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Daily F.X. Analysis, January 29 – Europe’s GDP’s / Consumer Sentiment + Join Forex Academy’s Telegram Signal Channel! 

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The German Prelim GDP q/q, French Flash GDP q/q, and Spanish Flash GDP q/q report will remain in highlights today on the news front. Later Revised UoM Consumer Sentiment and Pending Home Sales m/m can drive market movements today.

Economic Events to Watch Today  

  


 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21220 after placing a high of 1.21422 and a low of 1.20806. The EUR/USD pair remained higher on Thursday amid the broad-based U.S. dollar weakness and the positive macroeconomic data from the European side. Behind the gradual upward momentum in EUR/USD pair was the U.S. dollar’s weakness driven by the improvement in the market’s appetite for risk. The U.S. Dollar Index that measures the greenback’s value against major currencies dropped by 0.3% and weighed on the U.S. dollar, supporting the upward momentum in EUR/USD pair on Thursday.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter declined to 4.0% against the forecasted 4.2% and weighed on the U.S. dollar that capped further gains in EUR/USD pair. The Unemployment Claims from last week were declined to 847K against the forecasted 880K and supported the U.S. dollar that also limited the upward momentum in EUR/USD pair. The Goods Trade Balance from December declined to -82.58B from the forecasted -83.4B and supported U.S. dollar. For December, the Prelim Wholesale Inventories also fell to 0.1% against the forecasted 0.5% and supported the U.S. dollar.

At 18:32 GMT, the Advance GDP Price Index for the quarter declined to 2.0% against the forecasted 2.2% and weighed on the U.S. dollar hat added further gains in EUR/USD pair. At 20:00 GMT, the C.B. Leading Index for December came in line with a 0.3% forecast. In December from the U.S., the New Home Sales declined to 842K against the forecasted 860K and weighed on U.S. dollar to and pushed the EUR.USD pair are even higher.

From the European side, the German Prelim CPI in January raised to 0.8% against the expected 0.4% and supported Euro that ultimately pushed EUR/USD pair higher. At 13:00 GMT, the Spanish Unemployment Rate dropped to 16.1% against the expected 16.7% and supported Euro to add further gains in EUR/USD pair on Thursday. 

Moreover, Wall Street suffered its biggest one-day percentage decline in three months overnight, with declines accelerated in the wake of the U.S. Federal Reserve’s policy statement. The Fed signaled a worrying slowdown in the pace of recovery of the world’s top economy and sworn continued support until a full economic rebound was in place. This also weighed on the U.S. dollar and supported an upward momentum in EUR/USD pair.


Daily Technical Levels

Support   Resistance

1.2054      1.2167

1.1999     1.2225

1.1940      1.2280

Pivot point: 1.2112

EUR/USD– Trading Tip

The direct currency pair EUR/USD is trading with a bearish bias at 1.2090, facing immediate resistance at 1.2132 level. The EUR/USD is again forming three black crows on the hourly chart, dispensing the selling trend in the EURUSD pair. On the downside, the pair is expected to go after the 1.2090 and 1.2055 level. The 50 periods EMA are signaling the selling trend in Euro today. Violation of 1.2050 will determine long term trend.


GBP/USD – Daily Analysis

The GBP/USD closed at 1.37267 after placing a high of 1.37458 and a low of 1.36299. The U.S. dollar’s fresh weakness and the rise in British Pound against other major currencies lifted the currency pair GBP/USD on Thursday. Prime Minister Boris Johnson announced no schools until 8-March and laid out a lengthy exit strategy from the lockdown this week. However, a detailed plan will be out on the week of February 22. This showed that Johnson may have learned from past promises and was now going wrong on the side of caution. Because people were expecting an earlier exit from the restrictions and this announcement killed their expectations.

In December, Johnson rejected calls for a lockdown and refused to cancel Christmas, only to back down several days later. However, the U.K. has been vaccinating its population rapidly, which should have led to the lifting restrictions not extending them. Despite all these lockdown developments in the U.K., the British Pound remained amongst the top three best performing G10 currencies on Thursday and supported the upward momentum in GBP/USD pair.

On the data front, from the U.S. side, at 18:30 GMT, the Advance GDP for the quarter fell to 4.0% against the anticipated 4.2% and weighed on the U.S. dollar that added more gains in GBP/USD pair. The Unemployment Claims from last week dipped to 847K against the anticipated 880K, supported the U.S. dollar, and capped further GBP/USD pair gains. The Goods Trade Balance fell to -82.58B from the anticipated -83.4B and supported the U.S. dollar from December. The Prelim Wholesale Inventories for December also fell to 0.1% against the anticipated 0.5% and supported the U.S. dollar. 

At 18:32 GMT, the Advance GDP Price Index for the quarter fell to 2.0% against the anticipated 2.2% and weighed on the U.S. dollar that pushed the currency pair GBP/USD higher. At 20:00 GMT, the C.B. Leading Index for December came in line with the anticipation of 0.3%. The New Home Sales in December from the U.S. fell to 842K against the anticipated 860K and weighed on the U.S. dollar and supported the rising prices of the GBP/USD pair.

The declining GDP numbers from the world’s largest economy in the last quarter of 2020 added weight on the local currency U.S. dollar and supported the GBP/USD pair’s rising prices on Thursday. Furthermore, the market’s risk sentiment was somehow supported by the rally in precious metals markets triggered by speculation that retail traders who had been focusing on pumping stocks like GameStop were now turning their focus to silver. The rising risk sentiment in the market also helped the risk perceived GBP/USD pair rise on Thursday.


Daily Technical Levels

Support   Resistance

1.3643      1.3746

1.3600      1.3804

1.3541      1.3848

Pivot point: 1.3702

GBP/USD– Trading Tip

A day before, the GBP/USD pair traded bullish after violating the narrow trading range of 1.3680 – 1.3670. It placed a high of around 1.3753 level, and it later reversed back to trade between the same trading range of 1.3696 – 1.3646. The GBP/USD may find support around the 1.3647 level, and violation of this level can extend selling bias until 1.3610. Approaching the 2-hour timeframe, the GBP/USD is holding below 10 and 20 periods EMA, and it may extend the selling trend today. Let’s consider taking a sell trade until 1.3645 and 1.361 level.  


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.259 after placing a high of 104.460 and a low of 104.053. The currency pair USD/JPY extended its gains on Thursday amid the pickup in risk appetite in the market that drove weakness in both the U.S. dollar and Japanese Yen versus most of their major G10 counterparts due to their safe-haven status. 

However, nominal U.S. yields rose on Thursday, with U.S. Treasury yields on the 10-year note up more than 4bps at 1.06%. It drove an increase in U.S./Japanese rate differentials that favor Japanese Yen flows into the U.S. dollar, supporting the currency pair USD/JPY. On the data front, at 04:50 GMT, the Retail Sales from Japan in December dropped to -0.3% against the expected -0.4% and supported Japanese Yen, and capped further upside in the USD/JPY pair.

From the U.S. side, at 18:30 GMT, the Advance GDP for the quarter decreased to 4.0% against the projected 4.2% and weighed on the U.S. dollar and limited further upside momentum in the USD/JPY pair. Last week, the Unemployment Claims decreased to 847K against the projected 880K and supported the U.S. dollar that added further gains in the USD/JPY pair. The Goods Trade Balance from December decreased to -82.58B from the projected -83.4B and supported the U.S. dollar and pushed the currency pair USD/JPY higher.

 For December, the Prelim Wholesale Inventories also decreased to 0.1% against the projected 0.5% and supported the U.S. dollar that extended gains in the USD/JPY pair. At 18:32 GMT, the Advance GDP Price Index for the quarter decreased to 2.0% against the projected 2.2% and weighed on the U.S. dollar and capped further upside in the USD/JPY pair. At 20:00 GMT, the C.B. Leading Index for December came in line with the projection of 0.3%. In December from the U.S., the New Home Sales decreased to 842K against the projected 860K and weighed on the U.S. dollar and capped further gains in the USD/JPY pair.

Risk appetite in the market took a meaningful turn on Thursday, with U.S. equities erasing losses incurred on Wednesday leading up to the FOMC monetary policy decision event. The ultra-dovish tone of the Federal Reserve was actually seen as positive for the risk appetite as Wednesday’s risk-off was a result of overvaluation fears as well as because of the short-selling hedge funds being forced to liquidate profitable large-cap stock long positions as speculative retail trade-driven mania continued in the likes of GameStop. Furthermore, another reason behind the rising USD/JPY pair prices was that the U.S. stimulus package proposed by Joe Biden did not receive approval from Republicans as of yet. This also supported the U.S. dollar that ultimately added gains in the USD/JPY pair.


Daily Technical Levels

Support   Resistance

103.71      104.34

103.33      104.58

103.09      104.96

Pivot point: 103.96

USD/JPY – Trading Tips

On Friday, the USD/JPY pair is trading with a bullish bias at 104.475, and it has violated the resistance level of 104.385. It’s likely to lead the USD/JPY pair until the 104.745 level. On the lower side, the USD/JPY may find support at the 104.300 level. The USD/JPY pair is likely to stay bullish as MACD and EMA suggest bullish bias in the USD/JPY pair on the four hourly timeframes. We can expect USDJPY to bounce off upon 104.300 to continue buying trend today. Good luck! 

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Forex Market Analysis

Daily F.X. Analysis, January 28 – Top Trade Setups In Forex – Advance GDP in Focus!

Later today, the focus will remain on the German Prelim CPI and Advance GDP figures from the U.S. both of the events are expected to perform worse than before as the data represents the economic activity of the lockdown period. So most of it is already priced in. However, the U.S. Jobless claims will remain in the highlights, and these are expected to rise again, perhaps due to the second wave of COVID19 in the U.S.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21117 after placing a high of 1.21696 and a low of 1.20581. The EUR/USD pair posted losses on Wednesday as the Federal Reserve kept its benchmark short-term interest rates unchanged near zero and maintained an asset purchasing program at $120 billion a month. 

The Federal Reserve Open Market Committee released its statement from the January meeting that stated that the pace of recovery in economic activity and employment has moderate in recent months with weakness concentrated in the sectors most adversely affected by the pandemic. 

According to the statement, the coronavirus pandemic was causing tremendous human and economic hardship across the United States and worldwide. The committee also stated that the economy’s path would depend significantly on the course of the virus, including the progress on vaccination.

The market’s reaction to the Federal Reserve policy decision kept the EUR/USD pair under pressure, and hence, the currency pair started to extend its losses on Wednesday. Whereas the single currency Euro faced mixed movements throughout the day, the currency remained under pressure with fresh speculations that the ECB could soon cut Eurozone interest rates. The Central Bank was reportedly concerned that markets were pricing out the chances of more interest rate cuts from the ECB. 

Furthermore, the fears for vaccine shortage in Eurozone also weighed on the single currency on Wednesday after the European Union called out vaccine makers AstraZeneca and Pfizer over delivery delays that could slow its recovery from the pandemic. Officials were even threatening to restrict exports and take legal actions as anger mounts. 

According to E.U. officials, AstraZeneca will not deliver as many doses as it promised and has put the government rollout plans and economic recovery at risk. The news came in after Pfizer said that it had delivered fewer doses of its vaccine than expected last week. European Commission President Ursula von der Leyen turned up the pharmaceutical companies’ heat and said that Europe had invested billions in helping develop the world’s first coronavirus vaccine to create a truly global common good, and now companies must deliver and honor their obligations. 

The European Union has devoted part of 2.7 billion euros emergency fund to assist with vaccine development. E.U. countries we recounted on the vaccines to rein in the health crisis and jumpstart their economies, but now they were forced to modify their plans. Furthermore, the E.U. urged the pharmaceutical firm AstraZeneca to supply it with more coronavirus vaccine doses from U.K. plants to row over shortages. However, the company denied and said that the production delay in European plants could only deliver a fraction of the doses it promised for the first quarter of the year. However, the E.U. insisted that doses made elsewhere should make up the shortfall and d criticize the slow rollout of vaccination.

This vaccine drama in the European Union raised concerns over the delayed economic recovery and added weight on the single currency Euro that ultimately added EUR/USD pair losses on Wednesday.

On a data front, at 18:30 GMT, the Core Durable Goods Orders for December rose to 0.7% against the expected 0.5% and supported the U.S. dollar that added more losses in EUR/USD pair. 

In December, the Durable Goods Orders dropped to 0.2% against the expected 1.0% and weighed on the U.S. dollar. From the European side, at 12:00 GMT, the German GfK Consumer Climate dropped in January to -15.6 against the forecasted -7.8. It weighed on Euro that ultimately dragged the currency pair EUR/USD further on the downside on Wednesday. 


Daily Technical Levels

Support Resistance

1.2119 1.2189

1.2079 1.2217

1.2050 1.2258

Pivot point: 1.2148

EUR/USD– Trading Tip

The EUR/USD pair is trading with a bearish bias at 1.2090, facing immediate resistance at 1.2120 level. The EUR/USD is closing three black crows on the hourly timeframe, suggesting selling bias in the pair. On the lower side, the pair is expected to go after 1.2095 and 1.2060 level. The 50 periods EMA are suggesting selling bias in Euro today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.36887 after placing a high of 1.37586 and a low of 1.36590. On Wednesday, the currency pair GBP/USD dropped and posted losses for the day amid the broad-based U.S. dollar strength after the FOMC statement and Fed’s monetary policy decision.

The Federal Reserve Open Market Committee released its statement from January’s meeting on Wednesday that mentioned that the Fed will keep its interest rates near zero and maintain the asset purchasing program of $120 billion per month.

Federal Reserve said that the economic path would solely be decided by pandemic and vaccine rollout developments. Other than this, everything stated in the statement issued by FOMC was just as expected and supported the U.S. dollar that ultimately kept the GBP/USD pair under pressure for the day. On the data front, at 18:30 GMT, the Core Durable Goods Orders for December surged to 0.7% against the anticipated 0.5% and supported the U.S. dollar that ultimately added weight on GBP/USD pair. In December, the Durable Goods Orders fell to 0.2% against the anticipated 1.0% and weighed on the U.S. dollar that capped further GBP/USD pair losses. 

From Britain’s side, at 05:01 GMT, the BRC Shop Price Index for the year came in as -2.2% against the previous -1.8%.

The GBP/USD pair rose to its highest since May 2018 on Wednesday however failed to remain there and reversed its direction. The rise in the GBP/USD pair during the session’s early trading hours could be attributed to U.K. Prime Minister Boris Johnson’s latest comments.

The PM has said that he hopes that a gradual and phased relaxation of coronavirus restrictions could begin in early March. Johnson said that he intended to set out a plan to ease the lockdown in England. The factors will include death and hospitalization numbers, the progress of vaccinations, and changes in viruses.

He also ruled out schools in England re-opening after the February half term instead set a target of 8-March. He also announced a 10-day self-funded quarantine restriction for all travelers entering the U.K. from high-risk countries under tighter border restrictions to combat new variants of coronavirus. The PM was under pressure from Tory MPs to spell out plans for how the current lockdown will end. Then PM replied that relaxing restriction would depend on emerging data about how effectively the vaccine stops virus transmission. These comments from UK PM raised the local currency, British Pound, to economic recovery and pushed the pair GBP/USD in early trading hours. However, the strength of the U.S. dollar due to the Federal Reserve’s decision in the January monetary policy meeting added pressure on the currency pair. It dragged GBP/USD to the downside.


Daily Technical Levels

Support Resistance

1.3647 1.3783

1.3560 1.3832

1.3511 1.3918

Pivot point: 1.3696

GBP/USD– Trading Tip

A day before, the GBP/USD pair traded bullish after violating the narrow trading range of 1.3680 – 1.3670. It placed a high of around 1.3753 level, and it later reversed back to trade between the same trading range of 1.3696 – 1.3646. The GBP/USD may find support around the 1.3647 level, and violation of this level can extend selling bias until 1.3610. Approaching the 2-hour timeframe, the GBP/USD is holding below 10 and 20 periods EMA, and it may extend the selling trend today. Let’s consider taking a sell trade until 1.3645 and 1.361 level.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.108 after placing a high of 104.197 and a low of 103.579. The USD/JPY pair rose and reached its nine-day highest level on the back of the U.S. dollar’s broad-based strength. 

The currency pair USD/JPY touched its highest since January 19 and surpassed 104 level on Wednesday as the greenback became strong on board. The currency pair preserved its bullish momentum as the U.S. Dollar Index that measures the greenback’s value against the basket of six major currencies rose to a weekly top at 90.62 on Wednesday and boosted the safe-haven U.S. dollar. The strength in the U.S. dollar then ultimately pushed the currency pair USD/JPY on the upside.

The risk-averse market sentiment was confirmed by the declining S&P 500 futures that lost more than 1% on the day. Wall Street’s main indexes also started the day in negative territory and supported the U.S. dollar and USD/JPY pair. On the data front, at 18:30 GMT, the Core Durable Goods Orders for December advanced to 0.7% against the estimated 0.5% and supported the U.S. dollar, and added further gains in the USD/JPY pair. In December, the Durable Goods Orders plunged to 0.2% against the estimated 1.0% and weighed on the U.S. dollar. Nevertheless, investors largely ignored the data as the focus was solely on the FOMC’s policy announcement.

The first policy meeting under Joe Biden’s presidency had all the investors’ focus, and that kept driving the whole market on Wednesday. The Federal Reserve Chairman Jerome Powell made clear that the U.S. Central bank was nowhere near exiting massive support for the economy during the ongoing coronavirus pandemic. The Federal Reserve officials kept the benchmark interest rates unchanged near zero and flagged a moderating U.S. recovery in a statement released by FOMC for the January meeting. The bank repeated that it would maintain its bond-buying program at the current pace of $120 billion of purchases per month until substantial further progress towards its employment and inflation goals. 

After this announcement, the Yields on U.S. 10-year Treasury notes hovered just above 1%, and the U.S. dollar held its gains while the S&P 500 closed 2.6%, down from its steepest drop since October amid growing concerns that stocks have become overvalued. FOMC said in a statement that the pace of the recovery in economic activity and employment has moderated in months, with weaknesses concentrated in the sectors most adversely affected by the pandemic. Central Bank also said that the path for the economy would depend significantly not just on the coronavirus but also on vaccination progress. There was no macroeconomic data from Japan to be released on Wednesday, so the pair USD/JPY continued following the developments made in the U.S. front and continued rising on the day.


Daily Technical Levels

Support Resistance

103.49 103.77

103.38 103.94

103.20 104.05

Pivot point: 103.66

USD/JPY – Trading Tips

The USD/JPY pair is trading with a bullish bias at 104.350, and violation of this level is likely to lead the USD/JPY pair until the 104.745 level. On the lower side, the USD/JPY may find support at the 104.198 level. We can expect USDJPY to bounce off upon the 104.198 level today. On the 4 hour timeframe, the USDJPY pair is likely to close a doji candle below 104.368 level. If this happens, we may see a bearish correction in the USD/JPY pair. Good luck! 

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Forex Market Analysis

Daily F.X. Analysis, January 27 – Top Trade Setups In Forex – Big Day, Fed Rate Ahead! 

On the news front, the eyes will remain on the FOMC Statement and Federal Funds Rate, which is not expected to change the interest rate. Still, it will help us understand U.S. economic situation and policymakers’ stance on it. Besides, the Durable Goods Orders m/m from the U.S. will also remain in highlights.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21595 after placing a high of 1.21756 and a low of 1.21076. The EUR/USD pair edged higher on Tuesday as the U.S. Dollar Index (DXY) dropped and the risk appetite in the market witnessed a major turnaround. After a mixed start on the session, the European equities embarked upon a recovery mode and brought back the market’s risk sentiment. The pan-European benchmark, the Euro Stoxx 50, rallied by 1% and lifted the overall market mood. Whereas, the safe-haven U.S. dollar came under pressure after a rise in European equities and come back of risk sentiment that ultimately added gains in the currency pair EUR/USD on Tuesday.

In the early Asian trading session, the main currency pair EUR/USD extended its previous day’s bearish sentiment and fell below 1.2108, on the back of the U.S. dollar’s strength gathered by the risk-off market mood driven by the deadlock over U.S. fiscal stimulus and the renewed US-China tensions over the South China Sea.

On Tuesday, China said that it would conduct military exercises in the South China Sea this week, just days after complaining that a U.S. aircraft carrier group has sailed through the disputed waters. These rising tensions between the world’s two largest economies raised the safe-haven appeal in early trading hours on Tuesday. They lifted the greenback that ultimately dragged the currency pair EUR/USD on the downside.

 However, during early European trading hours, the risk-sentiment started to come back as the positive shift in the tone of the news flow on the coronavirus front. Moderna and Pfizer announced that they were looking into coronavirus booster shots that would specifically target building immunity to variants of the virus, such as that discovered in South Africa a few weeks ago. 

Furthermore, Johnson & Johnson’s CFO has said earlier that they expect to release COVID-19 vaccine trial data next week. The company was very optimistic that they will be releasing a very robust data set. The J&J’s vaccine has been advertised as a game-changer in the vaccination race as it would only require one shot to acquire full immunity. This vaccine-related optimism helped risk sentiment in the market and supported riskier assets like EUR/USD pair on Tuesday.

On the data front, there was no macroeconomic data released from the European side. In contrast, from the U.S. side, at 19:00 GMT, the Housing Price Index from the U.S. for November rose to 1.0% against the forecasted 0.9% and supported the U.S. dollar that capped further upside in the EUR/USD pair. 

The S&P/CS Composite -20 HPI for the year also rose to 9.1% against the forecasted 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January declined to 14 against the forecasted 18 and weighed on the U.S. dollar that added gains in the EUR/USD pair. At 20:00 GMT, the C.B. Consumer Confidence in January rose to 89.3 against the forecasted 88.9 and supported the U.S. dollar and limited further gains in the EUR/USD pair on Tuesday.


Daily Technical Levels

Support   Resistance

1.2108     1.2177

1.2077     1.2215

1.2039    1.2245

Pivot Point: 1.2146

EUR/USD– Trading Tip

The EUR/USD pair is trading at 1.2156, facing immediate resistance at 1.2165 level. The EUR/USD has entered the overbought zone on the hourly timeframe, suggesting odds of bearish correction in the pair. On the lower side, the pair is likely to complete 38.2% Fibonacci retracement at 1.2150 and 61.8% Fibonacci retracement at 1.2134. Selling bias seems strong.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.37363 after placing a high of 1.37443 and a low of 1.36092. GBP/USD pair rebounded on Tuesday during early European trading hours after falling below 1.36100 level. The GBP/USD pair’s comeback was due to the recovered risk appetite in the market and Britain’s strong job report.

However, despite the strong macroeconomic data from Great Britain, the GBP/USD pair benefited from the broad U.S. dollar’s weakness on Tuesday as investors focused more on the U.S. Federal Reserve’s upcoming decision. The risk appetite took a significant turn during the early European trading hours after a downbeat Asa Pacific session. It weighed on the safe-haven U.S. dollar that ultimately lifted the GBP/USD pair on Tuesday. U.S. stocks were high, European equities erased most of Monday’s losses, the crude oil market was also high, and bond yields were rising on both sides of the Atlantic. 

The reason behind the turnaround of the risk sentiment was the positive vaccine news, as Moderna and Pfizer announced last night that they were starting investigating a booster vaccine shot that will come between 6-12 months after the second doses and will provide immunity against the new variants of coronavirus like the one emerged in South Africa in the past few days. Meanwhile, the Johnson & Johnson CFO also said on Tuesday that they expect to release the trail data for their coronavirus vaccine next week. They were very optimistic that the data will be robust and have claimed that their vaccine will be a game-changer in the vaccine race as it will provide full immunity in a single shot.

The rising risk sentiment in the market helped the risk perceived GBP/USD currency pair gain traction and rose to post gains for the day. On the data front, at 19:00 GMT, the Housing Price Index from the U.S. for November surged to 1.0% against the projected 0.9% and supported the U.S. dollar, and capped further upside in the GBP/USD pair. The S&P/CS Composite -20 HPI for the year also surged to 9.1% against the projected 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January decreased to 14 against the projected 18 and weighed on the U.S. dollar, which ultimately added more GBP/USD pair gains. At 20:00 GMT, the C.B. Consumer Confidence in January surged to 89.3 against the projected 88.9 and supported the U.S. dollar that capped further bullish momentum in GBP/USD pair.

From the Britain side, at 12:00 GMT, the Average Earnings Index for the quarter raised to 3.6% against the estimated 2.9% and supported the British pound that pushed the pair GBP/USD even higher on board. For December, the Claimant Count Change declined to 7.0K against the forecasted 47.5K and supported Sterling, which ultimately added more GBP/USD pair gains. In December, the Unemployment Rate from Britain also dropped to 5.0%against the forecasted 5.1% and supported British Pound that lifted the bullish sentiment in GBP/USD pair. AT 16:00 GMT, the CBI Realized Sales in January dropped to -50 against the estimated -32 and weighed on British Pound and capped further upside in GBP/USD pair on Tuesday.

Another reason that could also be attributed to the rising prices of GBP/USD pair on Tuesday was UK PM Boris Johnson’s latest announcement about new travel instructions. The incoming passengers in the U.K. will need to self-fund a quarantine for ten days in a hotel. The new policy was a part of a government strategy to prevent foreign strains of the virus from entering the U.K. This also helped British Pound gain strength and support the GBP/USD pair’s upward momentum on Tuesday.


Daily Technical Levels

Support   Resistance

1.3641     1.3717

1.3607     1.3759

1.3565     1.3794

Pivot Point: 1.3683

GBP/USD– Trading Tip

On Wednesday, the GBP/USD pair continues trading with a bullish bias at 1.3733 level after violating the symmetric triangle pattern. The GBP/USD pair is trading with a bullish bias on the two-hourly timeframes, facing immediate resistance at 1.3749 area. A bullish breakout of this level is expected to trigger further buying trends until the 1.3807 mark. Today, we can expect to enter a buy position over 1.3749 and selling below the same. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.617 after placing a high of 103.826 and a low of 103.553. After rising for two consecutive sessions, the USD/JPY pair dropped on Tuesday despite the market’s rising risk-on market sentiment. The U.S. Dollar Index (DXY), which measures the value of the greenback against the basket of six major currencies, was up on Tuesday by 0.2% at 90.547 level and supported the U.S. dollar. The safe-haven greenback gained in early trading hours of the day as the rising tensions between the U.S. and China over the South China Sea prompted the risk-off mood. 

On Tuesday, China said that it would conduct military exercises in the South China Sea later this week. This announcement came in just days after they had complained that a U.S. aircraft carrier group has sailed through the disputed waters. This helped the Japanese Yen gain traction due to its safe-haven nature and weighed on the USD/JPY pair. 

The US-China relation also came under headlines after Chinese President Xi Jinping warned against the new cold war. On Monday, Xi warned global leaders against starting a “new Cold War” and urged unity in the face of the coronavirus pandemic. He said that building small cliques or starting a new Cold War to reject, threaten or intimidate others will only push the world into division.

The words appeared to be aimed at U.S. President Joe Biden’s plans to revitalize global alliances to counter China’s growing influence. These comments added to the tensions between China and the U.S. and raised the need for safe-haven that ultimately supported the safe-haven Japanese Yen and dragged the pair USD/JPY on the downside. However, the market’s risk sentiment came back during early European trading hours after positive news from vaccine makers came into the market. Moderna and Pfizer announced that they have started working on the booster shots of vaccines that will provide full immunity even against the new variants of the coronavirus like the one that emerged in South Africa. Meanwhile, the Johnson & Johnson CFO also announced that they would release their vaccine data next week, and they were very optimistic that it will be robust data. J&J has claimed that their vaccine will provide full immunity in a single shot, and if the data suggested so, it would be a game-changer in the vaccine race so far.

The rising risk sentiment in the market could not lift the USD/JPY pair, and the pair continued moving in the bearish trend for the day.

On the data front, at 19:00 GMT, the Housing Price Index from the U.S. for November advanced to 1.0% against the anticipated 0.9% and supported the U.S. dollar that capped further losses in the USD/JPY pair. The S&P/CS Composite -20 HPI for the year also advanced to 9.1% against the anticipated 8.8% and supported the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index for January fell to 14 against the anticipated 18 and weighed on the U.S. dollar, adding more losses in the USD/JPY pair. At 20:00 GMT, the C.B. Consumer Confidence in January advanced to 89.3 against the anticipated 88.9 and supported U.S. dollar.

From the Japanese side, at 04:50 GMT, the SPPI for the year in December came in as -0.4% against the predicted -0.6% and supported Japanese Yen that added further downside momentum in the USD/JPY pair. At 10:00 GMT, the BOJ Core CPI for the year dropped to -0.3% against the expected -0.1% and weighed on the Japanese Yen.

Furthermore, the losses in USD/JPY were also capped after the announcement from the U.S. President Joe Biden on Tuesday. He said that the U.S. would accelerate the delivery of coronavirus vaccines across the country as his administration plans to buy 200 million more doses of the Pfizer-BioNTech and Moderna vaccines. However, Biden also warned that even with more Americans set to be inoculated sooner than previously anticipated due to additional doses, the pandemic would continue to worsen before it gets better. 

According to the Johns Hopkins University data, the number of confirmed coronavirus cases worldwide has passed 100 million just over a year since the first cases of the mysterious new illness was reported in the Chinese city of Wuhan. This weighed on market sentiment and supported the safe-haven Japanese Yen that ultimately added the USD/JPY pair’s losses on Tuesday.


Daily Technical Levels

Support   Resistance

103.62     103.89

103.50     104.06

103.34     104.17

Pivot point: 103.78

USD/JPY – Trading Tips

On Wednesday, the USD/JPY continues to trade sideways inside a broad trading range of 103.900 – 103.560. The USD/JPY has formed a symmetrical triangle pattern on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 26 – Top Trade Setups In Forex – C.B. Consumer Confidence Ahead! 

Investor’s eyes will stay on the Claimant Count Change and Unemployment Rate data from the U.K. as it’s likely to drive market movements during the European session. Later on, the C.B. Consumer Confidence from the U.S. will focus on the New York session today.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21415 after placing a high of 1.21831 and a low of 1.21158. After rising for two consecutive sessions, the EUR/USD pair dropped on Monday as the common currency remained under pressure due to the slow pace of coronavirus vaccination roll out in Europe. The slow distribution of vaccines and the new manufacturing issues lagged the COVID-19 vaccination rollout in the old continent. After Pfizer told the E.U. that retooling in its Belgian plant would cause a delay, AstraZeneca made a similar announcement on Friday. The bloc has a substantial deal with the British pharmaceutical, and the European regulator was set to approve it on Friday.

Apart from the vaccine delays, the fears of new coronavirus variants were also of concern and could trigger another nationwide lockdown in France, the Eurozone’s second-largest economy. Berlin has also announced to extend its restrictions through mid-February. On the other hand, the safe-haven U.S. dollar was on the back foot across the board due to U.S. President Joe Biden pushing his $1.9 trillion relief program. Simultaneously, moderate Senators were pushing back against approving new expenditure only a month after they approved $900 billion of funds. However, Democrats were set to ram through the package via a reconciliation that would relieve them of the need to receive Republicans’ support.

Another option is to quickly approve the coronavirus-related funds and delaying the other aspects of the suggested package, such as a hike to the minimum wage. These options also kept the prospects of package delivery in the act and kept weighing on the U.S. dollar that ultimately capped further downside in the EUR/USD pair. On the data front, at 14:00 GMT, the German IFO Business Climate dropped to 90.1 against the forecasted 91.5 and weighed on Euro. At 19:00 GMT, the Belgian NBB Business Climate dropped to -7.5 against the expected -8.0 and supported Euro.

It seems like the German Business Climate went down because of the issues mentioned above, as the lockdown restrictions have badly disturbed the business community and weighed on the common currency that dragged the EUR/USD prices on the downside. Meanwhile, equity markets have posted healthy gains over the last few weeks on bets coronavirus vaccines will start to reduce infection rates worldwide and on a stronger U.S. economic recovery under President Joe Biden. 

However, the vaccine rollout has been uneven, with relatively rapid progress in the U.K. but a much slower rollout in France. AstraZeneca warned of further delays to deliveries of its vaccines in Europe on Friday due to production blockage at one of its manufacturing partners. Over the weekend, Italy threatened legal action against both Astra and Pfizer over delivery delays. On Sunday, France has announced to impose a third lockdown that was already under a national 12-hour curfew. All these developments turned the European futures red and weighed on risk sentiment that ultimately dragged the EUR/USD pair on the downside.

On Monday, ECB President Christine Lagarde said that Climate Change could create short-term volatility in output and inflation through extreme weather events and, if left unaddressed, can have long-lasting effects on growth and inflation. ECB announced on Monday that it was creating a team of around 10 ECB employees, reporting directly to Lagarde to set the central bank’s agenda on climate-related topics.

On Monday, the ECB Chief Economist Philip Lane said that the European Central bank primarily focused on bank credit conditions ad bond yields when assessing if financing conditions were favorable. He added that naturally, the focus on credit conditions in the banking system on one side and the bond market on the other side was consistent with the main methods used by central banks in steering financial conditions. On Tuesday, the Federal Reserve will meet for its first monetary policy meeting, and the decision of the meeting will be handed down on the next day. EUR/USD pair traders will keep an eye on Fed’s decision for future impetus.


