP/USD– Trading Tip

On Thursday, the GBP/USD is taking a bullish turn since the release of negative economic data from the United States. The GBP/USD has violated the strong resistance level of 1.3028, which was extended by the downward channel, and it seems to close candle outside this range. Continuation of bullish trends can lead to GBP/USD prices towards 1.3100 and 1.3156 soon. 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.892 after placing a high of 110.008 and a low of 109.788. Overall the movement of USD/JPY remained bearish throughout the day.

USD/JPY on Wednesday posted losses on the back of the broad weakness of the U.S. dollar amid the release of details of the Phase-one trade deal between the U.S. & China.

U.S. & China finally reached a deal on Wednesday and signed on it to reduce the global trade tensions. Also, the details of the US-China trade agreement were revealed on Wednesday, which is comprised of 86 pages.

Many aspects were included in the phase-one deal like China would increase its U.S. farm purchases in 2020-2021 by $200B from its 2017 purchases. China would provide better protection for intellectual property to U.S. China pledged not to force technology transfer in exchange for entering the Chinese market. 

Both countries agreed on providing a series of measures to open the financial services sector. Both countries agreed not to devalue their currencies to benefit their exports. However, the deal also mentioned that the U.S. would retain 25% tariffs on $250B worth of Chinese industrial goods, which were used by U.S. manufacturers. The tariffs were kept as a threat to China to fulfill its part of the deal.

However, traders got disappointed as tariffs were not removed, and uncertainty emerged in the market, which put pressure on USD/JPY prices.

Daily Support and Resistance

  • S3 109.17
  • S2 109.51
  • S1 109.73
  • Pivot Point 109.84
  • R1 110.06
  • R2 110.17
  • R3 110.5

USD/JPY – Trading Tips

On Thursday, the USD/JPY pair is trading with a bullish bias at 110.017 after breaking above 109.600 triple top resistance level. Closing of Doji pattern followed by strong bullish candle seems to drive bearish bias for the pair, but it’s been trading with a bullish bias over faded demand for haven assets.

The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 109.84 level with a target of 110.570. 

All the best for today! 

Forex Market Analysis

Daily FX. Analysis, December 16 – Top Trade Setups In Forex – Eurozone’s PMI Figure Drives! 

The US Dollar Index was broadly flat at 97.17. The euro slipped 0.1% to $1.1121. Later today, research firm Markit will post December eurozone Manufacturing PMI (47.3 expected) and Services PMI (52.0 expected). The USD/JPY edged up 0.1% to 109.38.

Regarding U.S. economic data, retail sales rose 0.2% on month in November (below the +0.5% expected, +0.4% in October). Import prices increased 0.2% on month (as expected, -0.5% in October).

Later today, the Empire Manufacturing Index for December (5.0 expected) and the Markit US Manufacturing Purchasing Managers’ Index (52.6 expected) will be reported.

Economic Events to Watch Today

Let’s took at these fundamentals.

AUD/USD – Daily Analysis

The AUD/USD currency pair seen unchanged and consolidates in the narrow trading range between the 0.6875 – 0.6878. The currency pair remains depressed despite the fresh optimism over the Sino-US trade deal. As of writing, the Aussie currency pair is currently trading at 0.6875.

The AUD/USD currency pair picked up a buying near 0.6775 following the consumer spending data, which represented a rise in retail sales by 8% year-on-year during November, crossing the forecasted growth of 7.6% by a big range.

Industrial production rose 6.2% compared to an expected rise of 5%, marking an improvement from October’s 4.7%. Moreover, the People’s Bank of China has injected 300 billion Yuan into the system via a one-year medium-term lending facility. 

The AUD/USD currency pair did not succeed to gain on its early positive move and saw a dramatic intraday turnaround on Friday. Moreover, the uncertainty regarding the US President Donald Trump’s decision to cancel the December 15 tariff-hike on Chinese imports weighed heavily on the China-proxy Australian dollar, causing a drop in AUD/USD pair around 75 pips from an intraday high level of 0.6938 the highest since July 26.

The bullish sentiment remains weak, possibly due to the reports that Beijing is planning to lower its 2020 gross domestic product target to 6% from the current year’s 6.5%. 

Looking forward, the worries of a deeper recession in China in 2020 will likely continue to overshadow the phase one US-China trade deal and send the AUD lower.