Daily Technical Levels

Support   Resistance

1.2163       1.2173

1.2158       1.2178

1.2153       1.2183

Pivot Point: 1.2168

EUR/USD– Trading Tip

The EUR/USD pair’s technical side has turned bearish as it trades below the support level of 1.2133 level. Formation of the bearish engulfing candle on the hourly timeframe can extend selling bias until the support level of 1.2115 area. Whereas, further selling trend can lead the EUR/USD pair towards the support level of 1.2090 mark. Selling bias seems to dominate the EUR/USD pair today.


GBP/USD – Daily Analysis

The GBP/USD closed at 1.36757 after placing a high of 1.37232 and a low of 1.36485. The GBP/USD pair struggled to advance on Monday amid the concerns over the coronavirus pandemic that worsened and raised the safe-haven appeal. The US Centers for Disease Control and Prevention reviewed data that suggested the U.K. coronavirus variant actually may be deadlier than other variants. A British report found that the variant was associated with a higher death rate than other variants. But the United Kingdom’s chief scientist Patrick Vallance has stressed to reporters that the evidence was not yet strong. 

Previous research has shown that the variant was more contagious than the previous form of coronavirus. But scientists did not believe it was more deadly as it began spreading in the U.K. last fall. Several separate analysis from British researchers found that the patients infected with the variant have a higher risk of severe disease and death. However, U.K. scientists insisted that these researches have several limitations and that more research was needed to confirm these findings.

These reports raised concerns for economic recovery as the threats of new variants could mean new and stricter restrictions throughout the globe. That raised the risk-off market sentiment that ultimately weighed on the risk perceived GBP/USD pair on Monday.

The British Pound advanced last week against its major rival currencies due to a combination of higher market sentiment and hopes for Britain ramping up its coronavirus vaccination scheme. However, the coronavirus pandemic continued to weigh heavily on the British Pound outlook due to the new variant and its association with the mortality rate. As a result, the U.K. government indicated that the current lockdown could last for quite some time as infection rates remain high in the country. These coronavirus fears continued weighing on the British Pound on Monday and dragged the GBP/USD pair on the downside in the absence of any macroeconomic data from both sides.

On the U.S. side, the safe-haven U.S. dollar was strong on Monday as investors were hesitant to sell it as global coronavirus pandemic fears boosted the appetite for safer assets. The greenback’s strength also weighed on GBP/USD pair and extended its losses on the day. However, the GBP/USD pair’s losses started to reverse in the late session on Monday, and the currency pair ended its day with zero loss or gained as it was closed at the same level it began its day with. The reversal in GBP/USD pair in late trading hours came in due to some good news from the U.K. side. 

The U.K. saw a sustained weakness in the infections and the death toll on Monday as the country reported the lowest cases since mid-December on that day. The British Health Secretary Matt Hancock praised the latest measures to flash early positive signs while conveying heavy vaccination and lockdown success. However, the overall sentiment remained depressing as the delayed U.S. coronavirus aid package and AstraZeneca and Pfizer vaccine delivery raised fears for global economic recovery.


Daily Technical Levels

Support   Resistance

1.3677       1.3694

1.3668       1.3700

1.3661       1.3710

Pivot Point: 1.3684

GBP/USD– Trading Tip

The GBP/USD pair continues trading with a bullish bias after violating the narrow trading range of 1.3680 – 1.3670. On the upper side, the GBP/USD may face resistance at 1.3736 level now, as the pair may form a triple top pattern here. At the same time, the support continues to hold around 1.3697 level. On the 2 hour timeframe, the GBP/USD has formed a symmetric triangle pattern, which is likely to provide resistance at 1.3701 along with support at 1.3613 level. Today, we can expect a choppy session in the Cable pair.   


USD/JPY – Daily Analysis

The USD/JPY closed at 103.756 after placing a high of 103.934 and a low of 103.670. USD/JPY pair extended its gains on Monday however remained depressive due to the risk-off market sentiment.

The demand for the greenback of risk-aversion pushed the USD/JPY pair to a daily high near 104 level. However, the U.S. treasury yields came under pressure with the yield on benchmark 10-year note down to 1.03% weighed by the news that U.S. President Biden’s stimulus plan faces opposition from Republican and Democrat lawmakers.

The $1.9 trillion stimulus package proposed by Biden is expected to get pass by the House of Representatives that is led by Democrats backing Biden. Still, the bill could face rejection at Senate as many senators were reluctant to pass another massive amount for spending just after a month of releasing $900 billion. However, Democrats were set to push through the package via a settlement that would relieve them of the need to receive Republicans’ support. Another option is to rapidly support the coronavirus-related funds and postpone the other suggested package features, such as a hike to the minimum wage.

Furthermore, the Federal Reserve monthly rate decision followed by Fed Chair Jerome Powell’s news conference is set to deliver later this week. Rates are projected to remain flat at a near-zero level that has stood there for almost a year now due to the coronavirus pandemic crisis. However, Powell’s words will be inspected for even the smallest signal of when recovery is likely expected, and as well as a narrowing of stimulus measures.

Over the past fortnight, Powell has claimed that tapering of stimulus measures will not happen anytime soon. Still, bond traders have completely ignored him and continued pushing yields higher in the hope of proving the Fed chief wrong that ultimately supported the U.S. dollar and raised the USD/JPY pair on Monday. 


Daily Technical Levels

Support   Resistance

103.77       103.82

103.74       103.86

103.71       103.88

Pivot Point: 103.80

USD/JPY – Trading Tips

The safe-haven pair USD/JPY continues to trade sideways inside a broad trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 25 – Top Trade Setups In Forex – ECB President Lagarde in Limelight! 

On the news front, eyes will remain on the ECB President Lagarde Speaks and German Ifo Business Climate figures from the Eurozone. President Lagarde is due to participate in a virtual panel discussion titled “Restoring Economic Growth” at Davos 2021.

Economic Events to Watch Today  

  


 


EUR/USD – Daily Analysis

 EUR/USD pair was closed at 1.21707 after placing a high of 1.21893 and a low of 1.21513. The EUR/USD tried to break above the strong resistance level of 1.2200 on Friday but failed as the U.S. dollar strength and the worsened pandemic situation around the bloc added pressure on the single currency Euro.

The U.S. dollar was strong across the board as investors were worried about the chances that President Joe Biden’s $1.9 trillion stimulus proposal failed to gain traction. Hopes have raised that the package’s final deal could be smaller or just be dragged, and this supported the local currency U.S. dollar, which ultimately capped further upside in the EUR.USD pair on Friday.

Meanwhile, the U.S. dollar was also strong due to better than expected macroeconomic data release on Friday. At 19:45 GMT, the Flash Manufacturing PMI rose to 59.1 against the forecasted 56.6 and supported the U.S. dollar, and capped further gains in EUR/USD pair. The Flash Services PMI also rose to 57.5 against the forecasted 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also rose to 6.76M against the forecasted 6.55M and supported the U.S. dollar, and limited the upward momentum in EUR/USD pair. From the European side, at 13:15 GMT, the French Flash Services PMI dropped to 46.5 against the predicted 48.3 and weighed on Euro. The French Flash Manufacturing PMI raised to 51.5 against the expected 50.6 and supported Euro that added further gains in EUR/USD pair. At 13:30 GMT, the German Flash Manufacturing PMI remained flat at 57.0. The German Flash Services PMI raised to 46.8 against the forecasted 45.1 and supported Euro that ultimately provided additional gains to EUR/USD pair. At 14:00 GMT, the Flash Manufacturing PMI remained flat with the expectations of 54.7. The Flash Services PMI raised to 45.0 against the projected 44.4 and supported Euro and pushed the EUR/USD pair higher. 

Meanwhile, the EUR/USD pair hit its highest in the week on Friday, but the day’s gains were small as the European leaders showed frustration about the slow vaccination pace. The new mutants of coronavirus raised fresh concerns in the European Union as the governments considered imposing stricter border controls and banning non-essential travel.

The European Central Bank chief Christine Lagarde warned that the pandemic still poses severe risks to the Eurozone economy as concerns grow about new variants and sluggish vaccination campaigns. While many countries were struggling to reduce the number of infections, the emergence of more contagious virus variants first discovered in the U.K. and South Africa has added to nervousness. 

However, one factor that helped the common currency in this depressing environment to stay strong onboard was European Central Bank’s latest decision. ECB said that risks remain tilted to the downside, but they were less pronounced. The President of ECB also emphasized the need for more monetary support while the policy remained unchanged. 


Daily Technical Levels

Support   Resistance

1.2127       1.2190

1.2086       1.2214

1.2063       1.2254

Pivot point: 1.2150

EUR/USD– Trading Tip

The EUR/USD continues trading bullish at 1.2173 level and holding right above the 1.2158 support mark. Over this level, the EUR/USD has chances of bullish trend continuation until 1.2220 level. The pair has recently closed candles over 1.2158, and the continuation of the upward trend seems very likely as the 50 periods EMA supports the pair. On the higher side, the EUR/USD may find a target around 1.2220 level.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.36816 after a high of 1.37358 and a low of 1.36354. After rising for three consecutive days, the GBP/USD pair dropped on Friday as the coronavirus pandemic hit the country hard and raised concerns for economic recovery as the lockdown restrictions extended. 

The GBP/USD pair also fell on Friday amid the broad-based strength of the greenback triggered by the rising U.S. Treasury yields and the stronger than expected macroeconomic data. The U.S. dollar was also strong as the market’s investors shifted their focus from Joe Biden’s $1.9 trillion massive stimulus package and rather ignored its prospects.

The GBP/USD pair saw selling pressure on Friday as the death toll around the country rose to an alarming level amid the coronavirus’s new variant. According to a rolling analysis by Oxford University, until Thursday, the U.K. had the highest per capita daily death toll of any other country globally, around twice that of the United States.

Given this state, the British government extended the nationwide lockdown till July 17 and also decided to quarantine travelers from high-risk coronavirus countries for at least 10-days as it failed to curb the rising number of coronavirus variant infections. Meanwhile, Britain’s hospitals were also struggling under an ever-growing flow of patients. In the extended lockdown situation, the economic concerns raised rapidly and weighed on the Sterling that ultimately dragged the currency pair GBP/USD on the downside.

Furthermore, on Friday, a U.K. report was released that stated a realistic possibility that the new U.K. variant had a higher mortality rate than other variants. While the data was not decisive but UK PM Boris Johnson said that there was some evidence that the new variant may be connected with a higher degree of mortality. This news added concerns about economic recovery and weighed on the British Pound that added GBP/SD pair losses.

On the data front, at 19:45 GMT, the Flash Manufacturing PMI advanced to 59.1 against the projected 56.6 and supported the U.S. dollar that dragged the GBP/USD pair even on the downside. The Flash Services PMI also advanced to 57.5 against the projected 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also advanced to 6.76M against the projected 6.55M and supported the U.S. dollar and added GBP/USD pair losses.

From Britain’s side, at 05:01 GMT, the GfK Consumer Confidence for January dropped to -28 against the expected -30 and supported British Pound that capped further downward momentum in GBP/USD pair. At 14:30 GMT, the Flash Manufacturing PMI for January dropped to 52.9 against the forecasted 53.5 and weighed on the British Pound, ultimately pushing the pair GBP/USD lower. The Flash Manufacturing PMI also dropped to 38.8 against the expected 45.2 and weighed on British Pound and added GBP/USD pair losses.


Daily Technical Levels

Support   Resistance

1.3676      1.3763

1.3624      1.3798

1.3589      1.3850

Pivot Point: 1.3711

GBP/USD– Trading Tip

The GBP/USD pair continues trading with a bullish bias after violating the narrow trading range of 1.3680 – 1.3670. On the higher side, the GBP/USD may find resistance at 1.3736 level now, as the pair may form a triple top pattern here. At the same time, the support continues to hold around 1.3697 level. Bullish bias dominates. 


USD/JPY – Daily Analysis

The USD/JPY closed at 103.769 after placing a high of 103.884 and a low of 103.446. After falling for two consecutive sessions, the USD/JPY pair rose on Friday amid the broad-based U.S. dollar strength; however, the sentiment remained depressing as the pandemic raised concerns for the economic recovery. The U.S. Dollar Index that measures the value of the greenback against the basket of six currencies was up by 0.1% on Friday to 90.243 level and supported the U.S. dollar that ultimately added gains in the currency pair USD/JPY.

The U.S. dollar was also high onboard on Friday as the U.S. Treasury yields also rose on the day amid the idea of greater borrowing to fund the additional stimulus proposed by Joe Biden for %1.9 trillion as it could raise the inflation and change the Federal Reserve’s ultra-loose monetary stance. This supported the risk-on market sentiment that ultimately supported the USD/JPY pair as traders were prepared to buy riskier currencies on the idea of quicker than previously expected global economic recovery after the additional stimulus to the economy.

However, these hopes deteriorated after the new variants of coronavirus from the U.K. and South Africa raised global economic concerns in the market. According to a report released on Friday from the U.K., there was a convincing possibility that the new variant of coronavirus in Britain had a higher death rate than other variants. While the data was not conclusive, but UK PM Boris Johnson said that there was some evidence that the new variant may be related to a higher degree of mortality.

This prompted U.S. President Joe Biden to reinstate a ban on most non-US citizens entering the country from Brazil and the U.K., where more transmissible variants of the coronavirus have emerged recently months. According to public health officials, the U.S. also added South Africa to the restricted list as the concerning variant has already spread beyond South Africa. Arrivals from Ireland and 26 countries in Europe were also banned to protect the people of the U.S. as it has already faced the pandemic on an extreme level.

The Centers for Disease Control and Prevention said that these measures were taken to protect Americans and reduce the risks of these variants spreading and worsening the current pandemic that already affected about 25 million Americans. These developments raised the global economic recovery concerns and added in the risk-off market sentiment that ultimately capped further upside in the USD/JPY pair.

On the data front, at 19:45 GMT, the Flash Manufacturing PMI increased to 59.1 against the anticipated 56.6 and supported the U.S. dollar that added in the upward momentum of the USD/JPY pair. The Flash Services PMI also increased to 57.5 against the anticipated 53.3 and supported the U.S. dollar. At 20:00 GMT, the Existing Home Sales also increased to 6.76M against the anticipated 6.55M and supported the U.S. dollar that pushed the USD/JPY pair higher.

At 04:30 GMT, National Core CPI for the year from Japan came in as -1.0% against the projected -1.1% and supported Japanese Yen. At 05:30 GMT, the Flash Manufacturing PMI dropped to 49.7 against the forecasted 50.1 and weighed on the Japanese Yen, supporting the upward momentum in the USD/JPY pair on Friday.


Daily Technical Levels

Support   Resistance

103.33      103.67

103.16      103.84

102.99      104.01

Pivot point: 103.50

USD/JPY – Trading Tips

On Monday, the safe-haven pair USD/JPY continues to trade sideways inside a broad trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 22 – Top Trade Setups In Forex – Manufacturing & Services PMI Ahead!  

On the news front, eyes will remain on the Manufacturing PMI and Services PMI figures from the Eurozone, U.K., and the United States. Almost all of the economic figures are expected to perform poorly than in previous months. Price action will depend upon any surprise changes in the PMI figures.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

UR/USD pair was closed at 1.21671 after placing a high of 1.21728 and a low of 1.21022. Despite the rising fears of the Eurozone falling into recession due to the damage caused by pandemic across the bloc, as warned by the European Central Bank President Christin Lagarde, the Euro rose against the U.S. dollar to a one-week high.

On Thursday, the European Central Bank President Christine Lagarde said that the coronavirus pandemic was still posing serious risks to the eurozone economy as lockdowns were tightened across the region. She added that the start of vaccination campaigns across the euro area was an important milestone in resolving the ongoing health crisis. Nonetheless, the pandemic continued to pose serious risks to public health and the euro area and the global economies.

In many of the European nations, the New Year began with stricter social restrictions and national lockdowns. This week, Germany extended a national lockdown until February 14, and the Netherlands announced that there would be a curfew starting from next week. France also chose to intensify its curfew hours earlier this month, while Portugal decided to close schools from Friday.

According to the European Centre for Disease Prevention and Control, Europe has reported more than 16 million coronavirus infections, with more than 400,000 deaths so far. Lagarde said that it was ready to update its policies whenever necessary amid the economic uncertainty. She added that ECB’s main policy target was to achieve an inflation rate close to 2%. 

Meanwhile, at its policy meeting on Thursday, ECB kept its interest rates and its huge stimulus program unchanged. The main refinancing operations remained flat at 0.00%, the marginal lending facility at 0.25%, and the deposit facility at -0.50%. The Governing Council has also decided to continue the purchases under the pandemic emergency purchase program (PEPP) with a total of 1850 billion euros until at least the end of March 2022.

In December, the bank estimated a GDP rate of 3.9% for 2021 and 2.1% for 2022. However, according to ECB, there were doubts over how the euro area will cope this year after a 7.3% GDP drop last year. ECB also signaled it might not need the full extent of its emergency purchase program to support the recovery. However, chances for an increase in the program were also mentioned to ensure the euro area economy remains well-financed. These comments from Lagarde failed to reverse the upward momentum of the EUR/USD pair on Thursday.

On the data front, at 19:30 GMT, the Consumer Confidence from Europe for January dropped to -16 against the expected -15 and weighed on Euro that capped further upside in EUR/USD pair. From the U.S. side, at 18:30 GMT, the Philly Fed Manufacturing Index for January rose to 26.5 against the forecasted 11.2 and supported the U.S. dollar that limited the upward momentum in EUR/USD pair. The Unemployment Claims from last week were decreased to 900K from the forecasted 930K and supported U.S. dollar. 

For December, the Building Permits rose to 1.71M against the forecasted 1.60M and supported the U.S. dollar. From December, the Housing Starts also rose to 1.67M against the forecasted 1.56M and supported the U.S. dollar that also weighed on the rising EUR/USD prices.

Despite strong macroeconomic data from the U.S., the greenback remained on the back foot on Thursday. It declined almost 0.2% against its rival currencies amid the rising hopes for a further stimulus package under Joe Biden’s administration. This weakness of the U.S. dollar also supported the EUR/USD pair’s rising prices on Thursday.

Furthermore, the U.S. recorded the death toll from coronavirus above 400,000, and it was expecting about 500,000 deaths from the pandemic by mid-February. This alarming situation prompted Joe Biden to sign orders to intensify the vaccination program that ultimately added to the market’s risk sentiment and supported the risk perceived EUR/USD pair on Thursday.


Daily Technical Levels

Support   Resistance

1.2006      1.2091

1.2039      1.2106

1.2058      1.2139

Pivot Point: 1.2062

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2128 level. The EUR/USD is holding right below 50 periods EMA on the hourly timeframe, extending the EUR/USD pair’s resistance. On the lower side, the support level continues to hold around 1.2120 and 1.2062 level. The MACD and RSI are suggesting a mixed bias for the EUR/USD pair. Buying can be seen over 1.2115.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.37332 after placing a high of 1.37456 and a low of 1.36469. GBP/USD pair rose to its highest since May 2018 on Thursday amid broad-based U.S. dollar weakness and a rising appetite for risk. The GBP/USD pair rose for 3rd consecutive session on Thursday as the global appetite for risk was raised, with Joe Biden sworn in as 46th President of the United States. Another reason behind the rising GBP/USD prices was the weaker U.S. dollar driven by the rising hopes for a massive stimulus package under Biden’s administration.

The new President is expected to announce a $1.9 trillion stimulus package to help the American economy survive through the ongoing coronavirus pandemic that has cost more than 400,000 American lives. Markets were confident that the stimulus package would boost the global economic situation and, in turn, will also push the risk-sensitive Pound higher.

 Moreover, the British Pound was already strong onboard due to Bank of England’s governor Andrew Bailey who expected a pronounced recovery in Britain’s economy as vaccination against coronavirus is underway. On Thursday, the Bank of England released the credit conditions survey that indicated an increase in the mortgage payment default rates at the beginning of 2021 as the pandemic’s economic impact hit the households. This weighed a little over British Pound and capped further upside in GBP/USD pair on Thursday.


Daily Technical Levels

Support   Resistance

1.3622      1.3717

1.3576      1.3764

1.3528      1.3811

Pivot Point: 1.3670

GBP/USD– Trading Tip

The GBP/USD pair continues trading sideways between a narrow trading range of 1.3740 – 1.3703 level. On the lower side, a bearish breakout of 1.3703 level can extend the selling trend until the next support level of 1.3679 level. Conversely, a bullish crossover of 1.3740 can extend buying trend until the 1.3775 level. Let’s keep our eyes on the 1.3700 level today.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.489 after placing a high of 103.666 and a low of 103.325. The currency pair USD/JPY remained under consolidation and posted small losses as the U.S. dollar remained weak throughout the day. The main driver of currency pair USD/JPY on Thursday remained the rising hopes for massive stimulus from the new President of the U.S. and the latest growth outlook from the Bank of Japan.

The Bank of Japan kept its monetary policy steady on Thursday, upgraded its economic forecast for the next fiscal year, and warned of escalating risks to the outlook as new coronavirus emergency measures threatened to disrupt a fragile recovery.

Bank of Japan maintained its targets under yield curve control at -0.1% for short-term interest rates and around 0% for 10-year bond yields. The Governor of BOJ Haruhiko Kuroda said that the board had discussed the bank’s review of its policy tools due in March, though he also dropped a few hints on the outcome.

In the fresh quarterly projections, the Bank of Japan upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic. This projection raised the Japanese Yen that ultimately weighed on the USD/JPY pair on Thursday.

However, BOJ offered a depressing view on consumption and warned that services spending would remain under strong downward pressure due to the fresh state of emergency measures taken this month. Kuroda said that the risk of Japan sliding back into deflation was not high and signaled the BOJ had offered sufficient stimulus, for now, to ease the blow from COVID-19.

On the data front, at 18:30 GMT, the Philly Fed Manufacturing Index for January advanced to 26.5 against the anticipated 11.2 and supported the U.S. dollar. The Unemployment Claims from last week fell to 900K from the anticipated 930K and supported the U.S. dollar that capped further downside in the USD/JPY pair. For December, the Building Permits advanced to 1.71M against the anticipated 1.60M and supported the U.S. dollar. The Housing Starts from December also advanced to 1.67M against the anticipated 1.56M and supported the U.S. dollar and limited USD/JPY pair losses.

From Japan, at 04:50 GMT, the Trade Balance from December dropped to 0.48T against the expected 0.70T and weighed on the Japanese Yen that limited the downfall in the USD/JPY pair on Thursday. Despite the stronger than expected macroeconomic data from the U.S., the greenback fell by 0.2% against the basket of six currencies and weighed on the USD/JPY pair as the hopes for a massive stimulus package from Democratic President Joe Biden increased.

Joe Biden is expected to announce a $1.9 trillion coronavirus relief package that will ultimately weigh on the local currency. Furthermore, the rising death cases from coronavirus in the U.S. also weighed on the U.S. dollar as the death toll surpassed 400,000 and raised fears. The weakness of the U.S. dollar dragged the USD/JPY prices on the downside on Thursday.


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

On Friday, the USD/JPY continues to trade sideways inside a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 21 – Top Trade Setups In Forex – ECB Policy Ready to Play! 

The market’s news is likely to offer high impact events from the U.S., while the major focus will remain on the Philly Fed Manufacturing Index and Unemployment Claims. U.S. dollar may exhibit mixed bias until the release of these events as Philly fed manufacturing is expected to perform badly, and the Jobless claims are likely to perform well.

Economic Events to Watch Today  

 

 


EUR/USD – Daily Analysis

The EUR/USD continues to trade higher at the 1.2160 level, and a bullish breakout can extend buying trend until the 1.2229 level. The market trading sentiment still represents positive performance on the day as the positive environment around the Asia-Pacific stocks. All-time high upticks in the S&P 500 Futures highlight the risk-on mood, which was being supported by optimism over a potential vaccine/treatment for the highly infectious coronavirus. 

Meanwhile, the increasing hopes over more U.S. stimulus package under Joe Biden’s presidency also played its major role in supporting the market trading sentiment. The hopes of further U.S. stimulus package sparked after the Biden entered the White House, without any losses, which could be considered as one of the major reason behind the latest positive mood in the market,

In response, the broad-based U.S. declined to stop its long bearish bias and remained bearish on the day. The dip in the greenback was further sparked by the optimism over vaccines’ rollout for the highly contagious coronavirus disease, which eroded demand for safe-haven currencies. Therefore, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index that measures the dollar versus a bucket of other currencies dropped by 0.19% to 90.300 by 11:26 PM ET (4:26 AM GMT).

As per the report, the Secretary of the Treasury nominee Janet Yellen urged Congress to “act big” on the Coronavirus relief program and shouldn’t worry about debt through her Senate confirmation hearing. These positive remarks helped the market trading bias to stay bid. 


Daily Technical Levels

Support   Resistance

1.2006     1.2091

1.2039     1.2106

1.2058     1.2139

Pivot Point: 1.2062

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2128 level. The EUR/USD is holding right below 50 periods EMA on the hourly timeframe, extending the EUR/USD pair’s resistance. On the lower side, the support level continues to hold around 1.2120 and 1.2062 level. The MACD and RSI are suggesting a mixed bias for the EUR/USD pair. Buying can be seen over 1.2115.


GBP/USD – Daily Analysis

The GBP/USD continues to hold its bullish tone through the first half of the day as the pair ran into the weekly highs around the 1.3710 mark. It’s mostly due to the weaker U.S. dollar. The trader hopes for further U.S. fiscal incentive immediately intensified after the U.S. Treasury Secretary candidate Janet Yellen urged lawmakers to act high on the COVID-19 relief package and not bother too much regarding debt. The remarks of Yellen were was seen as one of the critical factors that weakened the safe-haven U.S. dollar and added to the GBPUSD gains. 

Besides this, the dollar losses bolstered by the confidence over the rollout of COVID-19 vaccines, which confer some further support to the GBP/USD pair. The U.S. failed to stop its long bearish bias and remained bearish on the day. The losses in the U.S. dollar were further sparked by the optimism over vaccines’ rollout for the highly contagious coronavirus disease, which eroded demand for safe-haven currencies. Therefore, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.19% to 90.300 by 11:26 PM ET (4:26 AM GMT).

Conversely, the anxieties regarding increasing COVID-19 cases and economically-painful hard lockdowns in the U.K. keep questioning the pair’s upside impulse. The U.K. coronavirus strain has been discovered in at least 60 countries so far, as per the WHO report. The Kingdom announced 33,355 fresh virus cases and 1,610 deaths on the day. Globally, the number of cases has exceeded 96 million, prompting the pair’s upside momentum. Besides, the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada also seems to question the Sterling bullish bias.


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 is also heading north amid a weaker dollar, as it trades at a 1.3655 level. Continuation of an upward trend can lead the Cable towards the next target area of 1.3700 level. At the same time, the Cable may find support at 1.3628 level today. On the higher side, the bullish breakout of 1.3701 level can extend buying trend until 1.3736. The GBP/USD is supported by 10 and 20 periods EMA on the two-hourly timeframes, suggesting further buying in the pair. Let’s consider trading bullish over 1.3715 level today. 


USD/JPY – Daily Analysis

Today in the early European trading session, the USD/JPY currency pair failed to stop its previous-session selling bias and remained depressed around two-weeks low around below 103.5 level as the U.S. dollar faced some follow-through selling pressure, which, in turn, was seen as one of the key factors that exerting downside pressure on the USD/JPY currency pair. The bearish bias surrounding the U.S. dollar was mainly sponsored by the increasing optimism over the massive U.S. stimulus measures under the newly inaugurated Joe Biden administration, which undermined demand for safe-haven currencies. 

Simultaneously, the prevalent risk-on environment undermined the Japanese yen and helped the currency pair limit deeper losses. Meanwhile, the dovish comments by the BoJ Governor, Haruhiko Kuroda, added further burden on the JPY and extended some additional support to the USD/JPY currency pair to halt its bearish rally. Currently, the USD/JPY currency pair is currently trading at 103.47 and consolidating in the range between 103.33 – 103.67.

Conversely, the equity market’s positive performance weakened the Japanese yen and helped the currency pair limit its deeper losses. Also capping the currency pair’s losses could be the dovish comments by the BoJ Governor, Haruhiko Kuroda, which further weighed on the JPY and extended some support to the USD/JPY pair to stop its bearish rally. As per the latest report, Kuroda repeated that the BoJ observes the coronavirus’s impact very closely and will not hesitate to ease further if needed. The Japanese central bank updated its GDP target for the fiscal year 2020 to -5.6% from the previous projection of -5.5%.

On the different page, the concerns about rising COVID-19 deaths and re-imposing the economically-painful hard lockdowns keep challenging the upbeat market mood, which could change the currency pair’s direction.

Looking forward, the market traders will keep their eyes on updates from the Biden administration. Meanwhile, the European Central Bank’s (ECB) monetary policy and U.S. Unemployment Claims will also be key to watch. In addition to this, the risk catalyst like geopolitics and the virus woes will not lose their importance.


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 USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 20 – Top Trade Setups In Forex – Economic Sentiment Under Spotlight!

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%; however, it will be important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

Today in the Asian trading session, the EUR/USD currency pair extended its previous-day bullish streak and refreshed daily tops around the 1.2150 regions. However, the prevalent bullish bias around the currency pair was mainly tied to the weaker U.S. dollar. The prevalent upbeat market mood was seen as one of the key factors undermining the safe-haven U.S. dollar. However, the global risk sentiment was being supported by the increasing prospects of massive fiscal spending in the U.S. Across the pond, the buying interest around the currency pair got an additional boost from the better-than-expected German ZEW Economic Sentiment Index. On the bearish side, the escalating concerns over the COVID-19 cases and economically-painful extended lockdown restrictions keep questioning the currency pair’s upside momentum. As of writing, the EUR/USD currency pair is currently trading at 1.2153 and consolidating in the range between 1.2124 – 1.2158.

The market trading sentiment managed to extend its previous-day positive performance and remained supportive during the Asian trading session on the day. However, the reason could be tied to the higher prospects of massive fiscal spending in the U.S. As per the latest report, the Secretary of the Treasury nominee Janet Yellen recently pushed Congress to “act big” on COVID- 19 relief and not worry too much about debt during her Senate confirmation hearing before the Senate Finance Committee. These positive comments helped the market trading sentiment to stay bid. The latest upticks in the equity market could also be attributed to the low number of negatives factors from the economic calendar. The prevalent upbeat market mood was seen as one of the key factors that undermining the safe-haven greenback.

Across the pond, the buying interest around the currency pair got an additional boost from the better-than-expected German ZEW Economic Sentiment Index. At the data front, the German ZEW Economic Sentiment Index climbed to 61.8 in January compared to 60.0 expected and 55.0 previous. Meanwhile, the gauge for the broader Eurozone surprisingly improved to 58.3 during the reported month against 45.5 forecasted.

On the bearish side, the concerns about rising COVID-19 cases and economically-painful hard lockdowns keep challenging the pair’s upside momentum. As per the latest report, the death toll from the coronavirus in the U.S. crossed to 401,000, and the number of cases in the country exceeded 24 million as of January 20. In addition to this, the World Health Organization (WHO) said that the U.K. coronavirus strain had been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


Daily Technical Levels

Support   Resistance

1.2006     1.2091

1.2039     1.2106

1.2058     1.2139

Pivot Point: 1.2072

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at 1.2145 level. The pair has recently crossed over 50 periods of EMA on the hourly timeframe, suggesting chances of an upward movement in the market. Continuation of a bullish trend can lead the EUR/USD price towards the 1.2178 level. At the same time, support continues to hold around 1.2150 today. The bullish bias is likely to dominate the market.

GBP/USD – Daily Analysis

Today in the early European trading session, the GBP/USD currency pair maintained its bid tone through the first half of the Asian session and hit the weekly highs around above the mid-1.3600 level amid a softer tone surrounding the U.S. dollar. The market hopes for additional U.S. fiscal stimulus instantly escalated after the U.S. Treasury Secretary nominee Janet Yellen pushed lawmakers to act big on the COVID-19 relief package and not worry too much about debt, which in turn, was seen as one of the key factors that weakened the safe-haven U.S. dollar and contributed to the currency pair gains. Apart from this, the greenback losses were further bolstered by the optimism over the rollout of COVID-19 vaccines, which lend some additional support to the currency pair. Across the ocean, the buying interest around the cable currency pair picked up further pace following the release of hotter-than-expected U.K. consumer inflation figures. 

On the contrary, the concerns about the highly contagious coronavirus disease and the imposition of fresh travel restrictions in the U.K. could cap the GBP/USD currency pair’s upside momentum. At a particular time, the GBP/USD currency pair is currently trading at 1.3668 and consolidating in the range between 1.3627 – 1.3675.

The combination of positive factors has helped the GBP/USD currency pair catch sharp, fresh bids on the day. Be its optimism over the rollout of vaccines for the highly infectious coronavirus disease or the rising prospects of massive fiscal spending in the U.S., not the forget upbeat economics data, these all factors positively impact the market trading sentiment. 

Across the ocean, the buying interest around the cable currency pair picked up further pace following the release of hotter-than-expected U.K. consumer inflation figures. The headline CPI increased more-than-expected at the data front and arrived at a 0.6% YoY rate in December. Meanwhile, the core CPI (excluding food and energy items) also exceeded consensus estimations.

Alternatively, the concerns about rising COVID-19 cases and economically-painful hard lockdowns in the U.K. keep challenging the pair’s upside momentum. As per the latest report from World Health Organization (WHO), the U.K. coronavirus strain has been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


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 is also heading north amid a weaker dollar, as it trades at a 1.3655 level. Continuation of an upward trend can lead the Cable towards the next target area of 1.3700 level. At the same time, the Cable may find support at 1.3628 level today.


USD/JPY – Daily Analysis

During Wednesday’s early European trading session, the USD/JPY currency pair failed to stop its previous-session bearish bias and came under some renewed selling pressure low around 103.13 level mainly due to the broad-based U.S. dollar weakness. The market hopes for additional U.S. fiscal stimulus increased after the U.S. Treasury Secretary nominee Janet Yellen advised lawmakers to act big on the COVID-19 relief package while stating that the benefits of increased spending are greater than the costs associated with a higher debt burden, which in turn, boosted the market trading sentiment and weakened the safe-haven U.S. dollar. 

Apart from this, the greenback losses were further bolstered by the cautious sentiment ahead of President-elect Joe Biden’s inaugural ceremony on the day. On the different page, the upbeat market sentiment weakened the safe-haven Japanese yen, which, in turn, was seen as one of the leading factors that helped the USD/JPY currency pair to limit its deeper losses. Currently, the USD/CHF currency pair is currently trading at 103.77 and consolidating in the range between 103.72 – 103.94.

The market trading sentiment was representing positive performance on the day as the bullish appearance of Asia-Pacific stocks and upticks of the S&P 500 Futures tend to highlight the risk-on mood supported by optimism over a potential vaccine/treatment for the highly infectious coronavirus. Besides this, the increasing prospects of massive fiscal spending in the U.S. also played its major role in underpinning the market trading sentiment. The market hopes for additional U.S. fiscal stimulus increased further after the U.S. Treasury Secretary nominee Janet Yellen’s confirmation hearing before the Senate Finance Committee on Tuesday. 

As in result, the broad-based U.S. failed to gain any bid and remained pessimistic on the day. Apart from this, the losses in the U.S. dollar were further sparked by the optimism over the rollout of vaccines for the highly contagious coronavirus disease. In addition to this, the cautious sentiment ahead of President-elect Joe Biden’s inaugural ceremony also exerted downside pressure on the greenback. Hence, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. Meanwhile, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.11% to 90.365 by 9:17 PM ET (2:17 AM GMT)—moving on, the intensifying hopes for more aggressive U.S. fiscal spending under Biden’s presidency continuously providing support to the U.S. Treasury bond yields, which could help the U.S. dollar to limit any meaningful downside.

Conversely, the positive performance around the equity market was slightly unaffected by the concerns about rising COVID-19 deaths and the re-imposing of the economically-painful hard lockdowns, which keep fueling the worries over the global economic recovery. As per the latest report, the death cases from the COVID in the U.S. crossed to 401,000, and the number of cases in the country exceeded 24 million as of January 20. In addition to this, the World Health Organization (WHO) said that the U.K. coronavirus strain had been detected in at least 60 countries so far. The Kingdom reported 33,355 new virus cases and 1,610 deaths on the day. Globally, the number of cases has topped 96 million. Also questioning the pair’s upside momentum could be the reports of likely shortage of vaccine in New York and postponement of Pfizer’s vaccine to Canada.


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 USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 19 – Top Trade Setups In Forex – Economic Sentiment Under Spotlight!

The eyes will remain on the European German ZEW Economic Sentiment data and the Current Account figures from Europe on the news front. All of the figures are expected to have a mixed impact, which may put sideways in the single currency Euro. Besides this, the eyes will stay on the German Final CPI figures.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

Today in the Asian trading session, the EUR/USD currency pair successfully extended its overnight bullish streak and remained supportive around just below 1.2100 level of upbeat market trading that weighed on the U.S. dollar. The U.S. dollar weakness was seen as one of the key factors that pushed the currency pair higher. However, the sentiment around the equity market was being supported by the expectations of additional fiscal stimulus. It should be noted that the U.S. President-elect Joe Biden is ready to take Office on January 20, pushing for the $1.9 trillion stimulus package already planned last week. Meanwhile, the cautious sentiment ahead of the Biden government’s inauguration and the coronavirus (COVID-19) worried added further weakness to the greenback and contributed to the currency pair gains. Across the Atlantic, the Eurozone finance ministers’ latest push for financial support for their economies to boost the post-pandemic recovery plans also played its major role in underpinning the EUR/USD currency pair. 

The escalating concerns over the COVID-19 cases and economically-painful hard lockdowns keep questioning the pair’s upside momentum on the bearish side. As of writing, the EUR/USD currency pair is currently trading at 1.2087 and consolidating in the range between 52.17 – 52.49. The market trading sentiment managed to erase its previous-day losses and turned positive during the Asian trading session on the day. However, the reason could be attributed to the high expectations of additional fiscal stimulus. It is worth recalling that the U.S. President-elect Joe Biden is ready to take Office on January 20, pushing for the $1.9 trillion stimulus package already outlined last week. In the meantime, the Treasury Secretary nominee Janet Yellen is expected to push the government to “act big” with its next coronavirus relief package when she testifies before the Senate later on Tuesday. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

On the bearish side, the concerns about rising COVID-19 cases and economically-painful hard lockdowns keep challenging the upbeat market performance, which was seen as the key factor that kept the lid on any additional gains the currency pair. As per the latest report, the COVID-19 cases in Europe, the U.S., and the U.K. decreased somewhat but still not satisfactory as the strains are spreading faster, which in turn cause fresh activity restrictions. Moving ahead, the market traders will keep their eyes on the German ZEW survey, which is due to release later in the day. Meanwhile, the covid updates and any additional stimulus hint will also be key to watch.


Daily Technical Levels

Support   Resistance

1.2006      1.2091

1.2039      1.2106

1.2058      1.2139

Pivot Point: 1.2072

EUR/USD– Trading Tip

The EUR/USD is trading over 1.2064 support level, and closing of bullish engulfing candles over the same level supports the chances of

bullish correction until the 1.2115 level. On the lower side, the bearish breakout of the 1.2065 level can drive the selling trend until the support level of 1.2005. The 50 EMA and MACD suggest the pair is oversold and should reverse back slightly before exhibiting selling bias.


GBP/USD – Daily Analysis

The GBP/USD currency pair failed to stop its previous session bearish bias and drew some offers around the 1.3535 level mainly due to the prevalent cautious mood, which underpinned the U.S. dollar and contributed to the currency pair losses. The optimism over the rollout of COVID-19 vaccines helps the currency pair to limit its deeper losses along with capping the losses could be the latest report by U.K. vaccine deployment minister Nadhim Zahawi that everyone will be granted a vaccine by September. Currently, the GBP/USD currency pair is currently trading at 1.3537 and consolidating in the range between the 1.3524 – 1.3602.

Despite the on-going optimism about a potential treatment/vaccine and U.S. coronavirus (COVID-19) stimulus bill, the market risk mood failed to stop its previous negative performance and stay bearish during the European session amid growing market concerns over the potential economic fallout from the continuous rise in new COVID-19. The worries were further fueled by Friday’s disappointing U.S. monthly Retail Sales figures for December. 

At the USD front, the broad-based U.S. dollar extended its early-day gaining streak and remained bullish during the European session on the day as investors still preferring to invest in the safe-haven assets in the wake of the risk-off market sentiment. However, the U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. 

The currency pair was further pressured across the ocean by the imposition of fresh restrictions in the U.K. On the other hand, the optimism over the rollout of COVID-19 vaccines failed to give any meaningful support to the currency pair. The market traders will keep their eyes on the BOE Gov Bailey Speaks along with the Candian Housing Starts data. In the meantime, the coronavirus saga developments could play a key role in influencing the market risk sentiment and the USD price dynamics. 


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 trades have bounced off over the support level of 1.3534 level, and it’s likely to face resistance at the support become resistance level of 1.3617 level. Bullish crossover of this level can extend buying trend until 1.3697 area. On the lower side, the violation of the 1.3534 support level can extend the selling trend until the 1.3457 level. The MACD and RSI are in support of buying; thus, we should consider buying over 1.3617 and selling below the same.   


USD/JPY – Daily Analysis

The USD/JPY currency pair failed to stop its previous-day declining streak and remained depressed near 103.70 level mainly due to the worsening coronavirus (COVID-19) woes in the U.S., Europe, and some of the notable Asian nations like Japan, which fuel doubts over the global economic recovery and weighs on the market trading sentiment. In that way, the prevalent cautious sentiment benefitted the safe-haven Japanese yen and was seen as one of the key factors that exerting pressure on the USD/JPY currency pair. 

In contrast to this, the broad-based U.S. dollar strength, backed by the market risk-off tone, has become the key factor that helps the currency pair limit its deeper losses. Meanwhile, the coronavirus (COVID-19) vaccine’s positive developments help the market trading sentiment limit its deeper losses, which might change the currency pair’s direction. As of writing, the USD/JPY currency pair is currently trading at 103.77 and consolidating in the range between 103.69 – 103.93.

Despite the optimism about a potential treatment/vaccine, the market risk mood failed to stop its previous negative performance and stay bearish during the European session amid growing market concerns over the potential economic fallout from the continuous rise in new COVID-19. These worries were further fueled by Friday’s disappointing U.S. monthly Retail Sales figures for December. At the data front, the core retail sales declined 1.4% month-on-month in December, which was higher than the 0.1% contraction in forecasts and the 1.3% contraction recorded in November. Simultaneously, the Producer Price Index (PPI) increased 0.3% month on month in December, while retail sales declined 0.7% MoM in the same month. 

At the coronavirus front, the coronavirus (COVID-19) resurgence in Europe and the U.S. is still not showing any sign of slowing down, which keeps fueling the doubts over the economic recovery as the authorities in the U.S. and Europe keep imposing back to back restrictions over activities in efforts to control the spread of the virus. This, in turn, exerted downside pressure on the market risk tone and contributed to currency pair losses.

The traders will focus on the BOE Gov Bailey Speaks, and the Candian Housing Starts data. In the meantime, the coronavirus saga developments could play a key role in influencing the market risk sentiment and the USD price dynamics. 


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 USD/JPY continues to trade sideways in between a wide trading range of 104.340 – 103.560. The USD/JPY has formed a sideways channel on the 4-hour timeframe, and it has the chance of leading the pair towards the next resistance level of 104.800 upon the breakout of 104.810. 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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 18 – Top Trade Setups In Forex – Martin Luther King Day! 

The market may offer thin trading volume and volatility on the back of a holiday in the U.S. The U.S. banks will be closed in observance of Martin Luther King Day. However, the German Buba report will be in focus today to predict price action.

Economic Events to Watch Today  


 


EUR/USD – Daily Analysis

During Monday’s early European trading hours, the EUR/USD currency pair failed to stop its previous session losing streak and remained sideways around the 1.2071 mark due to the sluggish market sentiment underpinned the safe-haven 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 rising COVID-19 and stricter activity restrictions in Europe, raising doubts about the European economies and pushing the shared currency down. Conversely, the EUR/USD currency pair’s declines were rather unaffected by the latest reports suggesting that Prime Minister Giuseppe Conte faces a confidence vote in the lower house. Currently, the EUR/USD currency pair is currently trading at 1.2075 and consolidating in the range between the 1.2065 – 1.2086.

The global equity market failed to stop its previous session’s bearish performance and remained sluggish during the early European session as concerns about the potential economic fallout from the Covid-19 surge remain on the cards. These concerns were triggered after Friday’s disappointing U.S. monthly Retail Sales data. At the data front, the core retail sales declined 1.4% month-on-month in December, which was higher than the 0.1% contraction in forecasts and the 1.3% contraction recorded in November. Meanwhile, the Producer Price Index (PPI) increased 0.3% month on month in December, while retail sales declined by 0.7% in the same month.

The equity market losses could also be tied to the prevalent cautious mood ahead of U.S. President-elect Joe Biden’s first day of duty and initially negative signals for taxpayers and Canadian oil companies. In that way, the bearish tone around the equity markets was seen as one of the key factors that helped the safe-haven U.S. dollar.

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

The EUR/USD is trading over the 1.2065 support level, and the closing of Doji candles above the same level supports the chances of

bullish correction until the 1.2115 level. On the lower side, a bearish breakout of 1.2065 can extend the selling trend until the support level of 1.2005. The 50 EMA and MACD suggest the pair is oversold and should reverse back a bit before exhibiting selling bias.


GBP/USD – Daily Analysis

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.

At the USD front, the broad-based U.S. dollar managed to extend its early-day gaining streak and remained bullish during the European session on the day as investors still prefer to invest in the safe-haven wake of the risk-off market sentiment. The U.S. dollar has been supported by the Democrat victories in the runoff Senate elections in Georgia earlier in the month, which saw a surge in U.S. yields as Democrats got control of Congress. The U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.05% to 90.800 by 10:46 AM ET.

At home, the wave of the coronavirus and tighter travel restrictions in Europe keep fueling the doubts over economic recovery as back-to-back lockdown restrictions negatively affect economic activities. The latest report suggests the total novel coronavirus cases of 23,653,919 yesterday against 23,440,774 in the previous report on January 16.

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 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. 


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 1.3549 – 1.3452. On the higher side, a bullish breakout of 1.3549 level can extend the buying trend until the next resistance area of 1.3628 and 1.3698. Conversely, a bearish breakout of 1.3549 support level can extend the selling trend until 1.3455 and 1.3346. 


USD/JPY – Daily Analysis

The USD/JPY currency pair successfully maintained its bullish bias and took steps near mid- 103.00 regions largely due to the market’s downbeat mode and a big rally in the U.S. bond yield retained the U.S. dollar bullish and added to the currency pair accruals. Nevertheless, the market trading opinion was being pressed by the ever-rising figures of COVID-19 and stricter lockdown restrictions that keep 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. 

At the USD front, the broad-based U.S. dollar managed to extend its early-day gaining streak and remained bullish during the European session on the day as investors still prefer to invest in the safe-haven securities back of the risk-off market sentiment. The greenback has been supported by the Democrat victories in the runoff Senate elections in Georgia earlier in the month, which saw a surge in U.S. yields as Democrats got control of Congress. The U.S. dollar gains were seen as one of the key factors that kept the currency pair lower. The U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.05% to 90.800 by 10:46 AM ET.

At home, the wave of the coronavirus and tighter travel restrictions in Europe keep fueling the doubts over economic recovery as back-to-back lockdown restrictions negatively affect economic activities. The latest report suggests the total novel coronavirus cases of 23,653,919 yesterday against 23,440,774 in the previous report on January 16.


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! 

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Forex Videos

Market volatility continues into 2021, where next for Cable?

 


Market volatility continues into 2021, where next for Cable?

 

Thank you for joining this forex academy educational video.

In this session, we will be taking a look at how the pound is faring against the United States dollar as the UK leaves the European Union to go on its own way as an independent trading nation once again.

In this daily chart for cable, we can see a general trend higher from the 12th of May 2020, which culminated in a peak of 1.3700 at position A, which coincides with a future free trade agreement being announced between the United Kingdom and the European Union, which was generally seen by the market as going to happen, and which fuelled the bull rally as played out on the chart.

The pullback to the current level at 1.3558, at the time of writing, was to be expected, on the basis many traders work on the principle of buy the rumor and sell the fact, in which case we might naturally expect to see some traders exiting their long trades due to profit-taking, and a fear of a collapse due to this common market practice of buying the rumor and selling the fact. But the sell-off has been fairly muted, only flattening out to the current exchange rate.  

The real test here will be whether there is a move higher from position B to a retest of the 1.3700 line, which would then likely cause a push above it on towards 1.3800 and beyond, or a move lower towards the support line when longer-term institutional traders will be looking for the support line to breach, or price action to bounce higher and perhaps a retest of the 1.3700 figure from there.

Things to factor in are the extremely high rate of covid infections spreading through the United Kingdom and causing further lockdowns and loss of productivity within the UK, where long-term effects of this on the economy are not good.  The markets have been buoyed by the measures put in place by the government to protect businesses and inject money into the system.

We also have to consider a new United States president will be inaugurated in a couple of week’s time, and what effect this has on the United States dollar as he begins to introduce new legislation to raise income tax and increase red tape for businesses as he has pledged to do.

The recent pullback in the pound against the dollar has largely been a result of all of these factors and a slight improvement in US dollar sentiment. 

 Expect extreme volatility as we move in towards the middle part of January, especially around the time of the inauguration on the 20th of January.

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Forex Market Analysis

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  


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.


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. 


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! 

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Forex Market Analysis

Daily F.X. Analysis, January 14 – Top Trade Setups In Forex – U.S. Fed Chair Powell Speech in Focus! 

The eyes will remain on the ECB Monetary Policy Meeting Accounts due during the late European session on the data front. Alongside, the U.S. Unemployment Claims and Fed Chair Powell Speaks will remain in highlights today.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21577 after placing a high of 1.22226 and a low of 1.21396. The U.S. dollar recovered on Wednesday and weighed on EUR/USD pair that resulted in losses for another day. On Tuesday, the benchmark 10-year Treasury yields fell nearly seven basis points from a 10-month high hit on the day following strong demand at a $38 billion 10-year auction and comments from the U.S. Federal Reserve officials reiterating that monetary policy was going to stay supportive. 

The sharp rise in the U.S. yields resulted from the bond-market sell-off triggered by the rising hopes for massive stimulus measures largely funded by government borrowing after the Democrats claimed the Senate in Georgia runoff elections. 

At 12:00 GMT, the German WPI for December raised to 0.6% against the expected 0.1% and supported Euro on the data front. At 14:00 GMT, the Italian Industrial Production for November dropped to -1.4% against the expected -0.4% and weighed on Euro. At 15:00 GMT, the Industrial Production for November also raised to 2.5% against the expected 0.2% and supported Euro. From the U.S. side, at 18:30 GMT, the Consumer Price Index for December remained unchanged at 0.4%. The Core CPI for December also came in line with the forecasts of 0.1%. The European Central bank President Christine Lagarde called on Wednesday for global regulation of Bitcoin, saying that the digital currency had been used for money laundering activities in some instances and that any loopholes needed to be closed. The largely anonymous nature of cryptocurrencies has raised the concerns that they could be used for money laundering and other legal activities.

On Wednesday, the Federal Reserve Governor Lael Brainard said that unemployment for the lowest-paid workers in the U.S. was above 20%, and it underscores the importance of policy help for the economy. Brainard said that the figure indicated how uneven the recovery has seen since efforts to control the coronavirus pandemic resulted in the biggest quarterly GDP drop since the Great Depression. She also said that the level highlighted the need for accommodative policy, but she stated that it was too early to say how long Fed’s measures will stay in place. These comments from Brainard added strength to the U.S. dollar and added losses in EUR/USD pair on Wednesday.

Meanwhile, the losses in EUR/USD pair were extended after the German Chancellor Angela Merkel wanted to extend the current lockdown in Europe’s largest economy through the end of March. Extending the lockdown will hurt the Eurozone’s economy that could drag it to a double-dip recession, and it weighed on the local currency Euro that ultimately added weight on EUR/USD pair on Wednesday. Furthermore, On Wednesday, the House voted in favor of impeachment against Donald Trump, and he became the first U.S. President to be impeached twice. The House voted to impeach Trump on incitement of insurrection after the President incited a violent crowd to storm the Capitol last week, ultimately resulting in five deaths. These developments kept the safe-haven greenback under demand and added further losses in EUR/USD pair.

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

The EUR/USD is gaining support at the 1.2136 level, and violation of this can cause further dip until 1.2105 and 1.2065 level. On the higher side, the EUR/USD pair may face resistance at the 1.2170 level, and a bullish breakout of this level can prolong the buying trend until 1.2220. The RSI and MACD have shifted their selling trends; therefore, we may see further sell-off upon the bearish breakout of the 1.2136 level today.


GBP/USD – Daily Analysis

The GBP/USD closed at 1.36364 after placing a high of 1.37010 and a low of 1.36115. The GBP/USD pair dropped on Wednesday after British Pound started trimming its previous daily gains amid the U.S. dollar recovery. The greenback recovered strength, and the DXY rose back to the area of the daily high near 90.30. The gains were modest as Wall Street trades mixed and despite the decline in the U.S. treasury. The 10-year U.S. Treasury yield fell to 1.09%, its lowest since January 8. 

After the third national lockdown in the U.K. was announced last week, there had been speculations that the Bank of England (BoE) could introduce negative interest rates to help support the economy, which proved negative for the British Pound. However, following Tuesday’s comments from Bank of Governor Andrew Bailey, which ended the speculation, Sterling has since rallied and continued to find support from markets. Furthermore, the British Pound also rose as Home Secretary Priti Patel addressed the nation and said that the current lockdown restrictions were strict enough, claiming investors who had been worried that tougher restrictions could have been announced to tackle rising infection rates. 

The prospects of new restrictions added weight to the local currency, and it was further supported by the comments from the Scottish Minister, who announced further restrictions. Nicola Sturgeon urged people to minimize their interaction and keep in mind that the virus was there with everyone. He said that people should assume that they have the virus or any person they were in contact with and urged the public to prevent it from spreading by following the rules and SOPs. The rising number of coronavirus cases and imposed lockdowns in the nation added weight to the local currency Sterling, which ultimately added the GBP/USD pair’s losses.

The U.S. Inflation rate and the rising U.S. Treasury yields helped and supported the U.S. dollar supported due to its safe-haven status from the rising number of coronavirus cases U.S. fiscal stimulus speculations. The rising demand for the U.S. dollar added in the losses of the British Pound to the U.S. Dollar exchange rate and dragged it down on Wednesday.

For Cable investors, any coronavirus developments will remain in focus for the end of the week, with success in the rollout of vaccines seen as British Pound positive. Sterling investors will also be watching Friday’s U.K. growth data, which could weaken the GBP/USD exchange rate. 

The British Pound investors will also be looking to Federal Reserve officials over the coming days, with Fed chair Jerome Powell speaking and indicating that U.S. monetary policy will be kept loose and the U.S. dollar is likely to struggle further. Greenback investors will also be focusing on Friday’s initial jobless claims that could also disappoint the traders.

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 is trading at 1.3692, and it has closed a Doji candle on the four hourly timeframes, and it may extend a bearish correction in the GBP/USD pair. On the lower side, the support stays at 1.3636 and resistance at 1.3692 and 1.3720 today. The GBP/USD pair’s 10 & 20 periods EMA is supporting bullish bias in the Sterling. The MACD and RSI support bullish bias; therefore, bullish bias dominates over the 1.3646 level today.


USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.869 after placing a high of 103.995 and a low of 103.523. The pair refreshed daily tops on Wednesday, reversed an intraday dip near a one-week low, and recovered a quarter of the previous day’s losses. The U.S. Dollar demand rose on Wednesday amid the retracement slide from a 10-month high hit of U.S. treasury yield on a 10-year note that ultimately added to the USD/JPY pair’s upward momentum. The U.S. dollar was also high onboard amid the risk-off market sentiment on Wednesday due to increased infection cases and imposed lockdowns worldwide.

The Benchmark 10-year Treasury yields fell nearly seven basis points from a 10-month high hit on Tuesday following strong demand at a $38 billion 10-year auction. The comments from U.S. Federal Reserve officials stating that monetary policy would stay supportive also helped the U.S. dollar regain its strength and support the USD/JPY pair’s gains on Wednesday.

On the data front, at 04:50 GMT, the M2 Money Stock for the year from Japan remained flat at 9.2%. At 10:58 GMT, the Prelim Machine Tool Orders from Japan raised in December to 8.7% against November’s 8.6%. . From the U.S. side, at 18:30 GMT, the Consumer Price Index for December remained unaffected at 0.4%. The Core CPI for December also came in line with the projections of 0.1%.

The Kansas City Fed President Esther George has said that she does not expect the Fed to react if inflation exceeds the central bank’s 2% goal. Earlier in the month, the Democrats claimed the Senate after the runoff elections in Georgia that raised hopes for larger stimulus measures funded by the government borrowing. This resulted in a bond-market sell-off that drove U.S. yields sharply higher, helped stall the U.S. dollar’s decline, and supported the USD/JPY pair’s upward trend. 

The U.S. Federal Reserve officials expect a quick economic recovery if coronavirus vaccinations continue to gather pace; however, that could leave markets estimating about the outlook for the monetary policy by Central Bank. Federal Reserve might not recourse to faster than expected loosening of coronavirus stimulus efforts. Such a move from the Fed could put pressure on it to raise interest rates faster than expected, and this would help the U.S. dollar gather strength and support the rising USD/JPY pair. Moreover, on Tuesday, the daily U.S. coronavirus death-toll hit a record of 4327 as the Trump administration moved to rush the rollout of vaccinations across the country. During the holiday season around January 8, the rising death-toll was first seen in the U.S. with 4000 deaths, and it has reached 4327 now.

The total number of deaths in the United States from coronavirus has reached 382,624, and it is the biggest death-toll in the world. The U.S. also has the highest number of coronavirus cases globally, with 22,959,610 confirmed cases of coronavirus. Despite lockdown and restrictive measures, these rising coronavirus cases added weight on the U.S. dollar and capped further gains in the USD/JPY pair.

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! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 13 – Top Trade Setups In Forex – U.S. Inflation Report in Focus! 

On the news front, eyes will remain on the ECB President Lagarde Speaks as she may discuss the upcoming monetary policy event; however, the major focus will remain on the U.S. Inflation rates, which may help determine the further direction of the U.S. dollar.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD closed at 1.22077 after placing a high of 1.22095 and a low of 1.21369. After falling for three consecutive sessions, the EUR/USD pair rose on Tuesday as the U.S. dollar eased and U.S. Treasury declined. The U.S. Dollar had hit a more than two and half year lowest level in January after sliding for months as the U.S. Federal Reserve cut its interest rates and speculation of heavy rounds of fiscal stimulus under President-elect Joe Biden’s tenure. However, after Democrats won the Georgia runoff elections, the hopes for massive stimulus packages increased, and the U.S. Treasury yields started to rise that ultimately lifted the U.S. dollar.

This rise in the U.S. dollar weighed heavily on EUR/USD pair during last week; however, the recent rally in U.S. Treasury yields ran out of the stream, and the dollar came back to its previous levels. The U.S. Treasury yield on a 10-year note reached a 10-month high on Tuesday but ultimately had a reverse effect and weighed on the U.S. dollar. This slide-in U.S. dollar added gains in EUR/USD pair on Tuesday as the investors started taking profits. Meanwhile, on Tuesday, the Turkish President Recep Tayyip Erdogan said that country was ready to settle its frayed relationship with the European Union back on track and called on the 27 nation bloc to display the same determination. 

These new lockdown measures across Europe to fight the second wave of coronavirus raised the fears of a double-dip recession in the Eurozone that added weight on the single currency Euro and capped further upside in the EUR/USD pair on Tuesday.

On the data front, there was no macroeconomic data to be released from Europe while from the U.S., at 16:00 GMT, the NFIB Small Business Index for December dropped to 95.9 against the expected 100.1 and weighed on the U.S. dollar that ultimately added in the gains of EUR/USD pair. At 20:00 GMT, the JOLTS Job Openings for November rose to 6.53M against the expected 6.42M and supported the U.S. dollar that capped further gains in EUR/USD pair. At 20:02 GMT, the IBD/TIPP Economic Optimism came in line with the forecasts of 50.1.

Daily Technical Levels

Support   Resistance

1.2159     1.2234

1.2111     1.2259

1.2085     1.2308

Pivot point: 1.2185

EUR/USD– Trading Tip

The EUR/USD is gaining support at the 1.2200 level, and below this, it can dip further until the 1.2189 level. On the higher side, the pair may face resistance at the 1.2226 level, and a bullish breakout of this level can extend the buying trend until 1.2260. The RSI and MACD support a bullish trend, but there’s a chance of bearish correction upon the violation of 1.2190. On the 4 hour timeframe, the EUR/USD pair may face resistance at the 1.2220 level, which is extended by a downward trendline.


GBP/USD – Daily Analysis

The GBP/USD closed at 1.36645 after placing a high of 1.36702 and a low of 1.34932. After falling for four consecutive sessions, the GBP/USD pair raised on Tuesday after Sterling strengthened amid the Bank of England’s positive comments. The Pound Sterling jumped against the U.S. dollar and the Euro on Tuesday as comments from the Bank of England’s governor Andrew Bailey on the viability of negative interest rates dampened some sub-zero rates’ expectations in the U.K. 

Bailey said that there were many issues with cutting interest rates below zero, and such a move could hurt banks. After these comments from Bailey, the British Pound gained traction and raised that ultimately pushed the GBP/USD pair higher on Tuesday.

Meanwhile, The Deputy Governor of Bank of England, Ben Broadbent, said on Tuesday that Britain’s coronavirus pandemic was likely to have a limited long-run impact on inflation and has led to less short-term downward pressure on prices than might have been expected from the slump in headline economic output. Broadbent said that a smaller slowdown in inflation reflected shifts in consumer demand during the pandemic that had led to temporary capacity constraints in businesses, as well as support to household incomes from government furlough schemes.

On the data front, at 05:01 GMT, the BRC Retail Sales Monitor for the year for December dropped to 4.8% against the expected 5.9% and weighed on British Pound and capped further upside in GBP/USD pair. From the U.S. side, at 16:00 GMT, the NFIB Small Business Index for December declined to 95.9 against the projected 100.1 and weighed on the U.S. dollar that ultimately added the gains of the GBP/USD pair. At 20:00 GMT, the JOLTS Job Openings for November surged to 6.53M against the projected 6.42M and supported the U.S. dollar that capped further GBP/USD pair gains. At 20:02 GMT, the IBD/TIPP Economic Optimism came in line with the projections of 50.1.

On the other hand, the U.S. dollar was also weak on Tuesday as the U.S. Dollar Index dropped as investors kept an eye on U.S. politics while pressure continued to grow to impeach President Donald Trump. Furthermore, the U.S. dollar was also weak as the prospects of massive stimulus packages from Joe Biden’s government raised as he has shown a willingness to add trillions in new relief bills that ultimately supported the upward momentum of the GBP/USD pair.

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 is trading at 1.3692, and it has closed a doji candle on the four hourly timeframes, and it may extend a bearish correction in the GBP/USD pair. On the lower side, the support stays at 1.3636 and resistance at 1.3692 and 1.3720 today. The GBP/USD pair’s 10 & 20 periods EMA is supporting bullish bias in the Sterling. The MACD and RSI thesupport bullish bias; therefore, bullish bias dominates over the 1.3646 level today.


USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.749 after placing a high of 104.333 and a low of 103.718. After rising for four consecutive days, the USD/JPY pair dropped on Tuesday amid the slide in the U.S. dollar. The U.S. dollar index dropped to fresh weekly lows in the 90.20 level as hopes for additional fiscal stimulus raised and provided support to high yielding equities. The House of Representatives introduced an impeachment article against U.S. President Donald Trump that weighed on the U.S. dollar and dragged the pair USD/JPY on the downside.

The U.S. Dollar Index (DXY) fell almost 0.3% on Tuesday against its rivals, while the 10-year U.S. Treasury yields dropped to a session’s low of 1.146%. The U.S. stocks opened higher on Tuesday and recovered from the previous session’s losses, with investors looking for additional fiscal stimulus amid continued political turmoil. The Dow Jones Industrial Average was down by 0.3%, and the S&P 500 was down by 0.6% lower while NASDAQ was low by 1.2%.

On the data front, at 04:50 GMT, the Bank Lending for the year from Japan dropped to 6.2% against the forecasted 6.5% and weighed on the Japanese Yen that capped further losses in the USD/JPY pair. The Current Account Balance from Japan for November raised to 2.34T against the forecasted 2.00T and supported the Japanese Yen that ultimately added the USD/JPY pair’s losses. At 10:00 GMT, the Economic Watchers Sentiment dropped to 35.5 against the expected 36.9 and weighed on the Japanese Yen, which capped further losses in the USD/JPY pair.

From the U.S. side, at 16:00 GMT, the NFIB Small Business Index for December decreased to 95.9 against the anticipated 100.1 and weighed on the U.S. dollar that ultimately added further losses in the USD/JPY pair. At 20:00 GMT, the JOLTS Job Openings for November increased to 6.53M against the anticipated 6.42M and supported the U.S. dollar that capped further losses in the USD/JPY pair. At 20:02 GMT, the IBD/TIPP Economic Optimism came in line with the anticipations of 50.1.

Meanwhile, the safe-haven appeal rose on Tuesday after fears rose that there could be further disruptions in the days leading up to Biden’s inauguration on January 20. FBI has said that it has received information specifying that armed protests were being planned at all 50 state capitols and Washington. The FBI’s comments raised the safe-haven appeal and supported the safe-haven Japanese Yen that ultimately added the USD/JPY pair’s losses on Tuesday.

On Tuesday, Federal Reserve Governor Lael Brainard said that the federal banking agencies were in the process of enlisting requests for information on the risk management of artificial intelligence applications in financial services. Whereas, the Boston Federal Reserve Bank President Eric Rosengren said that the U.S. economy could see a strong rebound in the second half of this year as vaccinations became widely available and that monetary policy will remain accommodative. However, the virus was still driving the economy. The losses in USD/JPY pair were also capped on Tuesday after the Donald Trump administration said that it was releasing millions of coronavirus vaccine doses and urged states to offer them to all Americans over age 65 or with chronic health conditions.

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 103.623 level amid increased demand for safe-haven assets. On the lower side, the USD/JPY pair has completed 38.2% Fibonacci retracement at 103.611 level, and on the further lower side, the USD/JPY pair may find support at 50% Fibonacci level of 103.400 level. The MACD and RSI support selling bias; therefore, we may find support at the 103.283 level. Let’s consider taking the buying trade over the 103.283 level and selling below the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 12 – Top Trade Setups In Forex – Stronger Dollar In Play! 