Daily Support and Resistance  

  • S3 0.6759
  • S2 0.6824
  • S1 0.685

Pivot Point 0.6889

  • R1 0.6915
  • R2 0.6954
  • R3 0.7019

AUD/USD– Trading Tips

The AUD/USD pair is hanging around 0.6900, trading mostly bullish despite staying in the overbought zone. The traded higher further above the 0.6865 mark, the 61.8% Fibo retracement level of its November slide. In the 4-hour chart, the 20 SMA has hastened north over the bigger ones, all of them under the current mark. In contrast, the technical indicators lead to the north in overbought territory, without indications of bullish exhaustion. The rally is set to remain on a break over 0.6930, the next resistance.

GBP/USD– Daily Analysis

The GBP/USD currency pair still found on the bullish track and remain supportive mainly due to the United Kingdom Prime Minister Boris Johnson win who promised to leave the European Union (EU) swiftly before January 31, 2020. 

The GBP/USD currency pair traded bullish at 1.3388 and representing sizeable gains of +0.50%, having hit the high of 1.3398. By the way, the pair consolidates in the range between 1.3337 – 1.3398.

Prime Minister Johnson will welcome 109 new Conservative lawmakers to parliament and will repeat his promise to increase funding to the state health service on the day.

Moreover, the GBP/USD currency pair is also supported by the increased expectations of an improvement in the UK’s manufacturing sector activity, as the Markit Preliminary Manufacturing PMI for December is seen arriving at 49.4 against. 48.9 previous. The country’s Services PMI is expected to reach at 49.6 against. 49.3 last.

At the greenback front, markets still unexcited despite the details of the US-China Phase One trade deal. The US dollar index now tests the 97 handles, retreating from Friday’s highs of 97.24.

The GBP currency buyers will keep up the buying because the UK looks to clear the Brexit departure Agreement in the parliament before Christmas. In contrast, the Bank of England (BOE) may signal a willingness to change course on the monetary policy, with the United Kingdom election out of the way.             

Daily Support and Resistance

  • S3 1.3025
  • S2 1.32
  • S1 1.3267

Pivot Point 1.3374

  • R1 1.3441
  • R2 1.3548
  • R3 1.3722

GBP/USD– Trading Tip

The GBP/USD is presently consolidating around at1.3457, placing around 19-month high to 1.3515 during the US session yesterday. The UK election exit polls foretelling a big win for the incumbent Prime Minister Boris Johnson. 

The GBP/USD pair’s 14-day relative strength index (RSI) is now floating around 80.47. I must say it’s the highest mark since January 2018. An above 70-reading shows overbought situations. Consider capturing retracement below 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the bullish track and representing some moderate gains mainly due to fresh trade optimism between the United States and China. As of writing, the currency pair is currently trading at 109.38 and consolidates in the range of 109.31 – 109.44.

Notably, the currency pair had some good 2-way price moves on Friday and was impressed by the full market risk-on sentiment, which turned out to be one of the major reasons that affected the Japanese yen’s as a perceived safe-haven status. 

However, the USD/JPY pair quickly reversed an early decline to sub-109.00 levels and recovered to multi-month highs in the wake of optimism of UK Parliamentary elections.

However, the bullish momentum failed near the 109.70 regions after the disappointing release of the United States’ monthly retail sales data, which kept the greenback buyers on the defensive.]The uncertainty regarding the United States President Donald Trump’s decision to cancel the December 15 tariff-hike on Chinese imports further helped to the pair’s intraday pullback of around 35-40 pips.

It should be noted that the USD/JPY currency pair finally closed unchanged for the day but succeeded in recovering some positive traction. That might have been due to the United States Trade Representative Robert Lighthizer’s comments on Sunday, saying that the phase-one Sino-US trade deal is done. Under the agreement, China said it would increase agricultural purchases due to the US’ decision not to attempt a new round of tariffs.

Daily Support and Resistance

  • S3 108.42
  • S2 108.92
  • S1 109.13

Pivot Point 109.42

  • R1 109.63
  • R2 109.92
  • R3 110.42

USD/JPY – Trading Tips

The USD/JPY rose 0.8% to 109.40 as investors’ risk appetite grew. The pair is heading towards the double top resistance level of around 109.700. Below this, the USD/JPY is likely to show a bearish correction of up to 38.2% level, which stays at 109.200. 

On the higher side, the bullish breakout of USD/JPY can lead the Japanese pair towards 110.300. The MACD and RSI are in support of the bullish trend. 

All the best!