On the fundamental side, the economic calendar is likely to offer a thin trading volume, and it may offer thin volatility to the market. However, the focus can remain on the MPC Member Broadbent Speaks due to the European session today.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21499 after placing a high of 1.22258 and a low of 1.21320. The currency pair extended its losses on Monday and dropped for the third consecutive day amid the broad-based U.S. dollar strength. On Monday, the rising risk-off market mood strengthened the U.S. dollar following the news that China was intensifying coronavirus measures to limit the nation’s rising infection rate. Whereas, greenback investors were also optimistic that President-elect Joe Biden would push for a multi-trillion-dollar stimulus package.

The growing concerns over an increasing number of coronavirus cases throughout Europe and China increased the demand for safe-haven, weighing on the risk perceived EUR/USD pair on Monday. The World Health Organization (WHO) has announced on European countries to curb a new variant of coronavirus that was first detected in the U.K.

The WHO Europe director Hans Kluge has said that coronavirus’s new variant has hit almost 22 European nations, and it was an alarming situation. Many countries have imposed a full national lockdown to stop it from spreading further. However, Hans said that tougher measures were needed to flatten the steep vertical line of rising cases in some countries. These warnings by WHO also raised safe-haven appeal and added losses in the risk-sensitive EUR/USD pair on Monday.

There was no data to be released from the U.S. side on the data front, while from Europe, at 14:30 GMT, the Sentix Investor Confidence dropped to 1.3 against the forecasted 2.0 and weighed on Euro that ultimately added further losses in EUR/USD currency pair. 

On the U.S. front, the recent hike in the greenback was largely a result of higher U.S. Treasury yields that has resulted in a U.S. dollar short squeeze and pushed the greenback to higher levels. The U.S. Dollar Index continued to move higher and has climbed to 90.67, up by 0.67% on the day that added more weight on EUR/USD pair on Monday. 

The greenback was also strong on Monday amid the optimism regarding the prospects of massive stimulus packages from the president-elect Joe Biden. The incoming President has vowed to deliver two major stimulus packages in 2021. He has also said that his first order after joining the office on January 20 will be to increase the number of direct payments to $2000. This has also supported the U.S. dollar and weighed on EUR/USD pair on Monday.

Daily Technical Levels

Support   Resistance

1.2171      1.2215

1.2155      1.2243

1.2127      1.2259

Pivot Point: 1.2199

EUR/USD– Trading Tip

The EUR/USD is obtaining support at the 1.2144 level, and below this, it can dip further until the 1.2100 level. On the higher side, the pair may face resistance at the 1.2216 level. The RSI and MACD support bullish correction and may prompt a bounce off in the EUR/USD pair until the 1.2216 level. Beneath 1.2216, we can again see a dip in EUR/USD. On the hourly timeframe, the EUR/USD pair may find resistance at 1.2170, but the bullish crossover may offer us a quick buy position as the MACD supports the buying trend in the EUR/USD pair today. 


GBP/USD – Daily Analysis

The GBP/USD closed at 1.35100 after placing a high of 1.35679 and a low of 1.34507. The GBP/USD pair lost ground on Monday and dropped to a fresh 2-weeks lowest level amid the broad-based U.S. dollar strength. The pair GBP/USD witnessed some selling for the fourth consecutive session on Monday and extended its retracement slide from 33-months highs. The momentum drew the GBP/USD pair further below as the strong rally in the U.S. Treasury bond yields supported the U.S. dollar. The greenback recovered from nearly three-year lowest level after the treasury yields rally amid the hopes of additional U.S. fiscal stimulus measures. Investors started pricing in the prospects for a more aggressive U.S. fiscal spending in 2021 after the Democratic sweep in the U.S. Senate runoff elections in Georgia.

Meanwhile, the concerns about the surge in new coronavirus cases and the new tougher restrictions in Europe and China to fight against the new variant also weighed on the market sentiment as the safe-haven appeal emerged and contributed to the GBP/USD pair’s decline on Monday.

On Monday, England’s chief medical officer Chris Whitty said that the United Kingdom was enrolling its most challenging weeks since the start of the coronavirus pandemic as hospitals were overrun. He said that the U.K. was now at the worst point of the pandemic, and although they will have the vaccine in the future, the numbers were higher than they were in the previous peak. 

The U.K. has already suffered more deaths due to the new variant than any European nation and recently became the fifth nation on earth to reach the grim milestone of three million cases. Whitty said that there were currently more than 30,000 patients in the hospital than 18,000 during the first peek of the virus in April. Despite the nationwide lockdown, the rising number of coronavirus cases in the U.K. also weighed on the British Pound that ultimately added losses in the GBP/USD pair.

Moreover, the Bank of England policymaker Silvana Tenreyro announced on Monday that skipping British interest rates beneath zero could promote the economy by more than increasing bond purchases. The Bank of England was currently looking at Britain’s financial system’s negative rates’ technical feasibility. She said that she was pushing back against arguments that negative interest rates would be ineffective in boosting demand or would cause significant damage to the bank’s profitability. 

These dovish comments from Tenreyro weighed on British Pound that added losses in the GBP/USD currency pair on Monday.

Daily Technical Levels

Support   Resistance

1.3496      1.3553

1.3475      1.3589

1.3439      1.3611

Pivot Point: 1.3532

GBP/USD– Trading Tip

The GBP/USD has disrupted the sideways trading range of 1.3531- 1.3505 range on the higher side. Closing of candles above this area can trigger buying until the next resistance level of 1.3585 level. On the higher side, the resistance continues to stay at the 1.3605 mark. The 10 & 20 periods moving averages are suggesting odds of bullish trend continuation today. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.239 after placing a high of 104.396 and a low of 103.848. The currency pair USD/JPY rose for the fourth consecutive session on Monday and reached its highest level since December 10. The gains in USD/JPY were due to the stronger greenback as the U.S. Dollar Index was at weekly highs above 90.50 level on Monday. Wall Street’s main indexes were down on Monday, with Dow Jones down by 0.37% and the NASDAQ by 0.85%. The U.S. Treasury yield on a 10-year note hit the 1.136% level, which was the highest level since the March spike.

The rising treasury yields were due to the rising hopes of additional stimulus measures from the incoming Democratic President Joe Biden. He has promised to deliver two massive stimulus packages to aid the economy through the coronavirus pandemic in 2021. He also has said that his first order after joining the office on January 20 will be to increase the number of stimulus checks to $2000 from $600, which will be given to most Americans affected by the coronavirus pandemic.

Other than that, the USD/JPY pair continued to rise despite the rising risk-off market sentiment in the market. Mainland China saw its most significant daily rise in coronavirus cases in over five months. China’s health authority said on Monday that the new infections in Hebei province surrounding Beijing were continuously rising.

China saw almost 18 new imported infections from overseas, and on Monday, the country in northeastern Heilongjiang province moved into lockdown after reporting new coronavirus infections. These developments in the world’s second-largest economy added weight to risk sentiment that ultimately supported the safe-haven greenback and pushed the USD/JPY pair higher.

Meanwhile, the calls for Trump’s impeachment raised after he encouraged his supporters’ riots on Capitol Hill during the previous week that also kept the market sentiment soar. In Washington, the speaker of House of Representatives, Nancy Pelosi, called for Vice President Mike Pence and the cabinet to remove Donald Trump from office before moving to impeachment. This also helped raised the risk-off market sentiment and supported the USD/JPY pair’s upward momentum.

Furthermore, on Monday, the President and chief executive officer of the Federal Reserve Bank of Atlanta, Raphael Bostic, said that interest rates could rise sooner than anticipated as the economy was recovering more quickly than projected from the coronavirus damage. 

Fed had previously hoped that rates would remain unchanged until at least 2023, whereas Bostic believes that the Fed’s emergency measures to fight the pandemic can start to be rolled back within the next two years, if not sooner. These comments from Bostic supported the U.S. dollar and added gains in the USD/JPY pair. However, the Federal Reserve Chairman Jerome Powell will deliver a speech on Thursday and reaffirm interest rates to stay around zero through at least 2023.

Daily Technical Levels

Support   Resistance

103.90      104.17

103.74      104.26

103.64      104.43

Pivot Point: 104.00

USD/JPY – Trading Tips

On Tuesday, the safe-haven currency pair USD/JPY is trading at 104.123 level, facing resistance at 104.400. On the 4 hour timeframe, the USD/JPY pair implies bullish bias, and as the 10 and 20 EMA are in support of upward trend whereas the MACD stays over 0, suggesting a bullish trend in the safe-haven USD/JPY pair. An upward breakout of the 104.223 level can extend the buying trend until the 104.610 level today. Let’s consider taking the buying trade over the 104.223 level and selling below the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 11 – Top Trade Setups In Forex – Stronger Dollar In Play! 

On the news side, the European Sentix Investor Confidence will be in focus, along with speeches from UK MPC Member Tenreyro, and the U.S. FOMC Member Bostic will remain in highlights. The U.S. dollar was also strong on the board, mainly because of the rising U.S. treasury yields that rose more than 3% on the day. The unemployment rate and average hourly earnings data from the U.S. support the greenback. 

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22122 after placing a high of 1.22844 and a low of 1.21928. The EUR/USD pair dropped on Friday and extended its losses amid the broad-based strength of the U.S. dollar on the day amid the rising U.S. Treasury yields.

The U.S. dollar was also strong on the board, mainly because of the rising U.S. treasury yields that rose more than 3% on the day. The unemployment rate and Average Hourly earnings data from the U.S. also supported the greenback that ultimately added further losses in the currency pair EUR/USD. From the U.S. side, at 18:30 GMT, the Average Hourly Earnings for December rose to 0.8% against the forecasted 0.2% and supported the U.S. dollar and weighed on EUR/USD prices. In December, the Non-Farm Employment Change fell to -140K against the forecasted 60K and weighed on the U.S. dollar and capped further losses in EUR/USD pair. 

During December, the Unemployment Rate fell to 6.7% against the forecasted 6.8% and supported the U.S. dollar that added further EUR/USD pair losses. At 20:00 GMT, the Final Wholesales Inventories for November came in as 0.0% against the forecasted -0.1% and weighed on the U.S. dollar that limited the losses in EUR/USD pair on Friday.

Meanwhile, the fact that Democratic leader and incoming President Joe Biden will have complete control over all three legislative houses included the White House, the House of Representatives, and the Senate, also supported the U.S. dollar as it suggested a stable government ahead. The U.S. President Donald Trump also agreed to an orderly transition of power that also lifted the lingering political risk from the local currency and gave further strength to the U.S. dollar that ultimately added further pressure on the EUR/USD pair on Friday.

Daily Technical Levels

Support   Resistance

1.2228     1.2330

1.2186     1.2388

1.2127     1.2431

Pivot Point: 1.2287

EUR/USD– Trading Tip

The strength in the U.S. dollar also dragged the EUR/USD pair lower to the 1.2175 level. For the moment, the EUR/USD is gaining support at the 1.2175 level, and below this, it can dip further until the 1.2130 level. On the higher side, the pair may face resistance at the 1.2216 level. The RSI and MACD support bullish correction, and these may cause a bounce off in the EUR/USD pair until the 1.2216 level. Below 1.2216, we can again see a dip in EUR/USD.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.35606 after placing a high of 1.36356 and a low of 1.35382. The currency pair GBP/USD remained flat throughout Friday as it showed no movement and closed the day at the same level it started its day with. The pair GBP/USD raised during the early trading session on the day but faced some heavy pressure during the second half of the day and closed the trading week at the same level it started its day on Friday. The rise in the early trading session was caused after the U.K. announced the approval to use its third coronavirus vaccine. However, the downward pressure on the currency pair was caused by the relative strength of the U.S. dollar amid the rising U.S. Treasury yields on the day.

After the coronavirus press conference of the British Prime Minister Boris Johnson on Friday, the PM announced that the army would be brought in to help aid the vaccination rollout. On Friday, Britain’s medical regulatory approved Moderna’s coronavirus vaccine for emergency use. The U.K. also agreed to purchase an additional 10 million doses; however, the Moderna vaccine will not play a part in the first stage of Britain’s vaccine rollout.

The Health Minister of Britain, Matt Hancock, said that about 1.5 million people have already been vaccinated across the U.K. and Moderna’ ‘s vaccine will allow them to accelerate their vaccination program even further once doses become available in spring. These comments from the U.K. added optimism and supported the GBP/USD pair to rise in the early trading session on Friday.

However, the gains in GBP/USD currency pair could not live for long as the pair faced heavy pressure from the U.S. dollar’s strength and the rising number of coronavirus cases and deaths across the U.K. despite vaccine rollout. The U.S. Dollar was strong across the board after the U.S. Treasury yields rose on Friday to more than 3% amid the full sweep victory of Democrats over the Senate. The incoming President Joe Biden is expected to have full control over the White House, Senate, and House of Representatives added in the local currency as the incoming government will have more stability in rules.

In the capital, London’s mayor declared a major incident on Friday and issued a warning that hospitals in the city were close to being overrun. London’s situation was critical with the spread of the virus out of control as the city was declared to be at a crisis point. These developments in the U.K. also added pressure on British Pound and dragged the pair lower on Friday.

Daily Technical Levels

Support   Resistance

1.3496     1.3553

1.3475     1.3589

1.3439     1.3611

Pivot Point: 1.3532

GBP/USD– Trading Tip

The GBP/USD has violated the sideways trading range of 1.3625 – 1.3530 level, and closing of candles below this area can trigger selling until the next support level of 1.3452 level. On the higher side, the resistance continues to stay at the 1.3530 mark. On the hourly timeframe, the GBP/USD pair has violated the descending triangle pattern at the 1.3547 level, and now this level is likely to provide selling in the pair. Violation of the triangle pattern can extend selling bias today.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.951 after placing a high of 104.090 and a low of 103.602. The USD/JPY pair raised on Friday and extended its gains as the U.S. dollar was strong across the board amid the rising U.S. Treasury bond yields. The USD/JPY pair staged an impressive rebound and rose more than 150 pips in two days as the 10-year U.S. Treasury bond yield placed almost 13% gains in these two days. Over the week, the 10-year note U.S. Treasury yield has risen by about 21% and has supported the greenback since then. 

The U.S. dollar’s strength added further gains in the USD/PY pair and extended its upward momentum on Friday to its highest since December 15. The U.S. Dollar Index was also high beyond the 90.00 level for the first time in the week and supported the USD/JPY pair’s rise. Meanwhile, another factor involved in the rising demand for the U.S. dollar was Donald Trump’s comments, who agreed on a smooth transition of power. The political risk related to transition power that rose after Thursday’s attack was lifted and supported the local currency on Friday that eventually helped the USD/JPY pair to rise further n board. It means that the incoming President Joe Biden will have control over all three legislative bodies, the White House, the House of Representatives, and the U.S. Senate, to give his Democratic Party stability in rules. 

Despite all these positive sentiments, the incoming president promised to deliver two massive stimulus packages in 2021, and his first order is expected to increase the direct payment checks to $2000 kept the local currency USD under pressure and capped further upside in the USD/JPY pair. 

On the data front, at 04:30 GMT, the Household Spending from Japan in November raised to 1.1% against the expected -1.0% and supported the Japanese Yen that capped further upside in the USD/JPY pair. At 10:00 GMT, the Leading Indicators from Japan remained flat at 96.6%. 

From the U.S. side, at 18:30 GMT, the Average Hourly Earnings for December advanced to 0.8% against the projected 0.2% and supported the U.S. dollar that pushed the USD/JPY pair higher. In December, the Non-Farm Employment Change decreased to -140K against the projected 60K and weighed on the U.S. dollar. During December, the Unemployment Rate decreased to 6.7% against the projected 6.8% and supported the U.S. dollar that added further gains in the USD/JPY pair. At 20:00 GMT, the Final Wholesales Inventories for November came in as 0.0% against the projected -0.1% and weighed on the U.S. dollar that capped further upside in the USD/JPY pair on Friday. Furthermore, the USD/JPY pair’s upward momentum was also supported by the rising risk sentiment in the market. The risk flows were encouraged after the U.K. approved another vaccine from Moderna on Friday. U.K. became the first country to approve a third coronavirus vaccine for emergency use authorization that lifted the market’s risk sentiment that ultimately added weight on the safe-haven Japanese Yen and pushed the USD/JPY pair even higher on board.

Daily Technical Levels

Support   Resistance

103.18     104.19

102.56     104.58

102.16     105.21

Pivot Point: 103.57

USD/JPY – Trading Tips

The USD/JPY is trading at 104.123 level, facing immediate resistance at 104.223. On the 4 hour timeframe, the USD/JPY pair suggests bullish bias, and as the 10 and 20 periods, EMA is in support of buying trend while the MACD holds above 0, supporting bullish bias in the USD/JPY pair. A bullish breakout of the 104.223 level can extend the buying trend until the 104.610 level today. Let’s consider taking the buying trade over the 104.223 level and selling below the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 08 – Top Trade Setups In Forex – U.S. NFP Figures Ahead! 

The eyes will remain on the U.S. NFP data on the news side, which is expected to report a slight drop from 638K to 500K during the previous month. Besides, the U.S. Average Hourly Earnings m/m and Unemployment Rate will also remain the main highlight of the day, and these may determine the USD trend for today and next week. Let’s wait for the news.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22690 after placing a high of 1.23442 and a low of 1.22449. The EUR/USD pair came under renewed pressure as the U.S. dollar rebounded after an increased 10-year U.S. treasury yield and the depressing economic data from the Eurozone. The U.S. Dollar was strong onboard after falling to the multi-year lowest level this week amid the rising U.S. Treasury yield on a 10-year note that raised by 1% for the first time since March. The rising demand for the greenback ultimately added weight on EUR/USD pair that fell on Thursday.

However, the strong demand for the U.S. dollar is expected not to live for a large time as the Democratic win in the U.S. Senate elections has raised the prospects for a larger stimulus package that will ultimately weigh on the local currency. Meanwhile, the European Central Bank released the regular economic bulletin on Thursday in which it said that the Eurozone economic indicators point to an economic contraction in the final quarter of 2020. 

The ECB said that high-frequency indicators and the latest survey results were consistent with a fall in GDP in the final quarter of 2020. The survey indicators point to a renewed contraction in activity mainly affecting the services sector. The ECB also said that the stat of vaccinations supports expectations for a rapid recovery. Still, it will take time before widespread immunity could be reached and the economy could return to normal. These depressing comments from ECB also added weight on the single currency Euro that added further pressure on EUR/USD pair on Thursday.

On the data front, at 12:00 GMT, the German Factory Orders in November raised to 2.3% against the expectations of -0.6% and supported the single currency Euro that capped further downside in EUR/USD pair. At 15:00 GMT, the CPI Flash Estimate for the year for December declined to -0.3% against the expected -0.2% and weighed on Euro that added losses in EUR/USD pair. The Core CPI Flash Estimate remained flat with expectations of 0.2%. The Italian Prelim CPI also raised to 0.3%against the forecasted 0.2% and supported Euro and capped further downside in EUR/USD pair. The Retail Sales from Eurozone dropped to -6.1% against the forecasted -3.4% and weighed heavily on Euro that added further downside pressure on EUR/USD pair.

The Challenger Job Cuts for the year in December rose to 134.5% compared to November’s 45.4%. At 18:30 GMT, the Unemployment Claims from last week were dropped to 787K against the expected 798K and supported the U.S. dollar that added losses in EUR/USD pair. The Trade Balance from November showed a deficit of -68.1B against the expected -66.7B and weighed on the U.S. dollar that capped further downside in EUR/USD pair. The ISM Services PMI rose in December to 57.2 against the expected 54.5 and supported the U.S. dollar that added further losses in EUR/USD pair on Thursday.

Daily Technical Levels

Support   Resistance

1.2228      1.2330

1.2186      1.2388

1.2127      1.2431

Pivot Point: 1.2287

EUR/USD– Trading Tip

The EUR/USD continues trading with a bullish bias at 1.2367, facing resistance at the 1.2350 level. On the lower side, the support continues to hold around the 1.2278 level. Simultaneously, the bullish breakout of the 1.2350 resistance level can extend buying until the 1.2435 level. The leading indicators such as RSI and MACD support selling, but the EUR/USD 50 periods EMA is likely to support at 1.2289. 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.35641 after placing a high of 1.36330 and a low of 1.35324. The GBP/USD pair extended its losses on Thursday amid the broad-based U.S. dollar recovery amid the rising safe-haven demand and the British Pound’s weakness due to the rising deaths from a new coronavirus variant. Since March, the U.S. Dollar was high on board after the U.S. 10-year Treasury yield rose by more than 1% for the first time. The U.S. Dollar Index that measures the value of the greenback against the basket of six major currencies also recovered from the multi-year lowest level and supported the U.S. dollar that ultimately added weight on the GBP/USD pair on Thursday.

Moreover, the U.S. dollar gains were limited as the pressure of prospects of a larger stimulus package in 2021 from the Democratic government held the local currency down. The Democratic win in the U.S. Senate elections raised the anticipations that President-elect Joe Biden will stand true to His promises for delivering two major stimulus packages in 2021. 

However, the losses in the GBP/USD pair could also be attributed to the rising number of deaths in the U.K. from the new UK coronavirus variant. The U.K. reported a further 1041 fatalities due to coronavirus, which is the highest daily death toll since April. 

On Thursday, about 62,322 new coronavirus cases were recorded, which was also the highest daily rise since mass testing began. The rising spread of coronavirus due to its new variant and the increased number of deaths despite the nationwide lockdown and vaccine rollout raised fears for the newly independent nation Great Britain’s economy that ultimately weighed on the local currency Sterling and dragged the currency pair GBP/USD on the downside.

Furthermore, the World Health Organization (WHO) called on European countries to intensify coronavirus measures as the region deals with the new UK-detected variant. On Thursday, the WHO Europe director Hans Kluge said that further measures were needed to flatten the steep vertical line of rising cases in some countries. Moreover, the French Prime Minister Jean Castex said that France’s border with the U.K. will remain shut and that it was out of the question to lower their guard in weeks to come. These statements also weighed on British Pound and affected the GBP/USD pair’s movement on Thursday.

The Construction PMI for December from Great Britain came in line with the expectations of 54.6. At 14:32 GMT, the Housing Equity Withdrawal for the quarter also remained flat with the expectations of -7.0B. The Challenger Job Cuts for the year in December surged to 134.5% compared to November’s 45.4%. At 18:30 GMT, the Unemployment Claims from last week fell to 787K against the projected 798K and supported the U.S. dollar that added losses in GBP/USD pair. The Trade Balance from November showed a deficit of -68.1B against the projected -66.7B and weighed on the U.S. dollar that capped further downside in GBP/USD pair. The ISM Services PMI surged in December to 57.2 against the projected 54.5 and supported the U.S. dollar that added further GBP/USD pair losses on Thursday.

The GBP/USD pair’s losses were limited as the U.K. government was trying to increase the vaccination supply to control coronavirus spread. The health minister Matt Hancock has said on Thursday that the Britain government was working with both Pfizer and AstraZeneca to increase supplies as the pace of Britain’s rollout of coronavirus vaccines was being limited by the supply of shots. He said that the government must quickly ramp up the rate of vaccinations to meet an ambitious target to protect more than 13 million people who were elderly, vulnerable, or frontline workers by mid-February. 

Daily Technical Levels

Support   Resistance

1.3518      1.3620

1.3474      1.3678

1.3416      1.3722

Pivot Point: 1.3576

GBP/USD– Trading Tip

The GBP/USD pair continues to consolidate in a narrow trading range of 1.3625 – 1.3556. The Sterling may face immediate resistance at the 1.3625 level, and the continuation of an upward trend can lead the Cable towards the 1.3700 resistance level. On the lower side, the breakout of 1.3545 support can extend the selling trend until the 1.3468 level.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.824 after placing a high of 103.955 and a low of 102.948. The USD/JPY pair rose to its highest level since mid-December on Thursday amid the broad-based strength of the U.S. dollar. The USD/JPY pair’s bullish momentum was supported by the stronger U.S. dollar driven by the rising 10-year U.S. Treasury yields. The U.S. 10-year Treasury yields rose to 1.085% on Thursday that was the highest level since March. On Wall Street, the main indexes were also at record highs as Dow Jones gained about 1.7% and NASDAQ gained about 2.25% on Thursday.

The rising risk sentiment because of the rally in the stock market and the U.S. treasury yield, along with the rising crude oil prices, added weight on the safe-haven Japanese Yen that ultimately pushed the currency pair USD/JPY higher onboard to 4 weeks highest level. The U.S. Dollar Index was also up from the multi-year lowest level on Thursday and moved near 89.85 and was up 0.35% for the day. The rising demand for the greenback pushed the currency pair USD/JPY higher on the board.

However, the U.S. dollar demand is expected not to live for a longer period as the Democratic win in U.S. Senate elections has raised the prospects for a larger stimulus package. Joe Biden, who will begin his term from January 20th, has promised to deliver about two large stimulus measures this year, ultimately hurting local currency.

On the data front, at 04:30 GMT, the Average Cash Earnings for the year from Japan dropped to -2.2% against the projection of -0.9% and weighed on the Japanese Yen that ultimately added further gains in the USD/JPY pair. From the U.S. side, at 17:30 GMT, the Challenger Job Cuts for the year in December increased to 134.5% compared to November’s 45.4%. At 18:30 GMT, the Unemployment Claims from last week were decreased to 787K against the anticipated 798K and supported the U.S. dollar that added further gains in the USD/JPY pair. The Trade Balance from November showed a deficit of -68.1B against the anticipated -66.7B and weighed on the U.S. dollar that capped further upside in the USD/JPY pair. At 20:00 GMT, the ISM Services PMI increased in December to 57.2 against the forecasted 54.5 and supported the U.S. dollar that added further gains in the USD/JPY pair.

Meanwhile, on Thursday, the Federal Reserve released its FOMC December meeting minutes that revealed that the Federal Reserve officials consistently backed, holding the pace of asset purchases stable, while some were open to future adjustments if needed. Minutes also revealed that all participants judged that it would be appropriate to continue those purchases at least at the current pace. Nearly all members favored keeping the current arrangement of purchases. The Federal Open Market Committee kept interest rates near zero. It supported its commitment to bond-buying at the meeting after vowing to maintain a $120 billion monthly pace of purchases until there will be considered further progress towards inflation goals and employment. The FOMC meeting minutes also supported the local currency U.S. dollar and added further upside in the USD/JPY pair on Thursday.

Daily Technical Levels

Support   Resistance

103.18     104.19

102.56     104.58

102.16     105.21

Pivot Point: 103.57

USD/JPY – Trading Tips

The USD/JPY consolidates below 103.950 level, after bouncing off above 103.528 support level. A bullish breakout of 103.950 can lead the USD/JPY pair to the 104.322 level. The 50 periods EMA is expected to keep the USD/JPY support at 103.355, which is very far from the current market price; thus, we can also expect some bearish correction. The market may show further movements upon the release of U.S. NFP figures today. Good luck! 

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Forex Market Analysis

Daily F.X. Analysis, January 06 – Top Trade Setups In Forex – ADP Non-Farm Employment Change Ahead! 

On the news front, eyes will remain on the Services PMI figures from the Eurozone, U.K., and the United States. Almost all economic figures are expected to perform better than previous months, perhaps due to a lockdown lift. Price action will depend upon any surprise changes in the PMI figures. Later today, the U.S. ADP figures will also drive some volatility in the market.

Economic Events to Watch Today  


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22984 after placing a high of 1.23055 and a low of 1.22419. The renewed U.S. dollar weakness and the prospects for a Democratic majority in the Senate after the runoff election in Georgia boosted the market sentiment that supported the upward trend in EUR/USD pair on Tuesday.

The U.S. Dollar Index that gauges the greenback’s value against the basket of six major currencies fell by almost 0.38% on Tuesday to an 89.53 level that ultimately added gains in EUR/USD pair. The U.S. Dollar was also under stress on Tuesday amid the US Georgia runoff elections that would decide the future of the U.S. Senate. The outcome will be crucial for incoming president Joe Biden as the Senate majority helps pass the law and confirm the cabinet appointments. The result is expected on Wednesday. It has made investors cautious about placing any strong bids in favor of the U.S. dollar, resulting in the upward momentum of EUR/USD.

On the data front, at 12:00 GMT, the German Retail Sales for November raised to 1.9% against the expected -2.0% and supported the single currency Euro and added further gains in EUR/USD pair. At 13:00 GMT, the Spanish Unemployment Change in December raised to 36.8K against the expected 30.5K and weighed on the single currency Euro that capped further EUR/USD pair gains. At 13:55 GMT, the German Unemployment Change for December declined to-37K against the expected 10K and supported the single currency Euro that added further EUR/USD pair gains. At 14:00 GMT, the M3 Money Supply for the year from Eurozone raised to 11.0% against the forecasted 10.6% and supported the single currency Euro that added additional EUR/USD pair gains. The Private Loans for the year from Eurozone dropped to 3.1% from the expected 3.3% and weighed on Euro that further capped gains in EUR/USD pair.

From the U.S. side, at 20:00 GMT, the ISM Manufacturing PMI from December rose to 60.7 against the estimated 56.6 and supported the U.S. dollar, and capped further gains in EUR/USD pair. The ISM Manufacturing Prices also raised to 77.6 against the anticipated 66.0 and supported the U.S. dollar. The Wards Total Vehicle Sales raised to 16.3M against the estimated 15.8M and supported the U.S. dollar, ultimately limiting further gains in EUR/USD pair.

On Wednesday, the HIS Markit will release the Services PMI data for Germany and the Euro area. From the U.S., the ADP Employment Change will also be featured in the economic docket that will impact EUR/USD prices. Furthermore, the investors will keep a close eye on the Georgia election results.

Daily Technical Levels

Support   Resistance

1.2257      1.2318

1.2220      1.2344

1.2195      1.2380

Pivot point: 1.2282

EUR/USD– Trading Tip

The EUR/USD is trading with a mixed bias at the 1.2272 level, having violated the upward trendline at the 1.2252 level. At the moment, the pair is likely to face resistance at the 1.2307 level along with a support area of 1.2245 and 1.2215. Bullish bias seems dominant today, so a bullish breakout of 1.2307 can extend buying until the next resistance level of 1.2345.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.36278 after a high of 1.36420 and a low of 1.35540. Despite the third nationwide lockdown in the U.K., the GBP/USD pair raised on Tuesday amid the broad-based U.S. dollar weakness. The U.S. Dollar Index that measures the value of the U.S. dollar against the basket of six major currencies fell by 0.38% towards the two years, the lowest level of 89.53, and weighed on the greenback that ultimately supported the gains in GBP/USD pair.

The U.S. dollar was weak across the board despite the safe-haven appeal in the market mainly because of the Georgia runoff elections in the U.S. The runoff will decide the future of the U.S. Senate. It will be essential for Joe Biden, the upcoming Democratic president of the U.S., as it holds major importance in the U.S. Congress being its upper chamber. Senate holding party could easily approve its bills, which is the main attractiveness for getting majority votes in the Georgia runoff elections. Since 2014, the Senate has been controlled by the Republican Party, and if Democrats win on Wednesday, the extra two seats will give them effective control.

On the other hand, the British Pound was under pressure on Tuesday as the number of new daily confirmed cases of coronavirus in the U.K. has topped 60,000 for the first time since the pandemic started.

According to the government figures on Tuesday, the number of people who tested positive was 60,916. It came in as England and Scotland announced new strict lockdowns with people told to stay at home. The country is entering another nationwide lockdown to control coronavirus’s new variant affected the local currency and GBP/USD pair. However, investors did not give much attention to it and continued moving with the weakness of the U.S. dollar that ultimately pushed the GBP/USD pair higher.

There was no macroeconomic data on the data front to be released from the U.K. From the U.S. side, at 20:00 GMT, the ISM Manufacturing PMI from December surged to 60.7 against the anticipated 56.6 and supported the U.S. dollar and capped further gains in GBP/USD pair. The ISM Manufacturing Prices also rose to 77.6 against the projected 66.0 and supported the U.S. dollar. The Wards Total Vehicle Sales surged to 16.3M against the expected 15.8M and supported the U.S. dollar that ultimately limited further GBP/USD pair gains.

Daily Technical Levels

Support   Resistance

1.3572      1.3660

1.3518      1.3696

1.3483      1.3749

Pivot point: 1.3607

GBP/USD– Trading Tip

The Cable’s technical side also remains mostly unchanged as the GBP/USD pair consolidates between 1.3632 – 1.3556 after violating the support level of 1.3609 level. On the higher side, the Sterling may find resistance at 1.3632 and 1.3697 level while support at 1.3550 and 1.3473 level. Choppy trading expected. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 102.716 after placing a high of 103.189 and a low of 102.603. On Tuesday, the currency pair USD/JPY came under resumed bearish pressure through the American trading hours and reached its lowest level in nearly ten months at 102.60. The intensified selling pressure surrounding the U.S. dollar in the second half of the day forced the USD/JPY pair on the lower side. The U.S. Dollar Index that measures the value of the greenback against the basket of six major currencies fell to its multi-year lowest level at 89.44 by 0.47% on Tuesday and weighed heavily on the USD/JPY pair.

The U.S. Dollar was also weak across the board ahead of the results of the Georgia runoff elections. The state of Georgia held runoff elections for its two Senate seats. The results will determine who gets to control the U.S. Senate for the next two years and will consequently have a profound impact on the course of U.S. fiscal policy. The U.S. Republican Party has been controlling the U.S. Senate since 2014, and markets are betting that the Republicans will still win at least one of the seats and cement its hold on the upper chamber of the U.S. Congress.

On the data front, at 04:50 GMT, the Monetary Base for the year from Japan raised to 18.3% against the forecasted 18.0% and supported the Japanese Yen that ultimately weighed on the USD/JPY pair. From the U.S. side, at 20:00 GMT, the ISM Manufacturing PMI from December rose to 60.7 against the forecasted 56.6 and supported the U.S. dollar, and capped further losses in the USD/JPY pair. The ISM Manufacturing Prices also raised to 77.6 against the projected 66.0 and supported the U.S. dollar that limited further losses in the USD/JPY pair. The Wards Total Vehicle Sales raised to 16.3M against the estimated 15.8M and supported the U.S. dollar that ultimately limited further losses in the USD/JPY pair.

Meanwhile, the rising demand for safe-haven appeal in the market also supported the safe-haven Japanese Yen that ultimately weighed on the USD/JPY pair. The U.K. entered into a third nationwide lockdown on Monday as the daily count of new coronavirus cases surpassed 60,000 figure for the first time since the pandemic started. The PM Boris Johnson said that it was crucial to control the spread of a new variant of coronavirus that was more contagious.

Meanwhile, Germany also stretched its nationwide lockdown until the end of the month and announced tougher new restrictions to curb rising cases of coronavirus infections. New York on Monday reported its first case of a new variant of the coronavirus that has been reported in more than 30 countries so far. In the past four days, the U.S. has added about 1 million new coronavirus cases that have pushed the total number of cases beyond 21 million. This rising number of cases across the globe added fears for the recovery of the global economy and increased the appeal for safe-haven that ultimately supported the safe-haven Japanese Yen and added weight on the USD/JPY pair on Tuesday.

Daily Technical Levels

Support   Resistance

102.49      103.08

102.24      103.44

101.89      103.68

Pivot point: 102.84

USD/JPY – Trading Tips

The technical side of the USD/JPY also remains mostly unchanged as the USD/JPY is trading sharply bearish at 102.74. On the downside, the USD/JPY pair may find support at the 102.595 level along with resistance at 102.930. The USD/JPY pair has formed a downward channel on the two-hourly timeframes, which is likely to keep the pair bearish. The MACD and 50 EMA is suggesting selling bias in the USD/JPY. Let’s consider taking sell trades below the 102.850 level today. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, January 05 – Top Trade Setups In Forex – ISM Manufacturing PMI In Focus!


On the news side, eyes will remain on European Unemployment Change and the ISM Manufacturing PMI manufacturing data from the U.S., Both of the figures, are expected to drive moves in Euro and dollar today.

Economic Events to Watch Today  


  



EUR/USD – Daily Analysis

Today in the early European trading session, the EUR/USD currency pair successfully extended its previous session winning streak and remained well bid around above the 1.2250 level as the U.S. dollar remains on the bearish track despite coronavirus concerns and weak China data. However, the losses in the U.S. dollar were triggered after the U.S. Food and Drug Administration said that 2-different mRNA vaccines now show the extraordinary result of about 95% in preventing Covid-19 infection in adults. 

Apart from this, the Federal Reserve’s expectations would keep rates low for a prolonged period also weighs on the greenback and contributes to the currency pair gains. Meanwhile, the probability of an additional U.S. financial aid package also played its major role in undermining the U.S. dollar. In that way, the U.S. dollar weakness was seen as one of the key factors that benefitted the EUR/USD currency pair.

 In contrast to this, the latest B117 strain of COVID-19 lead to the fresh lockdown restrictions on economic activity in Europe and the U.K., which keep raising doubts over the economic recovery and turned out to be one of the key factors that kept the lid on any additional gains in the currency pair. As of writing, the EUR/USD currency pair is currently trading at 1.2262 and consolidating in the range between 1.2246 – 1.2278.

The sentiment around the global equity market has been flashing red since the day started amid worries about the continuous surge in new COVID-19 cases. Also fueling the risk-off mood was the cautious sentiment ahead of the Georgia election and the Sino-American tussle. As per the latest report, Japan saw a record number of COVID-19 cases in recent days, which in turn, Prime Minister Yoshihide Suga said that he would consider declaring a fresh state of emergency in the Tokyo area. 

Across the ocean, the U.K. Prime Minister Boris Johnson also gave warnings over the possibility of tougher lockdown restrictions in the U.K., which instantly overshadowed the optimism over vaccines’ rollout for the highly contagious disease and contributed to the equity market losses. However, the intensifying concerns about rising COVID-19 cases and the intensifying lockdowns could cap further gains in the currency pair.

Daily Technical Levels

Support   Resistance

1.2179     1.2279

1.2144     1.2344

1.2078     1.2379

Pivot Point: 1.2244

EUR/USD– Trading Tip

The EUR/USD is trading with a mixed bias at the 1.2272 level, having violated the upward trendline at the 1.2252 level. At the moment, the pair is likely to face resistance at the 1.2307 level along with a support area of 1.2245 and 1.2215. Bullish bias seems dominant today as the 50 periods EMA supports the pair at 1.2245 level. However, the MACD stays in a sell mode, as histograms are being formed below 0, supporting selling bias. 



GBP/USD – Daily Analysis

During Tuesday’s European trading hours, the GBP/USD currency pair failed to extend its previous session winning streak and took some offer well below the 1.360 level mainly due to the continuous surge in new COVID-19 cases in the U.K., which raised doubts over the U.K. economic recovery and turned out to be one of the key factors that kept the currency pair down. On the contrary, the broad-based U.S. dollar weakness, triggered by multiple factors, failed to support the GBP/USD pair or ease the bearish pressure. At this particular time, the GBP/USD currency pair is currently trading at 1.3556 and consolidating in the range between 1.3556 – 1.3612.

Despite the risk-off market sentiment, the broad-based U.S. dollar failed to gain any positive traction and dropped near multi-year lows amid the probability of an additional U.S. financial aid package and speculations Fed will keep interest rates lower for a longer period. Apart from this, the optimism over a possible coronavirus vaccine pushes investors towards riskier currencies and higher-yielding assets rather than the safe-haven asset, which eventually leads to further losses in the safe-haven U.S. dollar. 

However, the U.S. dollar losses were seen as one of the key factors that benefitted the EUR/USD currency pair. As of now, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies dropped by 0.04% to 89.812 by 8:49 PM ET (1:49 AM GMT).

Apart from Brexit and U.S. headlines, the currency pair came under pressure as the market’s risk sentiment was affected by the increase in the number of coronavirus cases worldwide. 

The rising number of infections from COVID-19 raised fears that countries might extend the restrictions that would have a negative impact on global economic recovery. These fears kept the risk perceived GBP/USD pair under pressure and kept its gains limited during the Asian session on Monday.

Daily Technical Levels

Support   Resistance

1.3623      1.3705

1.3573      1.3737

1.3540      1.3788

Pivot Point: 1.3655

GBP/USD– Trading Tip

The GBP/USD pair has also violated the support level of 1.3609 level extended by an upward channel, which has now been violated. On the higher side, the Sterling may find resistance at 1.3609 and 1.3698 level while support at 1.3533 level today. The Cable is crossing below 50 periods EMA, and the MACD is also forming histograms below 0, suggesting strong selling bias. We should consider taking a selling trade the Cable below 1.3607 level today. 



USD/JPY – Daily Analysis

The USD/JPY continues trading with a bearish bias at the 102.930 level, as it looks clear direction while taking rounds to 103.10/15 through the opening hour of Asian trading sessions. The yen pair descended to the new low in 10 months the prior day before closing with the Doji candlestick’s near opening levels on the daily chart. The risk-aversion stream, supported by concerns of the coronavirus (COVID-19) tension and the unadventurous spirits ahead of the Georgian elections, battles the greenback recovery and holds the USD/JPY in a compact range off-late.

The U.S. Dollar Index that includes the worth of the greenback against the basket of six major currencies was dropping by 0.25% to 89.67 on the day to insignificantly beneath the level it closed 2020 at 89.766. The U.S. dollar instability appended to the downward momentum of the USD/JPY pair. The Federal Reserve is scheduled to publish the minutes from its December conference on Wednesday. Investors will be watching for more detail on the talks about securing their forward policy guidance more specific and the chance of additional development in asset buying in 2021. 

The USD/JPY pair was also down in initial trading hours on Monday as the rising number of coronavirus cases throughout the world raised the safe-haven appeal in the market. Prime Minister Boris Johnson urged that strict lockdown stipulations would be placed in England to fight against the new variant of coronavirus that has pushed the infection rates to their highest record levels. School unions have raised called for the closure of all schools for a couple of weeks as the virus was spreading faster, but Johnson said to parents that they should send children to school as the threats to young kids from the deadly virus were very small.

 From the U.S. side, at 19:45 GMT, the Final Manufacturing PMI from the U.S. for December is projected to come as 56.3 against the previous 56.5 and weigh on the U.S. dollar add in the losses of USD/JPY pair. At 20:00 GMT, the Construction Spending for November is estimated to decrease to 1.1% against the previous 1.3% that could weigh on the U.S. dollar and USD/JPY pair as well.

Daily Technical Levels

Support Resistance

103.02     103.34

102.85     103.49

102.70     103.66

Pivot Point: 103.17

USD/JPY – Trading Tips

The USD/JPY is trading sharply bearish at 102.940, gaining support at the 102.940 level. The USD/JPY pair has formed a downward channel on the two-hourly timeframes, which may extend resistance at 103.300 as at the same level 50 periods EMA is also extending resistance. Today, we need to keep an eye on the 102.940 mark as a violation of this may offer us a sell trade until the 102.598 level. The MACD and RSI are suggesting selling bias in USD/JPY today. Good luck!

Categories
Forex Market Analysis

GBPUSD Advances in an Irregular Correction. What’s Ahead?

The GBPUSD pair advances in an incomplete Elliott Wave Irregular Flat pattern that began on September 01st when the Pound found resistance at 1.34832. Currently, the price action moves in its wave (b) of Minuette degree identified in blue, suggesting a potential decline in the coming trading sessions.

Technical Overview

The big picture of the GBPUSD illustrated in the following daily chart shows the advance in an incomplete upward corrective sequence of Minute degree labeled in black, which began on last March 20th when the Pound found support and fresh buyers at 1.14098 developing a corrective rally. Once completed the three-wave upward sequence on September 01st at 1.34832, the price completed its wave ((a)) in black and began to advance in a sideways corrective formation corresponding to wave ((b)), which remains in progress.

The previous chart shows the incomplete wave ((b)), which at the same time, rallies in a corrective sequence corresponding to wave (b) of Minuette degree identified in blue. This corrective formation in progress could correspond to an irregular flat pattern (3-3-5).

On the other hand, both the trend and momentum indicator confirms the upward bias of wave (b). The stochastic oscillator that acts as a timing indicator carries to suspect the wave (b) could advance in a complex correction. In this regard, the next 8-hour chart illustrates the internal structure of the wave (b).

The second chart exposes the Pound advancing in a triple-three pattern of Subminuette degree labeled in green. According to the textbook, this complex formation identified as w-x-y-x-z follows an internal structural series subdivided into (3-3-3-3-3). In this context, the complex correction in progress looks advancing in its third segment of wave z, which seems like an ending diagonal pattern.

In consequence, the GBPUSD should end this complex corrective rally in the coming trading sessions giving way to a new decline corresponding to wave (c) of Minuette degree.

Technical Outlook

The short-term structure developed by GBPUSD corresponds to an ending diagonal pattern, which suggests the finalization of the current corrective rally before starting a new decline.

The next chart exposes the Pound in its 8-hour time frame, which could make a new upward move, surpassing the ending diagonal pattern’s upper-line with a potential target in the area between 1.3700 and 1.3800.

Once the ending diagonal pattern finalizes, a breakdown below the Invalidation Level at 1.3439 would confirm the start of wave (c) in blue. According to the Elliott Wave Theory, this bearish leg should follow an internal sequence subdivided into a five-wave sequence.

On the other hand, considering that the upper degree’s current corrective pattern might correspond to an irregular flat, the price might develop two potential scenarios identified as follows.

  • Scenario 1: If wave (c) finds support above the end of wave (a), the Pound could drop to the demand zone between 1.2916 and 1.2853. This scenario suggests the strong long-term bullish pressure and the Elliott Wave formation should correspond to an irregular flat pattern with the failure in wave (c).
  • Scenario 2: If the price drops violating the end of wave (a) at 1.26753, the GBPUSD could decline to the next demand zone between 1.2553 and 1.2506. This scenario suggests the strength of bearish pressure, and the irregular flat pattern is extended in wave (c).

The price advance in a complex correction is identified as a triple-three formation, which seems moving in its last internal segment, which looks like an incomplete ending diagonal pattern. In this context, the breakdown and close below the 1.3439 would confirm the end of wave (b) and the start of wave (c) of Minuette degree identified in blue.

Considering that the upper degree corrective structure could correspond to an irregular flat pattern, wave (c) offers two potential scenarios. The first scenario could see a potential target between 1.2916 and 1.2853. In the second one, the price could decline between 1.2553 and 1.2506.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 29 – Top Trade Setups In Forex – Technical Levels in Play! 

On Tuesday, the market’s fundamental side is mostly muted as we don’t have any significant economic data scheduled from any economy. The S&P/CS Composite-20 HPI y/y will be released during the U.S. session; however, it’s low-impact and may not drive any major movement in the market today.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.22142 after placing a high of 1.22501 and a low of 1.21809. EUR/USD pair posted gains on Monday; however, some of the gains were lost in the late trading session. On the first day of the new trading week, the EUR/USD pair moved on the upside on the back of a weak U.S. dollar and the rising risk sentiment in the market. The global risk sentiment remained well supported by the latest optimism over a last0-minute Brexit deal and got an additional boost after the U.S. President Donald Trump finally signed the $2.3 trillion pandemic aid and spending package.

On Sunday, U.S. President Donald Trump signed the bipartisan bill of $2.3 trillion packages, including $900 billion for stimulus checks and $1.4 trillion for government funding. Trump, who first called this bill a disgrace, signed the bill and made it legislation as the government was near to shut down. However, he urged the U.S. Congress to increase the stimulus check amount to $2000 from $600. Given his calls, the House of Representatives led by Democratic leaders approved the CASH Act on Monday. The Act was designed to support Trump’s decision to increase the stimulus checks. The House voted 275-134 on Monday to increase the proposed $600 payments to more than triple $2000 and send it to Senate.

All these developments in the U.S. stimulus measure raised the market’s risk sentiment that ultimately added strength in the risk perceived EUR/USD pair. Meanwhile, another reason behind the EUR/USD pair’s upward momentum was the sharp rise in European markets on Monday. At the start of the last trading week of 2020, the Brexit developments and the U.S. stimulus measure raised the risk sentiment that supported the European stocks to move higher levels added in the EUR/USD pair. France’s CAC40 rose by 1.3%, the Swiss SMI surged by 1.8%, and Germany’s DAX index finished up by 1.5% on Monday.

However, some of the EUR/USD pair gains in the late trading session on Monday were lost after the news of a new variant of coronavirus reaching eight European countries emerged. The more contagious variant of coronavirus identified in the U.K. has been confirmed to be reported in Spain, Switzerland, Sweden, and France. This spread of a new variant of coronavirus affected EUR/USD’s upward momentum by weighing on the local currency Euro, as fears for economic slowdown emerged again in the European countries.

Daily Technical Levels

Support   Resistance

1.2179     1.2249

1.2144     1.2286

1.2108     1.2320

Pivot Point: 1.2215

EUR/USD– Trading Tip

On Tuesday, the EUR/USD consolidating in a narrow trading range of 1.2259 – 1.2205. On the 2 hour timeframe, the EUR/USD has formed an ascending triangle pattern supporting the pair around 1.2204 and a resistance at 1.2259. The MACD and RSI have now shifted to the bullish zone, supporting a bullish trend in the EUR/USD pair. Additionally, the 50 periods EMA supports the pair at 1.2204, and it’s also expending bullish sentiment for the EUR/USD pair today. 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.34574 after a high of 1.35760 and a low of 1.34289. On Monday, the currency pair GBP/USD fell sharply as market participants showed concerns that the post-Brexit trade agreement will slow the trade after the crucial services sector was largely excluded from the deal. The mayor of French fishing port has warned that Thursday’s historic Brexit trade deal between the U.K. and E.U. still left the fishing sector with many key questions unanswered. The mayor of Boulogne-sur-Mer, Frederic Cuvillier, said that the agreement left French fishermen wondering how it will impact them once the festive season was over. 

The long-awaited agreement between the two parties was resolved after granting a five-year transition period over fisheries, after which E.U. fish captures ought to be reduced by 25%. The concession was given from the U.K., who has initially demanded 60% at the start of the negotiations. Furthermore, on financial services, the Brexit deal is said to go in favor of the E.U. According to Boris Johnson, the agreement on financial services has fallen short of U.K. hopes. He said that perhaps the financial sector did not go as far as the U.K. would like. After these comments, Rishi Sunak offered financial services firms the prospect of closer access to E.U. markets than outlined in the Brexit trade deal.

Sunak said that he hoped that a planned memorandum of understanding on this issue between the U.K. and E.U. would smooth over many obstacles in the next few months. However, all these tensions weighed on the local currency British Pound and dragged the GBP/USD pair to the downside.

Meanwhile, the U.K. reported its highest day of new coronavirus infections on Monday with 41,385 new COVID-19 cases. The surge was driven by the new variant of the virus that is more transmissible and has forced the hospitals to cancel non-urgent procedures and scramble to find the space. Even though the new variant does not appear to make people sicker, it is believed to be up to 70% more contagious, resulting in an increased number of coronavirus infections in the U.K.

The rising number of coronavirus in the country and its faster rate affected the local currency, as hopes for an economic recovery dampened and weighed on the GBP/USD pair. It was another reason behind the downward momentum of the GBP/USD pair on Monday. However, the pair’s losses were limited on Monday due to the weakness of the U.S. dollar. The greenback was weak across the board as the U.S. President Donald Trump has signed the new coronavirus relief bill, turning it into law on Sunday. 

Whereas, the House of Representatives, which is led by Democrats, held a vote on the CASH Act on Monday, approved the Act, and passed it to the Senate. According to CASH Act, the number of stimulus checks in the bipartisan bill of $600 will be increased to $2000 as demanded by U.S. President Donald Trump and supported by the House of Democrats.

All the U.S. stimulus relief bill developments weighed on the U.S. dollar and capped further losses in the GBP/USD pair on Monday in the absence of any macroeconomic data release.

Daily Technical Levels

Support   Resistance

1.3393     1.3541

1.3337     1.3633

1.3245     1.3689

Pivot point: 1.3485

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3485, having supported over 1.3443 level. The support level is extended by an upward trendline on the two-hourly timeframes. The GBP/USD pair is likely to face resistance at the 1.3525 level, and a bullish crossover of 1.3525 level can drive Sterling’s price towards 1.3620. The bullish trendline is likely to support the pair today at the 1.3443 level, and violation of this can extend the selling trend until the 1.3343 level.     


USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.778 after placing a high of 103.896 and a low of 103.402. The currency pair USD/JPY extended its gains on Monday and raised for the second consecutive day as the market’s risk sentiment increased. The risk-on market sentiment was driven by the latest decision of Donald Trump to sign the bipartisan stimulus bill of $2.3 trillion that he had initially refused to pass. 

The U.S. President Donald Trump turned the bill of $2.3 trillion, including $900 billion for pandemic aid and $1.4 trillion for spending package on Sunday as the government was near to shut down in less than 30 days. However, despite signing the bill, Donald Trump continued urging Congress to increase the number of stimulus checks from $600 per person to $2000. Followed by his calls, the House of Representatives with a Democratic majority approved the CASH Act on Monday to allow the rise in payment of stimulus checks demanded by Donald Trump. The CASH Act was approved by Democrats and sent to Senate for further proceedings.

This added in to the risk sentiment as it raised hopes for economic recovery in a depressing environment and weighed on the safe-haven Japanese Yen that ultimately added in the USD/JPY pair’s upward momentum on Monday. Furthermore, the Bank of Japan released the summary of opinions at the December rate review that showed that the B.O. policymakers were divided on how far to go in changing its stimulus program, with some calling for an overhaul of its strategy achieving 2% inflation. 

The Governor of the Bank of Japan, Haruhiko Kuroda, said that the policy review would not lead to big changes to yield curve control (YCC) instead of focusing on fine-tuning the framework to make it more sustainable. However, some BOJ board members called for a more ambitious review as the hit to grow from coronavirus stokes fears of a return to deflation. 

On the data front, at 04:50 GMT, the Prelim Industrial Production reduced to 0.0% against the forecasted 1.4% and weighed on the Japanese Yen that added gains in the USD/JPY pair. Meanwhile, the USD/JPY pair’s gains were limited on Monday as the U.S. dollar was weak across the board due to the second round of stimulus relief package issuance. The bill will restore unemployment benefits to millions of Americans and averted a partial federal government shutdown that would have begun on Thursday. It raised the risk sentiment and weighed on the U.S. dollar that ultimately capped further upside in the USD/JPY pair on Monday.

Daily Technical Levels

Support   Resistance

103.47     104.02

103.25     104.37

102.91     104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY is trading sideways at the 103.700 level, supported by an ascending triangle pattern. On the 2 hour timeframe, the USD/JPY pair is gaining support at 103.600 and 103.400 levels along with a resistance level of 103.860, which is extended by a triple top pattern. The pair is now closing a series of doji and spinning top candles, suggesting neutral bias among investors. It’s common during such a timeframe of December as most of the traders are on holiday. Let’s consider taking a buy trade over 103.860 level and selling below the same as this level is of major importance today. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 28 – Top Trade Setups In Forex – Boxing Day Holiday! 

Welcome back to a fresh week after a long weekend. I hope you had a fantastic Christmas. The global banks will be closed in observance of Boxing Day today; therefore, we may have thin volatility and trading volume today in the market. Let’s check out the technical side of the market. 

 

Economic Events to Watch Today  


 

EUR/USD – Daily Analysis

The EUR/USD succeeded in maintaining its overnight bullish bias and remained well bid around above the 1.2200 level. However, the currency pair’s sentiment was being supported by the latest progress over the massive U.S. government spending bill and COVID-19 relief measures, which undermined the safe-haven U.S. dollar and contributed to the currency pair gains. 

Moreover, the S&P 500 Futures sentiment was further bolstered by the recent passage of the Brexit deal and upbeat comments from the covid vaccine producers, which in turn, added further weakness to the greenback and contributed to the currency pair gains. In contrast to this, the intensifying concerns about increasing COVID-19 deaths and the possibility of economically-painful hard lockdowns keep questioning the pair’s upside momentum. As of writing, the EUR/USD currency pair is currently trading at 1.2226 and consolidating in the range between 1.2181 – 1.2227.

The S&P 500 Futures enter the 3,700 marks and refreshed intraday high near 3,710 during early Monday. The market trading sentiment recently gained bids after U.S. President Donald Trump signed the much-awaited coronavirus (COVID-19) aid package, which instantly boosted the investor’s confidence. As per the New York Post, President Trump has signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct checks of $600 for people earning up to $75,000 per year. In addition to this, the bill creates a new $300 weekly unemployment supplement and replenishes a forgivable loan program for small businesses, while there’s an additional $600 per child stimulus payment. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

Elsewhere, the gains in the currency pair were further bolstered after the passage of the Brexit deal and upbeat remarks from the covid vaccine makers. As per the latest report, the U.K.’s Foreign Secretary Dominic Raab said that the United Kingdom is now seeking trade deals with Australia, the United States, and countries in the Indo-Pacific region.” Across the pond, the AstraZeneca CEO Pascal Soriot said that their covid vaccine is effective against the new strain, which in turn exerted an additional positive impact on the market trading sentiment and contributed to the currency pair gains.

Looking ahead, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package. However, the global markets may witness a dull trading session amid the year-end celebration mood and off at major bourses. 

Daily Technical Levels

Support Resistance

1.2143 1.2231

1.2090 1.2266

1.2055 1.2320

Pivot point: 1.2178

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at the 1.2224 area, having crossed over the triple top resistance level of 1.2200, now working as a support for the EUR/USD. Continuation of an upward trend can extend the buying trend until the 1.2250 level. The EUR/USD pair violates the symmetric triangle pattern, which is likely to drive further upward movement in the market. Bullish bias seems dominant today.

GBP/USD – Daily Analysis

The GBP/USD currency pair managed to maintain its bullish bias through the first half of the Asian session and remained bullish around above the mid-1.3500 level due to the prevalent risk-on market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair gains. Hence the market trading sentiment was supported by the hopes of coronavirus vaccine and progress toward a massive U.S. government spending bill and COVID-19 relief measures. 

On the contrary, the currency pair trimmed some of its sharp gains during Monday’s European session as the renewed uncertainties over the future of the recently signed Brexit deal tend to undermine the British Pound even as markets are off in the U.K. Furthermore, the currency pair’s gains were also capped by the growing market concerns about the continuous rise in new coronavirus cases and the enforcement of fresh restrictions in the U.K. As of writing, the GBP/USD currency pair is currently trading at 1.3561 and consolidating in the range between 1.3530 – 1.3576.

Despite the recent passage of the Brexit deal, the doubts over the key issues like the level Playing Field, Finance, and Gibraltar remain on the cards as the U.K. Prime Minister Boris Johnson has admitted it is an agreement which does not have as much as he would have liked about the financial services sector and regulatory equivalence. He further added that this agreement would give the people hope that we will remain in close dialogue with our European partners regarding things like equivalence decisions. In that way, the uncertainties over the recently signed Brexit deal’s future exerted downside pressure on the GBP/USD currency pair.

Despite this, the S&P 500 Futures managed to extend its previous session’s positive performance and refreshed intraday high near 3,710 during the early European session on the day. The market trading sentiment recently gained bids after U.S. President Donald Trump signed the much-awaited coronavirus (COVID-19) aid package, which instantly boosted the investor’s confidence. As per the New York Post, President Trump has signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct reviews of $600 for people earning up to $75,000 per year. 

In addition to this, the bill creates a new $300 weekly unemployment supplement and replenishes a forgivable loan program for small businesses, while there’s an additional $600 per child stimulus payment. This latest optimism put a bid under risk assets and weighed over the safe-haven U.S. dollar. 

Looking ahead, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package as the global markets witnessing a dull trading session amid the year-end celebration mood and off at significant bourses. 

Daily Technical Levels

Support Resistance

1.3442 1.3562

1.3378 1.3618 

1.3322 1.3683

Pivot point: 1.3498

GBP/USD– Trading Tip

The Sterling is trading with a bullish bias at 1.376 level, heading further higher towards the next resistance level of 1.3650 level. Support stays at 1.3495 level today. This support level is extended by an upward trendline, which can be seen in the 4-hour timeframe. On the higher side, the GBP/USD pair can prolong the buying trend unto the 1.3622 level, and the bullish trend continuation can lead the GBP/USD pair towards the 1.3706 mark. 

USD/JPY – Daily Analysis

The USD/JPY failed to stop its previous-session bearish bias and remained depressed around below the 103.50 level, mainly due to the broad-based U.S. dollar weakness. The fresh optimism was pressuring the U.S. dollar that the U.S. President Donald Trump signed a $2.3 trillion COVID-19 relief and government funding bill, urging investors to retreat from the safe-haven investment riskier assets. Apart from this, the losses in the U.S. dollar could also be attributed to the lingering doubts over the U.S. economic recovery from COVID-1, which adds further burden around the U.S. dollar and contributes to the currency pair losses. 

The upbeat market sentiment, backed by the hopes of coronavirus vaccine and the U.S. covid stimulus, boosted investors’ confidence and undermined the safe-haven Japanese yen, which, in turn, was seen as one of the leading factors that helped the USD/JPY currency pair to limit its deeper losses.

Despite the worries over the coronavirus pandemic’s resurgence, the optimism over a possible vaccine for the highly infectious coronavirus disease has remained supportive of the market risk tone. Also favoring the optimism could be the recent comments from the covid vaccine producers. As per the keywords, AstraZeneca CEO Pascal Soriot said that their covid vaccine is effective against the new strain. Thus, the risk-on market mood tends to undermine the safe-haven Japanese yen, which becomes the key factor that lends some support to the currency pair to ease the intraday bearish pressure surrounding the USD/JPY currency pair.

In addition to this, the sentiment around the equity market was improved further after U.S. President Donald Trump signed a $2.3 trillion COVID-19 relief and government funding bill. It is worth noted that U.S. President Trump had signed a $2.3 trillion COVID-19 relief and government funding bill that includes $600 stimulus checks for most Americans. The funding bill authorizes direct reviews of $600 for people earning up to $75,000 per year. Furthermore, the bill creates a new $300 weekly unemployment supplement and provides a forgivable loan program for small businesses. Besides this, there’s an additional $600 per child stimulus payment. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish trend and remained depressed on the day. Apart from this, doubts over the U.S. economic recovery remains on the cards amid rising COVID-19 deaths, which adds further burden around the greenback. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. Meanwhile, the U.S. dollar index, which measures the greenback against a bucket of currencies, dropped by 0.15% to 90.112 by 12:09 AM ET (5:09 AM GMT).

In contrast to this, the optimism around the equity market was slightly unaffected by the intensifying market worries regarding the continuous rise in new coronavirus cases in the U.S. and Europe, which keep sparking the worries over the global economic recovery through imposing new lockdown restrictions on economic and social activity. Furthermore, the equity market gains were also capped by the renewed uncertainty over the Brexit deal and intensified China-US tussles.

There isn’t any major market-moving economic data due for release on the day, which in turn, the market traders will keep their eyes only on updates surrounding the virus, vaccine, and the U.S. stimulus package as the global markets seeing a dull trading session amid the year-end celebration mood and off at major bourses.

Daily Technical Levels

Support Resistance

103.47 104.02

103.25 104.37

102.91 104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY trades choppy in between a narrow trading range of 103.750 – 103.360 level. The safe-haven USD/JPY pair faces immediate support of 103.360, and the formation of candles above this level can drive the buying trend until 103.746. Whereas, bullish trend continuation can extend further buying trend until 104.090 level. The MACD and RSI are suggesting selling bias as it’s forming histograms below 0 level. While the 50 EMA also supports the selling trend. Let’s consider taking a selling trade until the 102.990 level today. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, December 17 – Top Trade Setups In Forex – BOE Policy In Limelight! 

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%. However, it will be essential to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

 

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21988 after placing a high of 1.22121 and a low of 1.21450. EUR/USD pair extended its gains and rose for 3rd consecutive day on Wednesday to reach its highest since April 2018.

EUR/USD pair broke above 1.22 level mainly because of the strong PMIs on Wednesday and the U.S. dollar weakness. On the data front, at 13:15 GMT, the French Flash Services PMI for December raised to 49.2 against the expected 39.9 and supported Euro. The French Flash Manufacturing PMI in December also raised to 51.1 against the estimated 50.0 and supported Euro. 

At 13:30 GMT, the German Flash Manufacturing PMI in December surged to 58.6 against the forecasted 56.4 and supported Euro. The German Flash Services PMI also advanced to 47.7 against the expected 44.1 and supported Euro. At 14:00 GMT, the Flash manufacturing PMI from Eurozone raised to 55.5 against the forecasted 53.0 and supported Euro. The Flash Services PMI in December from the whole bloc also raised to 47.3 from the expected 41.9 and supported Euro. At 15:00 GMT, the Trade Balance from Eurozone for October came in greater than expected 22.1B as 25,9B and supported Euro.

The manufacturing and services sector in Eurozone advanced and showed growth in December that supported the single currency Euro and added in the daily gains of the EUR/USD pair. From the U.S. side, at 18:30 GMT, the Core Retail Sales for November declined to -0.9% against the projected 0.1% and weighed on the U.S. dollar and supported EUR/USD gains. For November, the Retail Sales also declined to -1.1% against the projected -0.3% and weighed on the U.S. dollar and added in the EUR/USD pair. AT 19:45 GMT, the Flash manufacturing PMI for December rose to56.5 against the projected 55.9 and supported the U.S. dollar, and capped further gains in EUR/USD pair. 

The Flash Services PMI for December declined to 55.3 against the projected 55.7 and weighed on the U.S. dollar and supported momentum upward in EUR/USD pair. At 20:00 GMT, the Business Inventories for October rose to 0.7% against the projected 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also declined to 86 against the projected 88 and weighed on the U.S. dollar, and added additional EUR/USD pair gains.

Apart from strong PMI figures, the latest news that Moderna’s vaccine was also up to getting emergency use authorization from the US FDA by the end of this week. This vaccine will be the second vaccine after Pfizer’s drug was approved last week and is currently being used on people. This news added in the risk sentiment and supported the risk perceived EUR/USD pair.

Furthermore, the Brexit hopes also raised on Wednesday and supported the single currency Euro after E.U.’s chief negotiator explained that she could not say if there will be a trade deal with Britain, but there had been progressing. The next few days would be critical. These developments also added to the upward trend of the EUR/USD pair on Wednesday.

Moreover, the Federal Reserve concluded its two-day meeting on Wednesday and decided to keep its interest rates at the same level until the inflation reaches its target. However, it decided to extend its Q.E. program that weighed on the U.S. dollar and supported the EUR/USD pair’s upward trend.


Daily Technical Levels

Support   Resistance

1.2126      1.2175

1.2077      1.2197

1.2099      1.2224

Pivot point: 1.2148

EUR/USD– Trading Tip

The EUR/USD bullish bias continues to dominate the market as it’s trading at 1.2225. On the higher side, the EUR/USD may target the 1.2250 level and 1.2282 resistance areas. The direct currency pair may find support at 1.2175, which is extended by a double top resistance, which now is working as a support. The MACD and RSI are supporting bullish bias along with the 50 periods EMA. We can expect a continuation of a bullish trend in the EUR/USD today.


GBP/USD – Daily Analysis

 The GBP/USD pair was closed at 1.35083 after placing a high of 1.35543 and a low of 1.34340. GBP/USD pair extended its gains on Wednesday and rose to its highest level since May 2018. The British Pound pared gains on Wednesday against the U.S. dollar as reports suggested that U.K. and E.U. were close to a breakthrough on a key sticking point amid the ongoing talks. The President of European Commission Ursula von der Leyen said that there was a narrow path to an agreement on a post-Brexit trade deal with the U.K.

The U.K. acknowledged that some progress had been made but continued to suggest a no-deal was most likely outcome as significant differences remain. Reports suggested that progress has been made over the level playing rules, but differences remain over the fisheries issue, as fishing quotas remain a challenge in negotiations.

However, the U.K. has softened its tone on fisheries in a bid to get a deal over the line. Britain ditched the demands for fishing vessels operating under the U.K. flag to be majority British-owned in the post Brexit era. Whereas PM Boris Johnson remained harsh in his speech on Wednesday and said that the E.U. should realize that the U.K. has a right to take control over its land and waters like every other country.

The hopes for the Brexit trade deal increased as the recent progress on talks came as both sides were coming under increasing pressure to secure a deal before the transition period on December 31. These hopes kept the British Pound supported and GBP/USD pair higher.

On the data front, at 12:00 GMT, the Consumer Price Index from the U.K. for November fell short of expectations of 0.6% and came in as 0.3% that weighed on the British Pound. In November, the Core CPI also fell to 1.1% against the expectations of 1.4% and weighed on Sterling. The RPI of the year from the U.K. for November also declined to 0.9% against the forecasted 1.3% and weighed heavily on GBP. At 12:02 GMT, the PPI Input from the U.K. declined to 0.2% from the expected 0.4% in November and weighed on the British Pound. The PPI Output, however, remained flat with the expectations of 0.2%. At 14:30 GMT, the Flash manufacturing PMI in December from Great Britain raised to 57.3 against the projected 55.9 and supported British Pound and added GBP/USD pair gains. The Flash Services PMI, however, declined to 49.9 against the forecasted 50.5 in December and weighed on Sterling. The Housing Price Index for October advanced to 5.4% against the estimated 5.1% and supported British Pound. 

Most of the data came in against the British Pound; however, the currency pair GBP/USD remains on the upside over the latest Brexit optimism.

From the U.S. side, at 18:30 GMT, the Core Retail Sales for November fell to -0.9% against the anticipated 0.1% and weighed on the U.S. dollar and supported GBP/USD pair. The Retail Sales for November also fell to -1.1% against the anticipated -0.3% and weighed on the U.S. dollar and added gains in GBP/USD pair. 

At 19:45 GMT, the Flash manufacturing PMI for December surged to56.5 against the anticipated 55.9 and supported the U.S. dollar. The Flash Services PMI for December fell to 55.3 against the anticipated 55.7 and weighed on the U.S. dollar. At 20:00 GMT, the Business Inventories for October surged to 0.7% against the anticipated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also fell to 86 against the anticipated 88 and weighed on the U.S. dollar and added further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3338      1.3258

1.3213      1.3595

1.3147      1.3719

Pivot point: 1.3404

GBP/USD– Trading Tip

Since the Cable is also a direct currency pair and the dollar is getting weaker, we can expect a continuation of an upward trend in the GBP/USD pair. The GBP/USD pair may find resistance at 1.3600 and 1.3706 level, while the support level stays at 1.3470 marks. The MACD and EMA are supporting the bullish trend in the Cable. On the 4 hour timeframe, the GBP/USD pair has formed an upward channel, which may keep pushing the Sterling further higher today. The buying trend can be seen over 1.3470 level until 1.3600 and 1.3706 level.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 103.419 after placing a high of 103.915 and a low of 103.259. The USD/JPY pair extended its losses on Wednesday and reached its lowest since November 9. The USD/JPY pair dropped on Wednesday amid the U.S. dollar weakness due to rising stimulus hopes and growing vaccine optimism. The U.S. lawmakers made progress toward a coronavirus relief package that added weight on the U.S. dollar and dragged the USD/JPY pair on the downside. The U.S. Dollar Index that tracks the greenback against a basket of six other currencies was down on Wednesday to 0.1% at 90.317. 

The bipartisan group had originally proposed a $908 billion stimulus bill, but it has now been split into two bills. The first bill includes a $748 billion proposal, including aid for vaccine distribution and unemployment benefits. This bill has gained traction and is expected to pass by Congress by the end of the week. The second bill that is worth $160 billion for local and state government support along with the temporary coronavirus liability protection that appears to be having more difficulty in gathering the necessary support from Congress.

On the data front, at 04:50 GMT, the Trade Balance from Japan for November surged to 0.57T against the forecasted 0.54T and supported the Japanese Yen that added further losses in the USD/JPY pair. At 05:30 GMT, the Flash Manufacturing PMI from Japan in December also raised to 49.7 against the forecasted 48.9 and supported the Japanese Yen that added additional losses in USD/JPY pair.

Meanwhile, the Federal Reserve kept its interest rates unchanged on Wednesday and said that they would remain the same until the inflation reaches 2-3%. However, Federal Reserve also announces to purchase at least $120 Billion of U.S. treasuries and mortgage-backed securities each month until employment gets better. This way to support the U.S. economy by increasing bond purchases also weighed on the U.S. dollar and dragged the USD/JPY pair on the downside.

From the U.S. side, at 02:00 GMT, the TIC Long-Term Purchases dropped to 51.9B against the forecasted 75.5 B and weighed on the U.S. dollar, and supported the downside movement in the USD/JPY pair. At 18:30 GMT, the Core Retail Sales for November decreased to -0.9% against the estimated 0.1% and weighed on the U.S. dollar and weighed on the USD/JPY pair. The Retail Sales for November also decreased to -1.1% against the estimated -0.3% and weighed on the U.S. dollar. AT 19:45 GMT, the Flash manufacturing PMI for December advanced to56.5 against the estimated 55.9 and supported the U.S. dollar. 

The Flash Services PMI for December decreased to 55.3 against the estimated 55.7 and weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. At 20:00 GMT, the Business Inventories for October advanced to 0.7% against the estimated 0.6%and weighed on the U.S. dollar. The NAHB Housing Market Index also decreased to 86 against the estimated 88 and weighed on the U.S. dollar and added further losses in the USD/JPY pair.

Another factor included in the losses of the USD/JPY pair was the increasing risk sentiment of the market from another coronavirus vaccine. Moderna has also applied for emergency use authorization of its vaccine from the U.S. regulatory FDA that is expected to approve within a week. Moderna will become the second company to get authorization from the U.S. regulator after Pfizer got approval last week and is currently being roll-out. This latest news added in the risk sentiment and weighed on the safe-haven Japanese Yen that ultimately weighed on the USD/JPY pair.

Daily Technical Levels

Support   Resistance

103.47      104.02

103.25      104.37

102.91      104.58

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY extends it’s selling trend as the pair trades at 103.250. The safe-haven currency pair is trading below an immediate support level of 103.250, and the closing of candles below this level will confirm the bearish breakout. If this happens, we may have an opportunity to short the USD/JPY pair today. Bearish bias seems solid as the MACD is forming histograms below 0, and the 50 periods EMA is holding around 103.860 level, suggesting strong odds of selling. On the lower side, the USD/JPY pair may find next support at the 102.900 level. Let’s consider taking a selling trade below 103.650 today. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 16 – Top Trade Setups In Forex – U.K.Manufacturing PMI Figures Ahead! 

On the news front, eyes will remain on the series of Manufacturing PMI figures from the Eurozone, U.K., and the U.S. Although it’s a low impact event, it may help determine the market sentiment today.

 

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.21522 after placing a high of 1.21687 and a low of 1.21210. Despite the coronavirus related lockdowns, the EUR/USD pair moved higher on Tuesday as the European stock markets traded higher amid the optimism over the ongoing Brexit trade negotiations.

The European Union negotiator Michel Barnier said that securing a trade deal with Britain was still possible. In contrast, European Commission Ursula von der Leyen said that there was some movement over the sticking points.

According to the Times of London, the two sides had made progress on the level playing field, and only the biggest obstacle to a deal has left of differences over fishing rights. However, the hopes increased that some form of a deal could be reached with just days to go before the U.K. leaves the E.U. trading bloc. This optimism kept the single currency Euro higher and supported the upward momentum in EUR/USD pair.

On the data front, at 12:45 GMT, the French Final CPI for November came in line with the expectations of 0.2%. At 15:00 GMT, the Italian Trade Balance for October raised to 7.57B against the forecasted 5.40B and supported Euro and added gains in the EUR/USD pair.

On the U.S. front, at 18:30 GMT, the Empire State Manufacturing Index for December declined to 4.9 against the projected 6.3 and weighed on the U.S. dollar that added further gains in EUR/USD pair. The U.S. Import Prices in November fell to 0.1% against the projected 0.3% and weighed on the U.S. dollar and supported the upward momentum in EUR/USD pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November rose to 73.3% against the projected 73.1% and supported the U.S. dollar. The Industrial Production in November also surged to 0.4%against the projected 0.3% and supported the U.S. dollar and capped further gains in EUR/USD pair.

Meanwhile, the lockdown restrictions increased in Europe, given the region’s rising number of coronavirus cases. On late Monday, the U.K. government imposed tighter restrictions on London amid the increased infection rates. It cited that these may be partly linked to a new variant of the coronavirus. From Wednesday, Germany will also enter a lockdown that will include the closure of non-essential stores. Netherland also announced a new five-week lockdown, while Italy was considering more restrictions over the Christmas holidays.

Throughout the region, these lockdown restrictions added pressure on the single currency Euro and capped further gains in the EUR/USD pair on Tuesday.

Daily Technical Levels

Support   Resistance

1.2126       1.2175

1.2099       1.2197

1.2077       1.2224

Pivot point: 1.2148

EUR/USD– Trading Tip

The precious metal gold continues to trade bullish at 1,857, having crossed over double top resistance level of 1,857 level. On the higher side, the metal opens up further room for buying until the next target level of 1,865 and 1,875 level. On the lower side, the precious metal gold may find support at 1,848, and below this level, the metal may drop until the 1,832 level. Let’s consider staying bullish over 1,848 today. The 50 periods EMA supports a bullish bias, keeping the EUR/USD pair in a little bit of buying mode. Simultaneously, the MACD and RSI are also supporting a buying trend; thus, we should look for a buying trade over the 1.2175 level to target the 1.2265 level today. 


GBP/USD – Daily Analysis

 The GBP/USD pair closed at 1.34635 after placing a high of 1.34688 and a low of 1.32800. The GBP/USD pair was among the best performer on the day amid the speculation regarding the prospect of an imminent Brexit deal.

There were speculations mostly amongst Conservative M.P.s that a Brexit deal was close and might be voted in the House of Commons next Monday and Tuesday. This optimism led the GBP/USD pair higher in the market to post gains for the day.

After posting losses for three consecutive days, the currency pair GBP/USD pair rose by nearly 1% on Tuesday after the speculation that there had been progressing on the issue of a level playing field. The European Union negotiator Michel Barnier said that reaching a trade pact with Britain was still possible. At the same time, European Commission Ursula von der Leyen noted that there was some progress made over the sticking points.

British Pound is highly sensitive to Brexit progress, and any news showing optimism regarding the post-Brexit trade deal with the E.U. will have a great impact on the GBP/USD pair. This was the reason behind the sudden surge in GBP/USD currency pair on Tuesday despite the renewed lockdown restrictions by the U.K. government over London.

The Health Secretary of the UK, Matt Hancock, said on Monday that this week London would return to a strict lockdown as the coronavirus cases have soared in the British capital. Hancock said London would move from England’s Tier 2 – high alert local restrictions to Tier 3 – very high alert on Wednesday noon. 

Under the highest restriction level, all hospitality venues, including pubs, restaurants, and cafes, will close except for takeout and delivery. People will avoid unnecessary traveling and reduce the number of journeys. Residents in London will be restricted from meeting in private gardens or outdoor venues.

Meanwhile, on the data front, at 12:00 GMT, the Average Earnings Index from Great Britain raised to 2.7% against the forecasted 2.2% and supported the British Pound that added gains in the GBP/USD pair. The Claimant Count Change from the U.K. raised to 64.3K against the expected 10.5K and weighed on British Pound. The Unemployment Rate from the U.K. dropped to 4.9% from the expected 5.1% and supported the Sterling that added strength to the GBP/USD pair.

From the U.S. side, at 18:30 GMT, the Empire State Manufacturing Index for December fell to 4.9 against the estimated 6.3 and weighed on the U.S. dollar that added further gains in GBP/USD pair. The U.S. Import Prices in November dropped to 0.1% against the estimated 0.3% and weighed on the U.S. dollar and supported the upward momentum in GBP/USD pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November surged to 73.3% against the estimated 73.1% and supported the U.S. dollar. The Industrial Production in November also rose to 0.4% against the estimated 0.3% and supported the U.S. dollar.

Daily Technical Levels

Support   Resistance

1.3338       1.3528

1.3218       1.3595

1.3147       1.3719

Pivot point: 1.3404

GBP/USD– Trading Tip

The GBP/USD pair is trading at 1.3460 level, facing immediate resistance at 1.3475 and 1.3538 level. While the support stays at 1.3430 and 1.3401 level. The RSI and MACD support the buying trend in the market, while Cable has the potential to stay bullish over 1.3400 today. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.


USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.647 after placing a high of 104.150 and a low of 103.604. The USD/JPY pair failed to capitalize on its previous daily gains and dropped on Tuesday over the fears of a new variant of coronavirus and the increased lockdown restrictions over the globe.

The safe-haven appeal in the market returned after the U.K. Health Minister Matt Hancock told parliament that a new variant of the coronavirus associated with faster spread had been identified in southeast England. This led to widespread concern as headlines in the newspaper called this new variant “Super covid” and “mutant covid.”

Matt Hancock added that about 60 different local authorities had recorded coronavirus infections caused by the new variant. He also said that the World Health Organization had been notified, and a detailed study by U.K. scientists has started.

The fear of new and improved disease raised the market’s safe-haven appeal as London went into renewed lockdown restriction of Tier-3 level. Along with London, Germany and Netherland also extended their lockdown restrictions. The rising demand for safe-haven assets added strength to the Japanese Yen that ultimately weighed on the USD/JPY pair.

Meanwhile, on the data front, at 18:30 GMT, the Empire State Manufacturing Index for December declined to 4.9 against the anticipated 6.3. It weighed on the U.S. dollar that added further losses in the USD/JPY pair. The U.S. Import Prices in November fell to 0.1% against the anticipated 0.3% and weighed on the U.S. dollar and added further in the losses of the USD/JPY pair. At 19:15 GMT, the Capacity Utilization Rate from the U.S. for November rose to 73.3% against the anticipated 73.1% and supported the U.S. dollar. The Industrial Production in November also surged to 0.4% against the anticipated 0.3% and supported the U.S. dollar and capped further losses in the USD/JPY pair.

Furthermore, on Tuesday, Dr. Anthony Fauci, the U.S. senior official for infectious diseases, predicted that the U.S. could begin to achieve early stages of herd immunity against the deadly coronavirus by late Spring or Summer. 

Fauci said that to see an impact of the vaccine over the coronavirus spread, almost 50% of people would have to get vaccinated. To achieve herd immunity, 75 to 85% of people would have to get vaccinated. 

Herd immunity occurs when enough people become immune to the disease that the spread of the virus from one person to another person becomes unlikely. Fauci pointed to polio and measles as examples of herd immunity. Despite these positive statements from the top health official from the U.S., the USD/JPY pair failed to reverse its direction upward because of traders’ focus on the new variant of coronavirus.

Daily Technical Levels

Support   Resistance

103.47       104.02

103.25       104.37

102.91       104.58

Pivot Point: 103.81

USD/JPY – Trading Tips

The USD/JPY is trading dramatically bearish, falling below 103.700. This resistance area is extended by a double bottom pattern, which later was violated on the 2-hour timeframe. Below this level, the USD/JPY pair has odds of extending a sell trade until the next support level of 103.211. The 50 EMA and MACD are supporting selling bias. Thus we can expect to sell below 103.700, to target the 103.200 mark. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 15 – Top Trade Setups In Forex – U.K. Labor Market Figures! 

Investor’s eyes will stay on the French Final CPI and Italian Trade Balance due from the European Economy. Economists are expecting no major changes in these inflation and trade balance data. Thus it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures today.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

During Tuesday’s Asian trading session, the EUR/USD currency pair managed to extend its overnight winning streak and sidelined near above the 1.2150 level mainly due to the risk-on market sentiment. That was supported by the upbeat China data and optimism over treatment for the highly infectious coronavirus, which weakens the safe-haven U.S. dollar and contributes to the currency pair gains. Moreover, the upbeat market tone was further boosted by the further U.S. stimulus package’s rising expectations, which add further burden around the U.S. dollar and boost the currency pair. 

On the contrary, the ongoing concerns about increasing COVID-19 deaths and the possibility of economically-painful hard lockdowns become the key factor that kept the lid on any additional gains in the currency pair. As of writing, the EUR/USD currency pair is currently trading at 1.2149 and consolidating in the range between 1.2143 – 1.2165.

As we already mentioned, the market trading sentiment succeeded in extending its previous day bullish bias and still representing positive performance on the day as the bullish appearance of Asia-Pacific stocks and the gains of the U.S. stocks futures tends to highlight the risk-on mood. However, the risk-on market sentiment could be attributed to the vaccine optimism and upbeat China data, which showed the economic recovery increased in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses helped the gold prices to deeper its losses as the gold price is inversely related to the U.S. dollar price. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the contrary, the concerns about rising COVID-19 deaths and the possibility of economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. Across the ocean, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two biggest economies in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is still unchanged as it trades at the 1.2131 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. The 50 periods EMA supports a bullish bias, keeping the EUR/USD pair in a little bit of buying mode. Simultaneously, the MACD and RSI are also in support of a buying trend; thus, we should look for a buying trade over the 1.2175 level to target the 1.2265 level today. 


GBP/USD – Daily Analysis

During Tuesday’s Asian trading session, the GBP/USD currency pair maintained its strong bid tone through the first half of the Asian session and remained positive around the 1.3335 level mainly due to the reports suggesting that the U.K. and the E.U. agreed to extend Brexit talks. Furthermore, the bid tone surrounding the British pound was further bolstered after the E.U.’s chief Brexit negotiator, Michel Barnier, said that they could face every hurdle to reach a post-Brexit trade deal. 

Across the ocean, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3333 and consolidating in the range between 1.3312 – 1.3348. Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, raised expectations for a free trade agreement before the end of Brexit transition period on December 31. However, these hopes were further fueled after the E.U.’s chief Brexit negotiator, Michel Barnier, told them to use every way to reach a post-Brexit trade deal.

Despite the prevalent doubts over the global economic recovery from coronavirus (COVID-19), the market trading sentiment managed to extend its previous day’s positive performance. It remained supportive by optimism over a potential vaccine/treatment for the highly infectious coronavirus. Let me remind you that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermine the safe-haven U.S. dollar.

As in result, the broad-based U.S. dollar failed to stop its previous day bearish bias and drew further offers on the day as demand for the safe-haven assets decreased amid progress toward agreeing on U.S. fiscal stimulus and optimism for a Brexit deal. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses provided an additional boost to the GBP/USD currency pair and remained supportive of the strong intraday positive move. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

On the bearish side, the concerns about rising COVID-19 deaths and the possibilities of the economically-painful hard lockdowns keep challenging the upbeat market performance, which becomes the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. After New York, that was witnessed readiness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

Moving on, the traders seem cautious to place any strong position ahead of the U.K. jobs data, which is due to release later in the day. From the projected view, the U.K. labor market report is anticipated to show that the average weekly earnings, including bonuses, in the 3-months to October, to increase from the previous 1.3% to 2.2%, while ex-bonuses, the wages are seen improving from 1.9% to 2.6% during the stated period. 

In addition to this, the number of people asking for jobless benefits is expected to rise from -29.8K previous to +50K in November. Moreover, the ILO Unemployment Rate may rise from 4.8% to 5.1% during the 3- months ending in October. However, the positive earnings growth tends to underpin the GBP; conversely, the low figures would be seen as negative for the GBP currency.

In the absence of the major data/events on the day, the market traders will keep their eyes on the continuous drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3330 level, maintaining a narrow trading range of 1.3345 – 1.3309. A lack of high-impact economic data drives the choppy session; however, the market will be offering us labor market figures, which are expected to be worse than before, and it may drive selling in the Sterling. Technically, the bearish breakout of the 1.3309 level can extend the selling trend until the 1.3265 level, whereas a bullish breakout can lead it towards the 1.3409 mark. A choppy session can be expected until the pair violates the 1.3345 – 1.3309 range.


USD/JPY – Daily Analysis

During Tuesday’s Asian trading session, the USD/JPY currency pair managed to stop its previous day losing streak and drew some modest bids around well above the 104.00 level. However, the bullish sentiment around the currency pair was supported by the upbeat market mood, which undermined the safe-haven Japanese yen and contributed to the currency pair gains. Apart from this, the latest local lockdowns in the northern hemispheres and the surge in Tokyo’s virus figures added further pressure on the Japanese yen and boosted the currency pair. On the contrary, the broad-based U.S. dollar, triggered by the upbeat market mood, has become the key factor that capped further upside momentum for the currency pair. Currently, the USD/JPY currency pair is currently trading at 104.09 and consolidating in the range between 103.98 – 104.15. 

As we already mentioned, market trading sentiment has been gaining positive traction since the day started and supported by the optimism over the U.S. President-elect Joe Biden’s victory in the Electoral College. As per the latest report, the U.S. President-elect Joe Biden recently won Electoral College and claimed his victory over President Donald Trump by achieving over 270 votes needed. In addition to this, the intensifying hopes of the U.S. covid stimulus also positively impacted the market trading sentiment. These hopes were triggered after Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi urged policymakers toward an early aid package while also indicating good progress in the discussions. 

Across the ocean, the reason behind the risk-on market sentiment could also be attributed to the upbeat China data, which showed the economic recovery improved in November. On the data front, China’s Retail Sales increased by 5.0% year-on-year in November, marking the 4th-successive month of growth. Industrial Production, a gauge of manufacturing, mining, and utility output, rose 7% year-on-year versus October’s 5.9% growth. 

On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus disease also keeps supporting the market trading sentiment. It is worth recalling that the U.S. Food and Drug Administration (FDA) granted permission for emergency use to BNT162b2, the COVID-19 vaccine co-developed by Pfizer (NYSE: PFE) and BioNTech SE (F:22UAy) on December 11. The approval will see the first U.S. deliveries of BNT162b2 later in the day, which lifted hopes that the world’s largest economy will likely see a reduction in the COVID-19 cases. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and undermined the safe-haven assets like the Japanese yen and U.S. dollar.

At the USD front, the broad-based U.S. dollar extended its previous session bearish bias. It failed to gain any positive traction during the Asian trading hours amid risk-on market sentiment. Apart from this, the greenback losses could also be associated with the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the U.S. dollar losses might stop bulls from placing any strong position and keep a lid on any further gains for the USD/JPY currency pair. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped to 90.642.

However, the market trading sentiment was rather unaffected by the fresh lockdown restrictions in Britain and Europe. As per the latest report, the growing virus numbers recall the local lockdowns in the U.K. and the U.S. After New York, a willingness to enter a second full lockdown as the number of COVID-19 cases surge. In addition to this, Germany also extended national activity restrictions. 

In the absence of the major data/events on the day, the market traders will keep their eyes on the ongoing drama surrounding the U.S. stimulus package. In the meantime, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for a fresh direction. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY is hardly moving as it continues to trade sideways below the 104.150 resistance area. This resistance area is extended by a double top level on the 2-hour timeframe. Bullish crossover of 104.156 level can open buying until 104.590 level. Conversely, the support holds around 103.910 level. A bearish breakout of this support can drive the selling trend until the next support area of 103.700 and 103.500. Let’s keep an eye on a breakout before placing any bullish or bearish bets. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 14 – Top Trade Setups In Forex – European Events in Highlights!  

On the news side, the market is expected to report a low impact on economic events, which may have a very slight or no effect on the market. The German WPI m/m, Industrial Production, and German Buba Monthly Report will be released from the European economy. Still, I suspect there’s not going to be any significant movement in the market.

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

During Monday’s Asian trading session, the EUR/USD currency pair succeeded in extending its overnight winning streak and remained well bid around the 1.2140 level mainly due to the risk-on market sentiment. That was supported by the optimism over treatment for the highly infectious coronavirus, which tends to weaken the safe-haven U.S. dollar and contributes to the currency pair gains. 

Moreover, the upbeat market tone was further boosted by the increasing expectations of a further U.S. stimulus package, which boosted the currency pair. On the contrary, the fresh jump in infections and death toll in Europe keeps fueling the doubts over the Eurozone economic recovery, which becomes the key factor that kept the lid on any additional currency pair gains. The EUR/USD is trading at 1.2134 and consolidating between 1.2116 and 1.2145.

The global equity market has been flashing green since the day started and is supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members are still progressing over the much-awaited stimulus talks. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. Across the pond, the optimism over treatment for the highly infectious coronavirus has also been favoring the market trading sentiment. These hopes were sparked after the U.S. Food and Drug Administration’s (FDA) officially authorized the Pfizer-BioNTech covid vaccine for emergency use. Thereby, the upbeat market mood has been playing its major role in underpinning the currency pair.

The broad-based U.S. dollar declined to obtain any positive traction and drew an offer on the day as doubts persist over the global economic recovery from COVID-19. That was witnessed by the U.S. previous week’s downbeat U.S. data. Meanwhile, the risk-on market sentiment also weighed on the U.S. currency. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

On the contrary, the intensifying coronavirus woes across the globe and intensifying lockdowns restrictions in Europe and the U.S. keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the growing virus cases recall the local lockdowns in the U.K. and the U.S. In the meantime, Germany also extended national activity restrictions. Meanwhile, the fears of a full-fledged trade/political war between the West and China also challenge the market’s upbeat mood. The tension between the two largest markets in the world was fueled after the U.S. imposed back to back travel restrictions over the Chinese Communist Party members and their families.

Looking forward, the traders will keep their eyes on the U.S. employment data for November along with Euro German Factory Orders data, which will likely entertain market players amid a light calendar. All in all, the updates surrounding the Brexit, virus, and U.S. stimulus package will not lose their importance. 

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD is trading choppy at the 1.2131 mark, meeting immediate resistance at 1.2160 and 1.2196 marks along with a support mark of 1.2085. Formation of candles beneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Industrial Production and German Buba Monthly Report will remain in highlights. Let’s wait to trade a breakout setup during the European or the U.S. session today. 


GBP/USD – Daily Analysis

During Monday’s Asian trading session, the GBP/USD currency pair managed to stop its previous week’s bearish bias and refresh the intra-day high around above the mid-1.3300 level, mainly due to reports suggesting that the UK PM. Boris Johnson and the European Commission (E.C.) President Ursula von der Leyen agreed to extend the Brexit talks for one more week, which eased fears of a no-deal Brexit and contributed to the currency pair gains. On the other hand, the broad-based U.S. dollar fresh weakness, backed by the market risk-on mood, also played its major role in underpinning the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3325 and consolidating in the range between 1.3291 – 1.3354.

It is worth recalling that the U.K. Prime Minister Boris Johnson and European Commission President announced that they discussed the key issues and decided to go for another round of discussions to reach a historic trade deal, which in turn, boosted the sentiment around the British Pound and contributed to the currency pair gans. In contrast, the British PM Johnson repeats, “I’m afraid we’re still very far apart on some issues.” However, this negative statement failed to leave any meaningful impact on the Pound. 

Despite the lingering doubts about global economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheering the optimism over a possible vaccine for the highly infectious coronavirus disease. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. However, the positive developments over the covid vaccine keep favoring the market risk-on mood. Apart from this, the global equity market was further supported by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

As in result, the broad-based U.S. dollar failed to stop its bearish bias and remained depressed on the day. Moreover, the doubts over the global economic recovery from COVID-19 remains on the card. That was witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair higher. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

Conversely, the intensifying coronavirus woes in the U.K. and the U.S. and intensifying lockdown restrictions keep challenging the upbeat market performance and become the key factor that kept the lid on any additional gains in the currency pair. As per the latest report, the U.S. and U.K. policymakers were forced to impose the local lockdowns once again. In the meantime, Germany also extended national activity restrictions. 

Looking forward, the market traders will keep their eyes on the developments surrounding the Brexit story for some significant direction in the pair. Furthermore, the updates covering the virus and the US-China tussle will also be key to watch.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant; therefore, we should be looking for a sell trade only upon the violation of the 1.3265 level. The lagging technical indicators like 50 EMA suggest selling bias. Thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   


USD/JPY – Daily Analysis

During Monday’s Asian trading session, the USD/JPY currency pair failed to gain any positive traction. They witnessed some modest selling moves near below the 104.00 level, mainly due to the upbeat market sentiment, which tends to undermine the safe-haven U.S. dollar and contributes to the currency pair losses. However, the market trading sentiment was supported by the optimism about the coronavirus treatment and progress in the U.S. stimulus talks. Simultaneously, the market’s upbeat mood weakens the safe-haven Japanese yen, which could be considered one of the key factors that help the currency pair limit its deeper losses. In contrast, Japan’s Tankan data for the 4th-quarter (Q4) marked upbeat figures, which boosted the Japanese yen’s sentiment and contributed to the currency pair losses.  

At the data front, Tankan Large Manufacturing Index for Q4 grew from -27 to -10, against expectations of -15, while the Non-Manufacturing Index increased from -6 market consensus to -5 during the stated period. Moreover, Tankan Large Manufacturing Outlook and Non-Manufacturing Outlook also recorded upbeat numbers of -8 and -6 respectively, against -11 and -7 forecasts in that order.

Despite the lingering doubts over the U.S. economic recovery and the escalating tension between the world’s two biggest economies, the market players continue to cheer the optimism over a potential vaccine for the highly dangerous coronavirus infection. These hopes were fueled after the U.S. Food and Drug Administration’s (FDA) officially approved the Pfizer-BioNTech covid vaccine for emergency use. In turn, the New York Times got help to say that the White House staff members will be among the first to be vaccinated. However, the positive developments over the covid vaccine keep favoring the market risk-on mood and contributed to the currency losses by undermining the safe-haven U.S. dollar.

Apart from this, the global equity market upticks were further fueled by the further stimulus package’s renewed possibilities. As per the latest report, the U.S. Congress members keep working to give the much-awaited stimulus package ahead of this Friday’s deadline. In that way, the latest talks suggest the partition of over $900 billion of aid package with $748 billion and $160 billion likely figures for each bill. 

This, in turn, the broad-based U.S. dollar failed to stop its bearish traction and edged lower on the day. Moreover, the doubts over the U.S. economic recovery from COVID-19 remains on the card, as witnessed by the U.S. previous week’s downbeat U.S. data. On the other hand, the U.S. dollar losses were further bolstered by the Fed’s expectations to keep interest rates low for an extended period at its last policy meeting of 2020. However, the losses in the U.S. dollar becomes the key factor that kept the currency pair lower. The U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.17% to 90.773 by 9:48 PM ET (1:48 AM GMT).

The rising tensions between the United States and China keep challenging the market risk-on tone and might suffer the currency pair into deeper losses. It’s also questioning the market risk-on mood could be the intensifying coronavirus woes in the U.K. and U.S., which leads to the intensifying lockdown restrictions. 

Daily Technical Levels

Support   Resistance

104.04       104.41

103.86       104.60

103.67       104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

During the previous week, the USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Forex Market Analysis

Daily F.X. Analysis, December 11 – Top Trade Setups In Forex on Friday! 

On the news front, eyes will remain on the German Final CPI m/m, which are expected to remain unchanged, and it may not drive any major movement in the market. BOE Gov Bailey is due to hold a press conference about the Financial Stability Report in London. Euro Summit also remains in highlight as the heads of state from the European Union countries are due to discuss the banking union and the capital markets union in Brussels.

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21215 after placing a high of 1.21588 and a low of 1.20633. After falling for four consecutive days, the EUR/USD pair rose on Thursday amid the European Central Bank’s latest decision.

On Thursday, the European Central Bank held its interest rates on its main refinancing operations at 0.00%, marginal lending facility at 0.25%, and the deposit facility at -0.50%. ECB said that it would continue to monitor the exchange rate’s developments about their possible implications for the medium-term inflation outlook.

The European Central Bank expanded its massive monetary stimulus program by another 500 billion euros as the second wave of lockdown measures weighed on the euro area’s economic recovery. It also expanded the emergency bond purchases scheme for nine months worth 1.85 trillion euros and aimed to keep firms and governments afloat until the economy was ready to re-open.

Central Bank also announced that it would hold the interest rates at the same level until the inflation outlook comes close to its below 2% target. The additional support to the Eurozone economy from ECB added that the Eurozone economy will now recover quickly. These hopes added strength in the single currency Euro that helped EUR/USD pair to post gains on Thursday. Meanwhile, on the Data front, at 12:45 GMT, the French Industrial Production for October raised to 1.6% against the expected 0.4% and supported the single currency Euro. From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the expected 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that added strength in the EUR/USD pair on Thursday.

The U.S. dollar was also weak on Thursday as the Unemployment claims rose from their expected level during last week due to increased restrictive measures in the U.S. and supported the EUR/USD pair’s upward trend. Furthermore, the U.S. dollar came under more pressure after releasing additional stimulus by the European Central Bank. The U.S. lawmakers were also unable to sort out disagreements over aid to state and local governments, holding up a broader spending package. The U.S. dollar weakness added further support to the upward momentum of the EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.2044       1.2133

1.2006       1.2186

1.1954       1.2223

Pivot point: 1.2096

EUR/USD– Trading Tip

The technical side of the EUR/USD continues to remain the same as the pair is trading at 1.2103 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. Euro Summit will remain in highlights, and the choppy session is expected until the release of the event.

 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.32900 after placing a high of 1.34108 and a low of 1.32453. The GBP/USD pair declined on Thursday as the meeting between PM Boris Johnson and E.U. Commission President Ursula von der Leyen failed to bridge major gaps between them.

PM Boris Johnson offered his ministers to prepare for the strong possibility of a no-deal Brexit. He said that the E.U.’s current offer was unacceptable because the U.K. could not be treated like its twin. He added that the deal offered by the E.U. was not sensible and was unlike any other free trade deal. He said that it was a way of keeping the U.K. locked in the E.U.’s regulatory orbit.

Johnson added a strong possibility that they would have a solution that will be much more like an Australian & Canadian relationship with the E.U. However, after the meeting, the PM Boris Johnson and E.U. Commission President Ursula von der Leyen agreed that a firm decision should be taken about the future of the talks by Sunday. The talks between the E.U.’s top negotiator Michel Barnier and the U.K.’s top negotiator David Frost will resume Brussels. Whereas, Foreign Secretary Dominic Raab said that it was unlikely the negotiations would be extended beyond Sunday.

At 05:30 GMT, the RICS House Price Balance from the U.K. raised 66% against the estimated 64% and supported British Pound. At 12:00 GMT, the Construction Output in October declined to 1.0% against the expectations of 1.2%. The Gross Domestic Product from Great Britain in October remained flat with expectations of 0.4%. The Goods Trade Balance from the U.K. showed a deficit of -12.0B against the forecasted -9.6B and weighed on British Pound and added losses in the GBP/USD pair. The Index of Services for the quarter also dropped to 9.7% against the expected 9.8% and weighed on Sterling and added further losses in GBP/USD pair. The Industrial Production in October surged to 1.3% against the expected 0.3% and supported British Pound. The Manufacturing Production for October also raised to 1.7% against the projected 0.3% and supported British Pound. 

At 18:30 GMT, the CPI for November surged to 0.2% against the anticipated 0.1% and supported the U.S. dollar that added pressure on GBP/USD pair. For November, the Core CPI also rose to 0.2% against the anticipated 0.1% and supported the U.S. dollar and added losses on GBP/USD pair. The Unemployment Claims from last week increased to 853K against the anticipated 723K and weighed on the U.S. dollar.

Moreover, the E.U. outlined contingency measures for a no-deal Brexit that reflected significant uncertainty whether a deal would be in place on January 1, 2021. This also raised the expectations that a Brexit deal might not be reached and weighed on GBP/USD pair on Thursday.

Daily Technical Levels

Support   Resistance

1.3338       1.3466

1.3280       1.3536

1.3209       1.3594

Pivot point: 1.3408

GBP/USD– Trading Tip

The GBP/USD is trading at the 1.3313 level, holding below an immediate resistance level of 1.3322. On the upper side, the GBP/USD pair can lead to a 1.3390 level, and support stays at 1.3269, which is extended by a double bottom level. Selling bias seems dominant, therefore, we should be looking for a sell trade only upon the violation of 1.3265 level. The lagging technical indicators like 50 EMA is suggesting selling bias, thus we should look for selling trades below 1.3400 and upon breakout 1.3265 level too.   

 


USD/JPY – Daily Analysis

The USD/JPY was closed at 104.212 after placing a high of 104.577 and a low of 104.139. The USD/JPY pair rose in the early trading session on Thursday amid the rising risk sentiment in the market after the stimulus measure from ECB and the vaccine optimism. On Thursday, an independent committee of experts recommended the U.S. Food and Drug Administration to approve the use of Pfizer and BioNtech’s coronavirus vaccine for people over the age of 16. It will be up to the FDA to decide whether to follow the recommendation or not. The agency is anticipated to announce its decision within days, and if it decides to approve the vaccine, then the health care workers could begin receiving the shots almost immediately.

The vaccine optimism in the U.S. raised the risk sentiment in the market as the chances for vaccine approval raised the chance for quick economic recovery and weighed on the safe-haven Japanese Yen, which ultimately added gains in the USD/JPY pair. The European Central Bank announced expanding its debt purchases scheme and further stimulus measures that also added in the market’s risk sentiment and supported the upward trend in the USD/JPY pair after weighing on the safe-haven Japanese Yen.

However, the USD/JPY pair failed to hold its gain on Thursday and started to decline as the U.S. Unemployment claims from last week raised to their highest since September 19 level. The rise in Americans’ jobless claim benefits was due to the states’ increased restrictive measures that halted economic activities. The raised unemployment claims weighed on the U.S. dollar and dragged the USD/JPY pair on the downside. 

On the data front, at 04:50 GMT, the BSI Manufacturing Index for the 4th quarter raised to 21.6 from the expectations of 3.5 and supported the Japanese Yen and weighed on the USD/JPY pair. The Producer Price Index from Japan came in line as expected -2.2%.

From the U.S. side, at 18:30 GMT, the CPI for November rose to 0.2% against the projected 0.1% and supported the U.S. dollar. The Core CPI for November also raised to 0.2% against the estimated 0.1% and supported the U.S. dollar. The Unemployment Claims from last week rose to 853K against the forecasted 723K and weighed on the U.S. dollar that made the USD/JPY pair to lose all of its gains on Thursday.

Daily Technical Levels

Support   Resistance

104.04        104.41

103.86        104.60

103.67        104.78

Pivot Point: 104.23

USD/JPY – Trading Tips

The USD/JPY violation of the symmetric triangle pattern at 104.346 faked out as the safe-haven currency pair reversed trade within the same triangle pattern. The current trading range of the USD/JPY pair remains 104.375 – 103.650, and violation of this range can extend the selling trend until the next support area of 103.200 level. Typically, such a triangle pattern can breakout on either side; this, we should be careful before opening any trade. The market is neutral as investors seem to wind up their positions ahead of the December holidays. Good luck

Categories
Forex Market Analysis

Daily F.X. Analysis, December 10 – Top Trade Setups In Forex – Eyes on ECB Policy Decision! 

On the news front, it’s going to be an important day for the Euro and U.S. dollar as investors await the Main Refinancing Rate and the U.S. CPI figures during the European and the U.S. session. The ECB monetary policy decision, especially the Main Refinancing Rate, is expected to remain unchanged while the Inflation figures can support the U.S. dollar today.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.20811 after placing a high of 1.21471 and a low of 1.20585. On Wednesday, the currency pair EUR/USD continued its bearish trend for the fourth consecutive day amid the deteriorated risk sentiment and higher U.S. yields that supported the greenback. The U.S. dollar was strong on Wednesday as the U.S. Dollar Index (DXY) rose above the 91.00 level, which was the highest in two days. The coronavirus situation in the U.S. has escalated to an alarming level as more than 200,000 Americans tested positive for the coronavirus every day on average. The total number of infections in the U.S. has surpassed 15 million.

Dr. Anthony Fauci, the nation’s top infectious disease expert, warned on Monday that the country was likely to see a Thanksgiving-related spike in coronavirus cases and hospitalizations in another week or so, in the middle of Hanukkah and just ahead of Christmas. The rising number of coronavirus cases in the U.S. raised the appeal for safe-haven and supported the greenback that ultimately added losses in EUR/USD pair.

Meanwhile, another reason for the continuous losses in the EUR/USD pair was the latest news from Great Britain about the coronavirus vaccine. On Wednesday, Britain’s health officials warned people with significant allergies to avoid receiving the Pfizer-BioNtech vaccine as two people reported an adverse reaction.

On the data front, at 12:00 GMT, the German Trade Balance for October showed a surplus of 18.2B against the expected 18.7B and weighed on Euro. From the U.S. side, at 20:00 GMT, the Final Wholesale Inventories for October surged to 1.1% against the forecasted 0.9% and weighed on the U.S. dollar. The JOLTS Job Opening for October also rose to 6.65M against the expected 6.30M and supported the U.S. dollar that added further losses in EUR/USD pair.

The U.S. dollar was also strong onboard after the hopes for further stimulus package were diminished with the White House’s latest proposal. Steven Mnuchin submitted a proposal on Wednesday worth $916 billion. The offer included only $40 billion towards unemployment benefits that were far less than the amount proposed in the package from a bipartisan group of lawmakers worth $180 billion. Democrats rejected the proposal as they have been trying since the CARES ACT for additional financial aid for laid-off workers.

This new proposal from the Trump administration gave mixed signals in the market. Some believed that the stalemate between Republicans & Democrats would remain intact for long to reach a deal. Others believed that the White House has reengaged in talks for the first time since the election and that it was a positive sign that a compromise could be reached before the end of the year. All the stimulus uncertainty added strength to the U.S. dollar and weighed on the riskier EUR/USD pair on Wednesday.

Daily Technical Levels

Support   Resistance

1.2042     1.2131

1.2006     1.2184

1.1954     1.2220

Pivot point: 1.2095

EUR/USD– Trading Tip

The technical side of the EUR/USD continues to remain the same as the pair is trading at 1.2103 level, facing immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. However, the focus is likely to stay on the ECB monetary policy decision, especially the Main Refinancing Rate, which is expected to remain unchanged. The choppy session is expected until the release of the ECB report.

 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.34060 after placing a high of 1.34778 and a low of 1.33455. The GBP/USD pair ended its day in positive territory on Wednesday and climbed above 1.34700 as the final round of talks between UK PM Boris Johnson and the European Commission President Ursula von der Leyen started.

Ahead of the talks, the U.K. Pm Boris Johnson said that the E.U. insisted on terms that no prime minister could accept in EU-UK trade talks. The PM said that a good deal was still there to be done as the E.U. sought an automatic right to retaliate against the U.K. if its labor and environmental standards diverge from theirs. PM Boris Johnson also said that the E.U. could not accept the U.K. as having sovereign control over its fishing waters after Brexit. Major disagreements remain over fisheries, business competition rules, and governance issues.

PM Boris Johnson said that a deal would not be possible if the E.U. insisted that if a new law is passed in the future and if the U.K. did not follow suit, then the E.U. wanted an automatic right to punish the U.K. and retaliate. He also claimed that the E.U. wanted the U.K. to become the only country in the world not to have sovereign control over its fishing waters. He said that he would not believe that any prime minister of this country could accept under these terms. However, German Chancellor Angela Merkel has said that a Brexit deal was still possible but insisted that the E.U. single market’s integrity must be respected.

On Wednesday, PM Boris Johnson arrived in Brussels to find common grounds on significant differences that have stalled the talks for eight months. Over the past couple of days, the optimism has increased that a deal might reach as both sides have successfully reached a post-Brexit arrangement in principle over the Irish border. This optimism kept the British Pound on the upside ahead of the talks and pushed the GBP/USD pair higher. Both sides have confirmed that these final talks’ decision will be revealed on Sunday, and this statement forced investors to lose some of its early daily gains.

Meanwhile, on the USD front, the U.S. dollar was strong across the board. The risk sentiment deteriorated, and safe-haven appeal emerged after the rising number of coronavirus cases posted global economic recovery threats despite the vaccine development. The total number of infections in the U.S. surpassed 15 million on Wednesday, and it was reported that almost 200,000 Americans were tested positive for coronavirus every day in the U.S.

Furthermore, the British Pound lost some of its gains in the late trading session on Wednesday after Britain’s top medical adviser warned people with significant allergies to avoid having Pfizer and BioNtech’s vaccine shots as they could give an adverse reaction. On Wednesday, two people were reported to have an adverse reaction to Pfizer’s coronavirus vaccine in Great Britain and weighed on the local currency that capped further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3301     1.3453

1.3236     1.3542

1.3148     1.3606

Pivot point: 1.3389

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3378, holding below an immediate resistance level of 1.3395. On the higher side, the GBP/USD pair can lead to a 1.3437 level, and support stays at 1.3340, which is extended by an upward trendline. Overall it’s an ascending triangle, and it typically breaks on the higher side; thus, we can expect the GBP/USD price to move until 1.3435.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.231 after placing a high of 104.403 and a low of 104.050. USD/JPY pair extended its gains for the second consecutive day on Wednesday as the U.S. dollar gained traction on the day. The hopes for the second round of massive stimulus package from Congress decreased n Wednesday after the Trump administration came up with a new proposal. The U.S. Secretary State Steven Mnuchin submitted a new proposal for an economic relief package that would offer far fewer unemployment benefits than what has been offered by a bipartisan group of lawmakers.

The unemployment benefits for millions of jobless Americans would be delivered as $180 billion under the framework proposed by a bipartisan group of lawmakers. But in contrast to this, the new package submitted by the Trump administration included $40billion in new funding for unemployment benefits.

The bipartisan effort of $908 billion packages has brought the Democrats and Republicans closer to a compromise on a coronavirus package. However, the new White House proposal of $916 billion was a sharp rejection from Democrats as the White House’s proposal was strongly criticized by House Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer in a joint statement.

Meanwhile, on Wednesday, the U.S. House of Representatives agreed on a one-week extension of federal government funding that would give lawmakers more time to agree on a massive coronavirus relief package. However, the Senate Majority leader Mitch McConnell said that lawmakers were still looking forward to a relief package.

These developments raised the uncertainty related to the U.S. stimulus package, supported the U.S. dollar, and supported the USD/JPY pair’s upward trend.

Meanwhile, on the data front, At 04:50 GMT, the Core Machinery Orders for October raised to 17.1% against the forecasted 2.6% and supported the Japanese Yen. The M2 Money stock for the year from Japan also raised to 9.1% against the estimated 8.9% and supported the Japanese yen that capped further gains in the USD/JPY pair.

On the U.S. front, at 20:00 GMT, the Final Wholesale Inventories for October rose to 1.1% against the anticipated 0.9% and weighed on the U.S. dollar. The JOLTS Job Opening for October also raised to 6.65M against the projected 6.30M and supported the U.S. dollar that added further gains in the USD/JPY pair.

Daily Technical Levels

Support   Resistance

104.10      104.44

103.90      104.60

103.75      104.79

Pivot point: 104.25

USD/JPY – Trading Tips

The USD/JPY has violated the symmetric triangle pattern at 104.346, and it opens further odds of buying until the 104.750 level. The pair has recently disrupted the sideways trading series of 104.200 – 103850. Now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair nearby 103.700 mark. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.700 today. Good luck

Categories
Forex Elliott Wave Forex Market Analysis

GBPUSD Ending Diagonal Completion a Warning Sign for a Trend Reversal?

In our last GBPUSD analysis, we discussed its upward advance in an incomplete ending diagonal pattern. We said that the terminal Elliott wave formation progressed in its fifth wave of Minuette degree identified in blue that belongs to a wave ((c)) of Minute degree labeled in black. Likewise, the wave ((c)) corresponds to the third internal segment of the wave B of Minor degree identified in green. 

Technical Overview

The big picture unveiled the sideways movement in an incomplete corrective formation, which could correspond to an expanding flat pattern. In this regard, after the completion of wave B, the Sterling should start developing wave C, which should lead to a decline of this major pair in a five-wave internal sequence.

On the other hand, the following 8-hour chart reveals the market participants’ sentiment unfolded by the 90-day high and low range, which looks advancing in the extreme bullish sentiment zone. 

The previous chart illustrates the bullish failure in the Wednesday trading session, which couldn’t strike the last high of 1.35394. This failure added to the breakdown of the previous upward trendline plotted in green leads us to expect further declines in the coming trading sessions, likely to the ascending primary trend-line identified in blue.

Short-term Technical Outlook

The intraday Elliott wave view for the GBPUSD pair displayed by the following 2-hour chart exposes the breakdown of the ending diagonal pattern formed on December 07th, confirming the completion of the terminal formation unveiled in the wave ((c)) identified in black. 

Once the Pound found the intraday support at 1.32238, the price action began to bounce in an internal corrective rally subdivided in a three-wave sequence corresponding to wave ((ii)) in black, founding resistance at 1.34779 on the Wednesday trading session.

In this regard, the breakdown of the intraday trend-line that connects the waves ((i)) and (b) should confirm the downward progress of its wave ((iii)) in black, which according to the Elliott wave theory, should be the largest wave of the downward sequence.

The third wave in black could find support in the demand zone between 1.31296 and 1.31064. If the price action continues deteriorating, the Cable could drop toward the next demand zone between 1.29843 and 1.29144.

Summarizing

After the GBPUSD pair made a breakdown of its ending diagonal pattern, is currently moving in a corrective rally corresponding to wave ((ii)), which should give way to a new decline corresponding to the third wave of Minute degree. According to the textbook, this movement should be the largest decline of the current downward sequence and could find support in the demand zone between 1.31296 and 1.31064. Finally, the invalidation level of the current bearish scenario can be found at 1.35394.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 09 – Top Trade Setups In Forex – Brace for BOC Policy! 

On the news front, the economic calendar is filled with the Bank of Canada’s policy rate. The BOC is expected to keep the Overnight Rate rate unchanged at 0.25%, which is likely to drive no major change in the Loonie. The BOC Rate Statement will be worth watching to determine further moves in CAD.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21044 after placing a high of 1.21337 and a low of 1.20952. EUR/USD pair fell on Tuesday for the third consecutive session but remained under consolidation in a tight range. The EUR/USD pair avoided major losses as the Euro remained appealing due to broad weakness in the U.S. dollar. The U.S. Dollar Index fell to its two and a half years lowest level on Tuesday and capped further losses in the EUR/USD pair. The U.S. dollar was weak on Tuesday as the country crossed the threshold of 15 million coronavirus cases, which was the world’s highest total. American hospitals braced to ration care amid staff shortages and warned about the rampant spread of the disease.

Pennsylvania’s governor Tom Wolf said that the coronavirus was running extensively throughout the state and could soon reach the level where hospitals will begin turning away patients. He also said that additional pandemic restrictions might be on controlling the spread of the virus.

Meanwhile, the talks for the second round of coronavirus relief stimulus between Democrats and the Republicans and the agreement of both parties over the bipartisan proposal of a $908 billion stimulus package also weighed on the U.S. dollar. Due to stimulus hopes and the rising number of coronavirus cases, the weak U.S. dollar capped further downside in the EUR/USD pair on Tuesday.

On the data front, at 11:30 GMT, the French Final Private Payrolls for the quarter raised to 1.6% against the expected -1.0% and supported the single currency Euro. At 12:45 GMT, the French Trade Balance showed a deficit of -4.8B against the expected -5.5B and supported Euro. At 15:00 GMT, the quarter raised the Final Employment Change to 1.0% against the forecasted 0.9% and supported Euro. The Revised GDP for the quarter dropped to 12.5% against the expected 12.6% and weighed on Euro. The ZEW Economic Sentiment raised in December to 54.4 against the estimated 37.5 and supported Euro. The German ZEW Economic Sentiment also surged to 55.0 from the projected 45.9 and supported Euro.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October fell to 7.2B against the projected 17.6B and weighed on the U.S. dollar and capped further losses in EUR/USD pair. At 16:00 GMT, the NFIB Business Index fell to 101.4 against the estimated 102.6 in November and weighed on the U.S. dollar that capped further losses in the EUR/USD pair.

At 18:30 GMT, the Revised Nonfarm Productivity for the quarter declined to 4.6% against the expected 4.9% and supported the U.S. dollar and supported the downward momentum in EUR/USD pair. The Revised Unit Labor Costs for the quarter came in as -6.6% against the estimated -8.9% and supported the U.S. dollar. 

At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December compared to the previous 50.0.

Moreover, the Euro remained comparatively appealing due to a more optimistic outlook of the Eurozone’s economy than the U.S. that capped further losses in the EUR/USD pair. The ECB’s policy decision is scheduled for Thursday. If the ECB takes a more hawkish tone, then Euro will rise and vice versa.

Daily Technical Levels

Support   Resistance

1.2086        1.2125

1.2071       1.2149

1.2046       1.2165

Pivot point: 1.2110

EUR/USD– Trading Tip

The EUR/USD is trading at 1.2127 level, finding an immediate resistance at 1.2160 and 1.2196 level along with a support level of 1.2085. Closing of candles underneath the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040. However, the focus is likely to stay on the German Trade Balance, which is due during the European session. Choppy session expected until economic figures show major deviations. The MACD is mixed, suggesting bearish; therefore, the idea will be to open a sell trade below the 1.2175 level today to capture quick green pips. 


GBP/USD – Daily Analysis

The GBP/USD pair closed at 1.33564 after placing a high of 1.33935 and a low of 1.32894. The GBP/USD pair fell on Tuesday for the third consecutive day amid the rising Brexit uncertainty that took its toll on British Pound. The mixed comments from various officials from both sides raised the uncertainty in the market related to the Brexit deal and weighed on British Pound. The British Cabinet Minister Michael Gove announced that they had reached an agreement in principle. The E.U.’s chief negotiator Michel Barnier told European ministers that a deal’s chances were very thin. At the same time, German Minister Michael Roth said there was no substantial progress in the trade talks between the E.U. and the U.K. He added that it was uncertain whether Britain and the E.U. could reach a trade deal.

All this uncertainty in the market weighed on the British Pound and dragged the pair GBP/USD on the downside. Another factor involved in the GBP/USD pair’s downward momentum was the latest move by the U.K. government to drop parts of its controversial internal market bill that paved the way for both sides to meet in Brussels on Wednesday to settle an agreement.

The U.K. government reached a post-Brexit arrangement in principle over the Irish border with the European Union after agreeing to ditch the most controversial parts of its internal markets bill. On Tuesday, the U.K. government said that it would abandon all the Brexit clauses relating to Northern Ireland in the internal market bill in exchange for promises by the E.U. to minimize checks and control due to being imposed on food and medicines going into Northern Ireland from Great Britain from January 01.

A deal on Ireland is reached between the E.U. and the U.K. it was not one of the key sticking points that have held the Brexit talks hostage. The Brexit talks will enter a last decisive phase from Wednesday as the PM Boris Johnson has prepared to travel to Brussels on that day to secure a deal over the European Union’s relations with the U.K. If he failed to reach an agreement with the E.U. It would mean that from the start of next year, the tariffs would be applied to some trade between the U.K. and the E.U. for the first time in almost half a century. U.K. sends almost 43% of its exports to the trade bloc E.U. and tariffs on its exports will be harmful to its economy. Failure to reach a deal will also end many cooperation types between the U.K. and the E.U. over crime, security, and travel.

The British Pound remains under pressure on Tuesday ahead of the final round of talks between PM Johnson and E.U. Commission President Ursula von der Leyen on Wednesday. On the data front, at 05:01 GMT, the BRC Retail Sales Monitor for the Year raised to 7.7%against the forecasted 5.0% and supported British Pound, and capped further losses in GBP/USD pair.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October declined to 7.2B against the estimated 17.6B and weighed on the U.S. dollar. At 16:00 GMT, the NFIB Business Index declined to 101.4 against the expected 102.6 in November and weighed on the U.S. dollar.

At 18:30 GMT, the Revised Nonfarm Productivity for the quarter fell to 4.6% against the expected 4.9% and supported the U.S. dollar. The Revised Unit Labor Costs for the quarter came in as -6.6% against the projected -8.9% and supported the U.S. dollar. At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December compared to the previous 50.0.

Daily Technical Levels

Support   Resistance

1.3297       1.3400

1.3242       1.3448

1.3193       1.3504

Pivot point: 1.3345

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3378, holding below an immediate resistance level of 1.3395. On the higher side, the GBP/USD pair can lead to a 1.3437 level, and support stays at 1.3340, which is extended by an upward trendline. Overall it’s an ascending triangle, and it typically breaks on the higher side; thus, we can expect the GBP/USD price to move until 1.3435.


USD/JPY – Daily Analysis

The USD/JPY pair closed at 104.161 after placing a high of 104.204 and a low of 103.953. The pair posted gains on Tuesday as the market’s risk sentiment improved due to a combination of factors.

The news that Great Britain has started using the Pfizer vaccine on patients from Tuesday increased the risk-on sentiment as the hopes for economic recovery increased. Another factor involved in the rising risk-on sentiment was the rising hopes that the U.S. will soon deliver the second round of stimulus measures.

On late Monday, the Chinese Foreign Minister, Wang Yi, said that Beijing was open to restarting its relationship with the U.S. He also declared that both countries were at a critical historical stage after a year of intensifying tensions. Wang said that U.S. policy on China needed to return to objectivity and rationality. He also said that both sides should struggle to restart the dialogue and get back on the right track and rebuild mutual trust in the next Sino-US relations phase. Wang blamed the growing division between the world’s two biggest economies on some Americans with outdated Cold War mentality and ideological preconceptions. All these developments in vaccine usage, rising hopes for stimulus, and the U.S. and China relationship raised the risk sentiment that weighed heavily on the safe-haven Japanese Yen that ultimately supported the USD/JPY pair on Tuesday.

On the data front, at 04:30 GMT, the Average Cash Earnings for the Year came in as -0.8% against the expected -0.7% and weighed on the Japanese Yen. The Household Spending for the Year dropped to 1.9% against the forecasted 2.7% and weighed on the Japanese Yen and added gains in the USD/JPY pair. At 04:50 GMT, the Bank Lending for the Year came in line with the expectations of 6.3%. The Current Account Balance from Japan showed a surplus of 1.98T against the forecasted 1.83T for October and supported the Japanese Yen.

The quarter’s final GDP also raised to 5.3% against the expected 5.0% and supported the Japanese Yen. AT 04:52 GMT, the Final GDP Price Index for the Year raised to 1.2% against the forecasted 1.1% and supported the Japanese Yen. At 10:00 GMT, the Economic Watchers Sentiment dropped to 45.6 against the expected 52.7 and weighed on the Japanese Yen that supported the USD/JPY pair’s upward trend.

From the U.S. side, at 01:00 GMT, the Consumer Credit for October fell to 7.2B against the estimated 17.6B and weighed on the U.S. dollar. At 16:00 GMT, the NFIB Business Index fell to 101.4 against the estimated 102.6 in November and weighed on the U.S. dollar. At 18:30 GMT, the Revised Nonfarm Productivity for the quarter declined to 4.6% against the forecasted 4.9%, supported the U.S. dollar, and added further gains in the USD/JPY pair. The Revised Unit Labor Costs for the quarter came in as -6.6% against the projected -8.9% and supported the U.S. dollar and supported the USD/JPY pair’s upside momentum. At 20:00 GMT, the IBD/TIPP Economic Optimism came in as 49.0 in December than the previous 50.0.

Meanwhile, the USD/JPY pair’s gains remained limited as the U.S. dollar was under pressure as the country crossed 15 million coronavirus cases, which was the world’s highest total. American hospitals started to give warnings about the staff shortage and extensive spread of the disease. Pennsylvania’s governor Tom Wolf said that the coronavirus was spreading extensively throughout the state and could soon reach the level where hospitals will begin turning away patients. He also said that additional pandemic restrictions might be on controlling the spread of the virus.

Daily Technical Levels

Support   Resistance

104.00       104.27

103.84       104.38

103.73       104.54

Pivot point: 104.11

USD/JPY – Trading Tips

The USD/JPY is trading within a symmetric triangle pattern observed in the 4-hour timeframe. The pair recently disrupted the sideways trading series of 104.600 – 104.200, and now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair nearby 103.700 mark. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.350 and 104.700 today. Good luck

Categories
Forex Signals

GBP/USD Violates Choppy Range – Brace for a Sell Trade! 

The GBP/USD pair bounced off over 1.3263 level, trading at 1.3340 level now. On the 4 hour timeframe, the GBP/USD is consolidating in between a broad trading range of 1.3406 – 1.3263. The Cable may find the next support at 1.3204 level, and below this, the next support can also be found around 1.3100 level today. On the higher side, the resistance hold around the 1.3406 mark. The 50 periods EMA also helps sell bent, while the Sterling is still seeking to close candle beneath 1.3330. If this occurs, we may see a revival of a selling bias in the GBP/USD pair. The MACD and RSI are suggesting selling bais in the pair, and we should look for selling trades below the 1.3350 level today. 


Entry Price – Sell 1.33248

Stop Loss – 1.331

Take Profit – 1.32848

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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Categories
Forex Market Analysis

Daily F.X. Analysis, December 07 – Top Trade Setups In Forex – Eyes on European Events! 

The calendar is a bit muted today, and the market can exabit thin trading volume on the news front. However, the focus can stay on German Industrial Production m/m and Sentix Investor Confidence from the Eurozone, which are expected to perform better than the previous month and may underpin the Euro currency. Besides, the U.K. Halifax HPI m/m will also play a slight role in determining the GBP trend, while economists expect HPI to improve from 0.3% to 0.6% this month.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.21185 after placing a high of 1.21772 and a low of 1.21101. After rising for three consecutive days, the EUR/USD pair dropped on Friday after the initial rally. The downfall in EUR/USD pair on the day came in after U.S. job figures’ release.

In the trading session on Friday, the EUR/USD pair rallied slightly on the back of improved risk sentiment and the U.S. dollar’s weakness. The risk perceived EUR/USD followed the optimism regarding the coronavirus vaccine and moved higher in the early trading session on Friday. Besides, the U.S. dollar’s weakness due to the increased spread of coronavirus and hospitalization rate in the U.S. also added strength to the rising EUR/USD pair.

The U.S. dollar was also weak due to increased hopes for the next round of U.S. stimulus package after the CARES Act passed in March. Democrats and Republicans have agreed over a $908 billion stimulus package, and the expectations have increased that a big stimulus will also be delivered soon. The weak U.S. dollar gave a Pushto EUR/USD pair on Friday and raised its prices above the 1.21700 level.

However, the EUR/USD pair’s gains started to reverse and converted into losses after the release of macroeconomic data from the U.S.

At 12:00 GMT, the German Factory Orders for November raised to 2.9% against the expected 1.4% and supported Euro. At 12:45 GMT, the French Gov Budget Balance came in as -159.9B. At 14:00 GMT, the Italian Retail Sales raised to 0.6% against the forecasted 0.2% and supported Euro.

At 18:30 GMT, the Average Hourly Earnings rose to 0.3% against the anticipated 0.1% and supported the U.S. dollar and added pressure on EUR/USD. The Non-Farm Employment Change declined to 245K against the anticipated 480K and weighed on the U.S. dollar. 

The Unemployment Rate declined to 6.7% against the anticipated 6.8% and supported the U.S. dollar and dragged the EUR/USD pair. The Trade Balance from the U.S. came in as -63.1B against the anticipated -64.7B and supported the U.S. dollar and weighed on EUR/USD pair. At 20:00 GMT, the Factory Orders for November raised to 1.0% against the anticipated 0.8% and supported U.S. Dollar. Most of the U.S. data came in support of the U.S. dollar that resulted in the EUR/USD pair’s downfall on Friday in the late trading session.

Daily Technical Levels

Support  Resistance

1.2101        1.2178

1.2063       1.2215

1.2025       1.2254

Pivot point: 1.2139

EUR/USD– Trading Tip

On Monday, the EUR/USD continues to trade sideways amid mixed NFP figures released on Friday. On the higher side, the EUR/USD may find an immediate resistance at 1.2160 and 1.2196 level. While the closing of candles below the 1.2103 level can send the EUR/USD pair further lower until 1.2080 and 1.2040 level. The MACD is strongly bearish; therefore, the idea will be to open a sell trade below the 1.2175 level today to capture quick green pips. 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.3413 after a high of 1.35390 and a low of 1.34096. The GBP/USD pair rose to its highest level since May 2018 in the early trading session on Friday over the combined factor of Brexit optimism and the weakness of the U.S. dollar. However, the British Pound cut its gains after the E.U.’s Brexit negotiator Michel Barnier paused the talks.

During the early trading session on Friday, the GBP/USD pair rose and started to post gains following the Brexit optimism triggered after the agreement was reached over the Fisheries between the U.K. and the E.U. Another factor involved in the GBP/USD pair’s upward momentum was the U.S. dollar’s weakness.

The U.S. dollar index (DXY) that measures the value of the U.S. dollar against the basket of six currencies fell to its six years, the lowest level of 90.47 on Friday. The losses in DXY were due to a combination of factors, including the rising number of coronavirus in the nation and the rising expectations of the U.S. stimulus package.

The number of new coronavirus cases in the past five days in the U.S. reached about 1 million. The hospitalization rate also increased to an alarming level and hit a record high after 101,487 patients were reported to be hospitalized in a single day. This negative news from the U.S. added further pressure on the U.S. dollar and supported the upward trend in the GBP/USD pair in the early trading session on Friday.

British Pound was under demand on Thursday after the U.K. and E.U. reported that they had reached an agreement over one key sticking issue of Fisheries. Investors started to buy GBP/USD in the early trading session on Friday as they continued following the previous trend.

However, the currency pair GBP/USD pair started to decline on Friday after the release of U.S. macroeconomic data and the announcement from Michel Barnier. The E.U. Brexit negotiator, Michel Barnier, said that he had paused the trade talks with the U.K. and added that the conditions for a deal had not yet been met.

After one week of intensive negotiations in London, the U.K. and E.U. agreed to pause talks because the post-Brexit deal conditions were not met. Barnier said that E.U. Commission president Ursula von der Leyen and PM Boris Johson would try to make progress on a deal in the next meeting that will take place on Saturday.

After these comments by the E.U. top negotiator, the earlier optimism that the deal was imminent could be reached before the end of the week. These updates suggested that talks have reached a very critical stage, and anything could happen. It raised the market’s uncertainty and supported the safe-haven greenback that exerted pressure on GBP/USD pair.

On the data front, at 14:30 GMT, the Construction PMI from Great Britain raised to 54.7 against the projected 52.3 and supported British Pound and limited the losses in GBP/USD pair.

From the U.S. side, at 18:30 GMT, the Average Hourly Earnings surged to 0.3% against the projected 0.1% and supported the U.S. dollar and added losses in GBP/USD pair. The Non-Farm Employment Change fell to 245K against the projected 480K and weighed on the U.S. dollar. The Unemployment Rate fell to 6.7% against the projected 6.8%, supported the U.S. dollar, and dragged GBP/USD pair. The Trade Balance from the U.S. came in as -63.1B against the projected -64.7B and supported the U.S. dollar. At 20:00 GMT, the Factory Orders for November surged to 1.0% against the projected 0.8% and supported U.S. Dollar and added losses in the GBP/USD pair on Friday.

Daily Technical Levels

Support   Resistance

1.3286       1.3441

1.3209       1.3519

1.3131       1.3596

Pivot Point: 1.3364

GBP/USD– Trading Tip

The GBP/USD is falling dramatically from 1.3450 to 1.3230 level by the time of covering this report. On the 4 hour timeframe, the GBP/USD pair has dipped sharply and has already violated the upward channel, which supported the pair around the 1.3350 level. The Cable may find the next support at 1.3204 level, and below this, the next support can also be found around 1.3100 level today. On the higher side, the resistance hold around the 1.3300 mark. The MACD and RSI are suggesting selling bais in the pair, we should look for selling trades below 1.3350 and buying over 1.3185 level today. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.186 after placing a high of 104.242 and a low of 103.736. The currency pair USD/JPY rose on Friday amid the supportive U.S. macroeconomic data and the increased U.S. yields.

On Friday, the U.S. Bureau of Labour reported that only 245K jobs were added to the economy while the unemployment rate fell by 0.2% in November and supported the U.S. dollar.

On the data front, at 18:30 GMT, the Average Hourly Earnings advanced to 0.3% against the anticipated 0.1% and supported the U.S. dollar and added gains in the USD/JPY pair. The Non-Farm Employment Change declined to 245K against the anticipated 480K and weighed on the U.S. dollar capped further gains in the USD/JPY pair. The Unemployment Rate declined to 6.7% against the anticipated 6.8% and supported the U.S. dollar.

The Trade Balance from the U.S. came in as -63.1B against the anticipated -64.7B and supported the U.S. dollar and pushed the pair USD/JPY higher. At 20:00 GMT, the Factory Orders for November advanced to 1.0% against the anticipated 0.8% and supported the U.S. Dollar, and added further gains in the USD/JPY pair.

The U.S.’s supportive data proved good news for the market that pushed the S&P 500 to an all-time high and raised the U.S. 10-year yield by 5bps to 0.97%. The rise in U.S. yields also added strength in the U.S. dollar and added gains in the USD/JPY pair. The less than expected job creation by the U.S. Labor Department made the near-term U.S. fiscal stimulus more likely and exerted pressure on Congress to swiftly avert the labor market’s slowdown.

However, the risk sentiment was also strong in the market after the vaccine optimism escalated and supported the hopes that the economic activities will return to pre-pandemic levels. These hopes, along with the rising expectations that the world’s largest economy will also recover soon as the stimulus package was near to be delivered, added to the risk-sentiment. These risk flows added weight on the safe-haven Japanese Yen that supported the USD/JPY pair and pushed it higher.

Meanwhile, the gains in the USD/JPY pair were also limited because of the rising number of coronavirus cases in the U.S. Over the period of 5 days, the U.S. has recorded about 1 million new coronavirus cases, and the hospitalization rate in the U.S. also hit its highest record by reaching more than 104,000 patients in a single day.

The USD/JPY pair rose on Friday due to supportive U.S. macroeconomic data, higher U.S. yields, and the rising risk sentiment in the market due to global economic recovery hopes.

Daily Technical Levels

Support   Resistance

103.48       104.35

103.13       104.89

102.60       105.23

Pivot point: 104.01

USD/JPY – Trading Tips

The USD/JPY is trading within a symmetric triangle pattern seen in the 4-hour timeframe. The pair lately violated the sideways trading range of 104.600 – 104.200, and now it’s trading at 104.300 level, especially after bouncing off over 103.700 level on the lower side, supporting the pair around 103.700 level. On the downside, the USD/JPY may find support at the 103.200 level upon a bearish breakout of the 103.750 support level. While resistance stays at 104.350 and 104.700 today. Good luck

Categories
Forex Elliott Wave Forex Market Analysis

Is GBPUSD Preparing a Reversal Move?

The GBPUSD pair is seen advancing in an ending diagonal pattern inside an incomplete flat pattern of Minor degree, identified in green, which is in progress since September 01st when the Sterling found resistance 1.34832. 

 

Technical Overview

The previous 8-hour chart exposes the advance in a potential flat pattern (3-3-5), which currently develops its wave B of Minor degree identified in green. In this context, once the current corrective rally ends, the next potential move, according to the Elliott Wave theory, could correspond the wave C. This movement should follow an internal structure subdivided into five wave segments.

Analyzing wave B’s internal structure, currently, we see the price advancing in its wave ((c)) of Minute degree labeled in black. In this context, according to the textbook, the pattern identified in the current wave ((c)) has the shape of an incomplete ending diagonal pattern.

On the other hand, looking at the price and time relationship presented in the first chart, it is interesting to compare the elapsed time of the current wave B with wave A. This comparison suggests that the current wave B can be thought of as a corrective rally; thus, the next move could become an aggressive decline. 

Nevertheless, considering that the current wave B remains in progress, the short-term bias is still on the bullish side.

Technical Outlook

The next 8-hour chart shows the GBPUSD advance in its fifth wave of Minuette degree, labeled in blue, which belongs to the wave ((c)), in black, suggesting a terminal movement.

In this context, the price’s test of the upper sideways channel trendline suggests that the Pound Sterling could develop an expanded flat pattern. This Elliott Wave pattern’s implication makes us consider a strike over the origin of wave A located at 1.34832, where the pair should start to decline, developing its wave C in green.

Finally, both the ending diagonal pattern and the expanded flat pattern requires the pair to confirm the breakdown below the demand zone between 1.33135 and 1.32876. If the pair’s price action confirms this breakdown, it could move down up to the level of 1.29144.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 03 – Top Trade Setups In Forex – Services PMI under Spotlight! 

The focus will remain on the range of services PMI numbers from the Eurozone and U.K. on the data front. Most of the data is anticipated to be neutral; nevertheless, the U.S. Unemployment Claims and ISM Services PMI will be the main highlight of the day.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.21150 after placing a high of 1.21182 and a low of 1.20398. The EUR/USD pair rose to its highest since April 2018 on Wednesday amid rising optimism from the vaccine front and the fiscal stimulus hopes.

On Wednesday, the U.K. regulator approved Pfizer and BioNtech’s vaccine for emergency use to fight against the coronavirus. This news added further support to the already improved risk sentiment in the market and helped the EUR/USD pair to rise as it is a riskier asset.

On the data front, at 12:00 GMT, the German Retail Sales for October raised to 2.6% against the projected 1.3% and supported Euro that added further gains in EUR/USD pair. At 13:00 GMT, the Spanish Unemployment Change dropped to 25.3K against the estimated 54.5K and supported Euro and added further gains in EUR/USD pair. At 14:00 GMT, Italian Monthly Unemployment Rate for October declined to 9.8% against the forecasted 9.9% and supported Euro and helped EUR/USD rise. At 15:00 GMT, the PPI for October raised to0.4% against the forecasted 0.2% and kept the single currency Euro and gave additional support to EUR/USD pair. The Unemployment Rate in Eurozone remained flat at 8.4%.

At 18:15 GMT, the ADP Non-Farm Employment Change for November fell to 307K against the anticipated 433K and weighed on the U.S. dollar and added further in EUR/USD pair. After the release of macroeconomic data on Wednesday, the currency pair EUR/USD raised sharply and surpassed the 1.2100 level as all the data was in favor of it. Meanwhile, the lawmakers in Washington continued their negotiations related to a fiscal stimulus deal to support the U.S. economy. The negotiations weighed on local currency and made the U.S. dollar weak across the board. Furthermore, the optimism about a $908 billion package also boosted the market’s risk sentiment and weighed on the U.S. dollar that added additional gains in EUR/USD pair.

The U.S. dollar was also weak because of the rising number of coronavirus cases in the U.S. On Wednesday, the total number of deaths from coronavirus set a new record in a single day, and hospitalizations also reached an all-time high. On Wednesday, about 100,200 patients of coronavirus were hospitalized in the U.S. The U.S. Dollar Index on Wednesday slumped to its lowest level in more than 30 months at 91.10 and supported the upward momentum of the EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.1971       1.2122

1.1873       1.2175

1.1819       1.2273

Pivot point: 1.2024

EUR/USD– Trading Tip

The bullish bias of the EUR/USD continues to dominate the market as the pair surged further higher until the 1.2117 level. On the higher side, the EUR/USD may find an immediate resistance at 1.2150 and 1.2196 level. Simultaneously, the closing of candles below the 1.2153 level can send the EUR/USD pair further lower until 1.2080. On the 4 hour timeframe, the EUR/USD has formed an upward channel, which is suggesting odds of further buying trend in the pair. The MACD is forming histograms above 0, suggesting odds of an upward trend in the market. Let’s consider the buying trend until the 1.2200 level today. 


GBP/USD – Daily Analysis

The GBP/USD closed at 1.33651 after placing a high of 1.34410 and a low of 1.32875. The British Pound erased gains and slipped to a 3-week lowest level on Wednesday after the E.U.’s chief Brexit negotiator said that progress in talks had stalled and cooled the expectations that a deal was near.

Michel Barnier said that a deal was not guaranteed and signaled that differences over key issues, including access to the U.K. fishing waters and level playing field rules, were still there. A day before this news, reports suggested that post-Brexit trade talks had reached the so-called tunnel. Tunnel refers to a situation where both parties don’t leave until a consensus is reached.

Ahead of the update, there were signs the ongoing impasse was starting to frighten some members, who have called on the E.U. to start preparation for a no-deal scenario. There likely could be another twist to come in Brexit talks in the days ahead with the U.K.’s proposal for a new finance bill. This bill undermines some parts of the original Brexit Withdrawal agreement, and it could dent the little progress in negotiations seen so far.

Whereas, Barnier said that if the U.K. government moved ahead next week with draft clauses in the Finance Bill that were inconsistent with the Withdrawal Agreement, then the talks will come under crisis.

All these negative reports depressed Brexit’s expectations and started to weigh on British Pound that added losses in GBP/USD pair. The time for an end of Brexit transition period on December 31 has come near, and if a deal has not been reached by then, U.K. will have to follow WTO rules and regulations while trading with the E.U.

Meanwhile, on the data front, at 05:01 GMT, the BRC Shop Price Index for the year dropped to -1.8% against the forecasted -1.3% and weighed on British Pound and added pressure on GBP/USD pair. On the U.S. front, at 18:15 GMT, the ADP Non-Farm Employment Change for November dropped to 307K against the anticipated 433K and weighed on the U.S. dollar, and capped further losses in the GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3340       1.3468

1.3263       1.3519

1.3212       1.3595

Pivot point: 1.3391

GBP/USD– Trading Tip

The GBP/USD is trading sideways in between a fresh trading range of 1.3305 – 1.3445. Breakout of this range can lead the Cable price towards the 1.3517 level. The volatility seems low ahead of the Christmas holidays. However, the European session can trigger a buying trend until the 1.3515 level, while support continues to stay at the 1.3305 level. A bearish breakout of the 1.3305 level can trigger selling until the 1.3212 level. The MACD and RSI are suggesting a bullish bias in the market. Let’s consider taking buying trades over 1.3305 and 1.3447 level today.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.410 after placing a high of 104.749 and a low of 104.223. The USD/JPY pair raised for the third consecutive day on Wednesday amid the market’s optimism. However, most of USD/JPY’s daily gains were lost during the late trading session as U.S. stimulus raised.

The risk sentiment in the market was improved after the successful vaccine development from famous drug companies. Pfizer and BioNtech even received approval from the U.K. administration for emergency use authorization of their vaccine on Wednesday. Pfizer & BioNtech became the first in the world to get approval for the widespread use of their vaccine. It means that their vaccine can now be used to prevent the coronavirus officially, and it raised the risk sentiment in the market that ultimately added weight on the Japanese Yen due to its safe-haven nature; thus, it supported the upward momentum of the USD/JPY pair.

The Monetary Base for the year dropped to 16.5% against the forecasted 17.2%. At 09:59 GMT, Consumer Confidence raised to 33.7 against the anticipated 33.0 and supported the Japanese Yen that capped additional gains in the USD/JPY pair on Wednesday. At 18:15 GMT, the ADP Non-Farm Employment Change for November fell to 307K against the estimated 433K and weighed on the U.S. dollar that limited the gains of the USD/JPY pair on Wednesday.

The prospects of a U.S. coronavirus relief package weighed on the greenback and forced the currency pair USD/JPY to lose most of its daily gains. As the $1.4trillion spending bill’s support increased, the top U.S. economic officials on Tuesday advised Congress to present more assistance for small businesses to survive during the pandemic.

Meanwhile, Philadelphia Federal Reserve Bank President Patrick Harker said on Wednesday that due to the increased spread of the coronavirus and delayed fiscal help along with the permanent job loss of some workers, the U.S. economic growth has been moderate.

Harker also forecasted moderate growth for the rest of this year and the first quarter of 2021. He also predicted that the economy would stay below pre-pandemic levels. Harker also said that if the vaccine is widely available by next spring and summer, then the growth will pick up in the second half of the next year. Harker added that more financial support was needed to get the economy to that point and to support low-income households.

Harker also said that the Central Bank’s emergency lending programs should be extended beyond next year as they are set to expire on December 31. Harker’s comments came in after Treasury Secretary Steven Mnuchin asked the Fed to return the unused funds. All these comments added pressure on the U.S. dollar as the continuous demand for a second stimulus bill weighed on local currency.

Daily Technical Levels

Support   Resistance

104.13       104.54

103.95       104.77

103.72       104.95

Pivot point: 104.36

USD/JPY – Trading Tips

The USD/JPY is trading with a sideways trading range of 104.600 – 104.200, holding below an immediate resistance level of 104.600. On the lower side, the safe-haven currency pair may find support at the 103.719 level. The pair seems to disrupt the resistance level of 104.600, and if this happens, the USD/JPY may soar until the next resistance area of 105.030 level. The MACD and RSI support the buying trend, but we should only take buying positions over the 104.600 level today. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, December 02 – Top Trade Setups In Forex – Advance NFP in Focus!

On Wednesday, the eyes will remain on the Fed Chair Powell Testifies, ADP Non-Farm Employment Change and Unemployment Rate from the Eurozone. A primary focus will remain on the ADP Non-Farm Employment Change as this will help investors determine the odds of actual NFP data, which is due on Friday.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD closed at 1.20715 after placing a high of 1.20764 and a low of 1.19243. The EUR/USD surged above 1.2000 level and reached 1.20764 level, the highest level since May 2018 amid the optimism surrounding the coronavirus vaccine and broad-based U.S. dollar weakness.

Many factors were involved in the breakout of the EUR/USD pair on Tuesday above the 1.2000 level, including the latest optimism because of vaccine hopes, monetary stimulus from both sides, and the political certainty for a change. 

Pfizer and BioNtech were the first to report a high efficacy of 95% in a phase-3 coronavirus immunization trial on November 09. After that, many drug companies, including Moderna, AstraZeneca, Novavax, and Oxford University, also followed them. Pfizer and Moderna have already applied for emergency use authorization from the US FDA, and soon after getting the approval, these vaccines will be available for usage. Even Pfizer has sent its first mass shipment of vaccine to Chicago on Monday. All this vaccine optimism pushed the safe-haven U.S. dollar down and raised the risk sentiment in the market that supported the upward momentum of the EUR/USD pair on Tuesday.

On the stimulus front, the European Central Bank and the U.S. Federal Reserve were set to expand their bond-buying schemes. Since the pandemic has started, the stimulus aid from ECB has supported the Eurozone’s economy by allowing governments to spend more. In the United States, the Federal Reserve’s dollar printing triggered a broad risk-on mood that also helped the riskier assets like EUR/USD pair to rise. 

On the Political certainty front, the U.S. elections have declared a final winner- Joe Biden. While outgoing President Donald Trump has been continuously crying foul, his attempts to overturn the elections failed, and investors continued to price the Joe Biden victory and selling the U.S. dollar. Moreover, the nomination of Janet Yellen as Treasury Secretary was also reassuring.

On the E.U. front, the political development in the upcoming Brexit deal has entered a tunnel as an intense final round of talks is in progress, and the results of talks are yet to be declared. All these factors combined and supported the EUR/USD pair’s upward momentum on Tuesday.

On the data front, at 13:15 GMT, the Spanish manufacturing PMI for November declined to 49.8 against the forecasted 50.8 and weighed on Euro. At 13:45 GMT, the Italian Manufacturing PMI also dropped to 51.5 against the projected 52.0 and weighed on the single currency. At 13:50 GMT, the French Final Manufacturing PMI raised to 49.6 from the expected 49.1 and supported Euro. AT 13:55 GMT, the German Final Manufacturing PMI stayed the same at 57.8. The German Unemployment Change came in as -39K against the expected 9K and supported the single currency. At 14:00 GMT, the Final Manufacturing PMI from the Eurozone remained flat with the expected 53.8. At 15:00 GMT, the CPI Flash Estimate for the year dropped to -0.3% against the estimated -0.2% and weighed n Euro. The Core CPI Flash Estimate for the year came in line as expected 0.2%. 

On the U.S. front, at 20:00 GMT, the ISM Manufacturing PMI for November fell to 5.75 against the forecasted 5.9 and weighed on the U.S. dollar and supported the upward momentum of the EUR/USD pair. The Construction Spending for October surged to 1.3% against the estimated 0.8% and supported the U.S. dollar. The ISM Manufacturing Prices for November also surged to 65.4 against the forecasted 65.0 and helped the U.S. dollar. The Wards Total Vehicle Sales from the U.S. declined to 15.6M against the estimated 16.1M and weighed on the U.S. dollar that added further gains in EUR/USD pair.

Given the above manufacturing data, the Eurozone economy’s outlook looks somewhat better than the United States outlook that added extra pressure on the U.S. dollar and helped the EUR/USD pair to place highs above the 1.200 level on Tuesday.

Daily Technical Levels

Support   Resistance

1.1971       1.2122

1.1873       1.2175

1.1819       1.12273

Pivot point: 1.2024

EUR/USD– Trading Tip

The EUR/USD surged dramatically on the back of risk-on sentiment amid positive reports over the COVID19 vaccine, which dragged the pair higher above the 1.2074 level. On the higher side, the violation of the 1.2010 resistance level is now working as a support, and it can lead the pair further higher until 1..2160. The bullish bias remains dominant today, especially over the 1.2015 level. However, the EUR/USD pair has recently formed a tweezers top pattern around 1.2076, suggesting the odds of bearish retracement. In this case, the EUR/USD can also drop until the support level of 1.2017 that marks 23.6% Fibonacci retracement. Let’s keep an eye on the 1.2060 support level today. 


GBP/USD – Daily Analysis

The GBP/USD closed at 1.34224 after placing a high of 1.34424 and a low of 1.33149. After placing losses for three consecutive days, the GBP/USD pair rose on Tuesday and recorded gains on the back of broad-based U.S. dollar weakness and increased Brexit hopes. The GBP/USD pair hit the highs at 1.3400 level on Tuesday over the positive Brexit news after the Times Radio’s Chief Political Commentator Tom Newton Dunn tweeted the U.K. and E.U. trade deal talks have entered a mythical tunnel. Though either side formally confirmed or rejected the “tunnel” status of negotiations after his tweet. 

The tunnel refers to a state of intense negotiation that essentially ends up having some agreement between both parties, and before that, neither side leaves. Though it does not guarantee a deal will be made, it shows a strong willingness/commitment from both sides to work as hard as possible to get a compromise. After this tweet by Dunn, the GBP/USD pair started to gain traction and rise in the financial market due to increased demand for British Pound. 

On the other hand, the GBP/USD pair’s gains could also be attributed to the U.S. dollar’s weakness. The greenback was weak across the board after the release of poor macroeconomic data and the rising number of coronavirus cases in the U.S.

The top U.S. health officials announced plans on Tuesday to begin vaccinating Americans against the coronavirus as early as mid-December amid the increasing death from coronavirus. The nationwide deaths hit the highest number for a single day in six months in the U.S. and raised economic recovery fears that led to the U.S. dollar’s weakness and improved GBP/USD pair.

On the data front, at 20:00 GMT, the ISM Manufacturing PMI for November declined to 5.75 against the estimated 5.9 and weighed on the U.S. dollar and supported the bullish momentum of the GBP/USD pair. For October, the Construction Spending rose to 1.3% against the projected 0.8% and helped the U.S. dollar. The ISM Manufacturing Prices for November also raised to 65.4 against the estimated 65.0 and supported the U.S. dollar. The Wards Total Vehicle Sales from the U.S. fell to 15.6M against the anticipated 16.1M and weighed on the U.S. dollar that added further gains in GBP/USD pair.

On Britain front, at 12:00 GMT, the Nationwide HPI for November raised to 0.9% against the forecasted 0.2% and supported the British Pound that added further gains in GBP/USD pair on Tuesday. At 14:30 GMT, the Final Manufacturing PMI also raised to 55.6 against the expected 55.2 and supported the British Pound that added further gains in GBP/USD pair.

Daily Technical Levels

Support   Resistance

1.3316       1.3342

1.3301       1.3353

1.3290       1.3368

Pivot point: 1.3327

GBP/USD– Trading Tip

The GBP/USD is trading sideways, having violated the narrow trading range of 1.3397 – 1.3304. The market is expected to display choppy sessions with a new limited range of 1.3397 to 1.3452 level. The violation of a triple top resistance level of 1.3397 level is now working as a support, and it may trigger a bounce off in the Cable until 1.3452 and 1.3512 level. Let’s keep an eye on the 1.3397 level to stay bullish above this level today. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.305 after placing a high of 104.576 and a low of 104.180. The USD/JPY pair stayed on a bullish track on Tuesday despite the broad-based U.S. dollar weakness due to increased risk flow in the market. The stock markets have been buoyed by the news that the first coronavirus vaccine could be administered by the end of the year. Despite the acceleration of the pandemic in the U.S. and many other parts of the world, the riskier assets gained on the back of improved risk sentiment due to vaccine hopes. The U.S. Dollar Index (DXY) that measures the U.S. dollar value against the six currencies basket fell to 92 levels on Tuesday.

The pair rose above 104.5 level on Tuesday amid the broad-based risk sentiment in the market over the optimism surrounding the vaccine hopes. However, the gains in USD.JPY pair started to fade away in the late trading session after the US ISM Manufacturing PMI release for November. In November, the declining manufacturing activity was the proof of halted manufacturing activity due to the rising number of restrictive measures in many states of America due to escalated second wave of coronavirus.

At 04:30 GMT, the Unemployment Rate from Japan for October remained flat with the expectations of 3.1%. At 04:50 GMT, the Capital Spending for the quarter from Japan came in as -10.6% against the expected -12.0% and supported the Japanese Yen that limited the USD/JPY pair’s gains. AT 05:30 GMT, the Final Manufacturing PMI from Japan also raised to 49.0 against the expected 48.3 and supported the Japanese Yen that capped further gains in the USD/JPY pair.

On the U.S. dollar front, at 20:00 GMT, the ISM Manufacturing PMI for November fell to 5.75 against the projected 5.9 and weighed on the U.S. dollar that capped further gains in the USD/JPY pair. For October, the Construction Spending surged to 1.3% against the estimated 0.8% and supported the U.S. dollar and added gains in the USD/JPY pair. The ISM Manufacturing Prices for November also rose to 65.4 against the expected 65.0 and helped the U.S. dollar that added additional gains in the USD/JPY pair. The Wards Total Vehicle Sales from the U.S. dropped to 15.6M against the expected 16.1M and weighed on the U.S. dollar that capped further gains in the USD/JPY pair.

Meanwhile, the U.S. death rate because of the COVID-19 virus has also increased to an alarming level as it posted the highest number for a single day in six months. The Top U.S. health official announced plans on Tuesday to begin vaccinating Americans against the coronavirus as early as mid-December. This statement also raised the risk sentiment and added weight on the Japanese Yen that supported the USD/JPY pair’s upward momentum on Tuesday.

Furthermore, On Tuesday, Federal Reserve Chairman Jerome Powell said that the United States economy’s outlook was extraordinarily uncertain due to increased numbers of coronavirus cases that have affected the U.S. economy hardly. 

In his testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs, Powell said that the increasing number of COVID-19 cases in the U.S. and abroad were concerning. He said that until the people were confident about re-engaging the economic activities confidently, full economic recovery was impossible. At the same time, Powell was upbeat over the recent optimistic news on vaccine development worldwide.

Meanwhile, several programs set by the Federal Reserve in March are near to end of the year. In response to this, Powell stated that these programs would help unlock almost $2 trillion funding. After this report, the USD/JPY pair started losing its early daily gains as the greenback became weak across the board due to rising hopes for stimulus measure.

Furthermore, On Tuesday, the outgoing Treasury Secretary Steven Mnuchin also testified before the Senate and urged lawmakers to pass a second stimulus bill quickly. This also added in the U.S. dollar weakness and capped further gains in the USD/JPY pair on Tuesday.

Daily Technical Levels

Support   Resistance

104.03       104.16

103.97       104.23

103.91       104.29

Pivot point: 104.10

USD/JPY – Trading Tips

The USD/JPY is trading with a sideways trading range of 104.600 – 104.200, holding below an immediate resistance level of 104.600. On the lower side, the safe-haven currency pair may find support at the 103.719 level. The pair seems to disrupt the resistance level of 104.600, and if this happens, the USD/JPY may soar until the next resistance area of 105.030 level. The MACD and RSI support the buying trend, but we should only take buying positions over the 104.600 level today. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, December 01 – Top Trade Setups In Forex – Manufacturing PMI Figures in Highlights!

Eyes will remain on the series of Manufacturing PMI figures from the Eurozone, UK, Canada, and the U.S. Although it is a low impact event, it may help determine the market sentiment today. The U.S. Fed Chair Powell will be in highlight as he is due to testify on the CARES Act before the Committee on Banking, Housing, and Urban Affairs, in Washington DC. Lastly, the ECB President Lagarde is also due to speak at an online event hosted by the Atlantic Council; however, it is now expected to significantly influence the Euro.

Economic Events to Watch Today  


EUR/USD – Daily Analysis

The EUR/USD closed at 1.19547 after placing a high of 1.20030 and a low of 1.19235. The currency pair EUR/USD surpassed the 1.20000 level on Monday amid the rising risk sentiment in the market and decreasing U.S. dollar; however, the pair started to lose its gains and ended up posting losses for the day.

The EUR/USD pair continued its bullish movement in the early trading session on Monday as the risk sentiment improved with more positive news from the coronavirus vaccine side. Pfizer has sent the first mass shipment of its vaccine to Chicago on Monday. Whereas, Moderna has applied for emergency use authorization of its vaccine from the US FDA on Monday. Both these latest reports from the vaccine side added further strength in the risk sentiment as it showed progress in steps that would eventually lead to global economic recovery.
The improved risk sentiment because of optimism regarding vaccine and economic recovery gave strength to riskier assets like EUR/USD pair on Monday.

Meanwhile, the U.S. dollar’s weakness also played an essential role in raising the currency pair EUR/USD above the 1.2000 level. The U.S. dollar was weak across the board due to the latest announcement that Congress has started its brief session to pass the next stimulus package for coronavirus.

Furthermore, both sides’ macroeconomic data were also in favor of pushing the currency pair EUR/USD near its mid-August high level on Monday. From the European Union side, The German Prelim CPI for November came in as -0.8% against the forecasted -0.7% and weighed on the single currency Euro. At 13:00 GMT, Spanish Flash CPI for the year came in as -0.8% against the forecasted -0.9% and supported Euro. At 15:00 GMT, the Italian Prelim CPI for November came in as -0.1%against the forecasted -0.2% and supported the single currency Euro.

On the U.S. dollar front, At 19:45 GMT, the Chicago PMI for November dropped to 58.2 against the anticipated 59.4 and weighed on the U.S. dollar. At 20:00 GMT, the Pending Home Sales for October fell to -1.1% against the estimated 1.1% and weighed on the U.S. dollar. However, the gains in the EUR/USD pair failed to remain till the end of the trading day and started to reverse in late trading hours amid the concerns of coronavirus pandemic in Europe. The outlook for the largest economy in the Eurozone, Germany, became increasingly uncertain due to the rising number of coronavirus cases surpassed above 1 Million.

Daily Technical Levels

Support   Resistance

1.1962       1.1976
1.1954       1.1982
1.1948       1.1991
Pivot point: 1.1968

EUR/USD– Trading Tip

The market’s technical side remains mostly unchanged on the back of a limited number of economic events on the calendar. The EUR/USD pair is trading with a bullish bias at the 1.1955 area, facing immediate resistance at the 1.2000 area. Closing of candles above the 1.1915 support level suggests odds of bullish bias in the EUR/USD as this level is extended by an ascending triangle breakout pattern. On the lower side, the EUR/USD may find support at the 1.1912 and the 1.1865 areas; however, bullish bias remains stable over the 1.1912 level.


GBP/USD – Daily Analysis

The GBP/USD closed at 1.33229 after placing a high of 1.33856 and a low of 1.32911. The GBP/USD pair tried to rise and post gains for Monday but failed to do so and continued its bearish streak for the third consecutive day. The rise in GBP/USD pair in the earlier trading session on Monday was due to the hopes that there was little progress in Brexit talks between U.K. and E.U. to settle disputes on several issues, including the fishing quotas.

The rise in British Pound was due to the latest comments from French European Affairs Minister Clement Beaune. On Monday, he said that he hoped to see an agreement in the next few days and called on negotiators to leap required. He acknowledged that two sticking issues, U.K. fishing waters and the so-called level-playing field for business, are still unresolved.

As both sides have already warned each other that the time was running out, a French presidency official said on Monday that Britain should clarify its positions and consult to find a Brexit deal on its association with the European Union. He added that the E.U. also has the interest to fight for, to give fair competition for its businesses and fishermen. He said that the Union has made a clear and balanced offer for a future partnership with Britain and that the E.U. will not accept a substandard deal that would not respect the E.U.’s interests.

On the other hand, Boris Johnson’s officials believed that the Brexit trade deal could be reached within days if both sides continue working in good faith to resolve fishing rights’ big obstacle. The U.K.’s Foreign Secretary Dominic Raab called on the E.U. to recognize that regaining control over British waters was the question of sovereignty for Britain. He said that talks were going good and he believed a deal on fish might be achievable during the final week of talks.

These optimistic and hopeful comments from both sides added strength to the GBP/USD pair on Monday during the early trading session. Still, the currency pair failed to maintain its gains and started to decline and post losses for the day despite the broad-based U.S. dollar weakness due to insufficient macroeconomic data on the day.

On the U.S. dollar front, at 19:45 GMT, the Chicago PMI for November fell to 58.2 against the estimated 59.4 and weighed on the U.S. dollar. At 20:00 GMT, the Pending Home Sales for October also declined to -1.1% against the projected 1.1% and weighed on the U.S. dollar that capped further losses in GBP/USD pair.

From the Britain side, at 14:30 GMT, the M4 Money Supply for October from Britain was dropped to 0.6% against the forecasted 1.0% and weighed on British Pound and added further losses in GBP/USD pair. The Net Lending to Individuals for October also declined to 3.7B against the expected 4.7B and weighed on British Pound and supported the bearish momentum in GBP/USD pair. At 14:32 GMT, Mortgage Approvals for October raised to 98K against the anticipated 85K and supported British Pound and capped further losses in the currency pair.

Meanwhile, the GBP/USD pair’s bearish trend was continued for the third consecutive day because of the rising fears that the U.K. and E.U. will end up having no-deal at the end of the transition period that is due on December 31. Only a month has left behind to resolve both parties’ issues, and none of them has shown any lenience. If both sides failed to reach a deal by the end of the deadline, then the U.K. will be forced to trade with the E.U. under the World Trade Organization terms that will not be good for both sides.


Daily Technical Levels

Support   Resistance

1.3316       1.3342
1.3301       1.3353
1.3290       1.3368
Pivot point: 1.3327

GBP/USD– Trading Tip

The GBP/USD is trading sideways, within a narrow trading range of 1.3397 – 1.3304. The market is likely to exhibit choppy sessions until this narrow trading range gets violated. On the higher side, the GBP/USD is facing a triple top level at the 1.3397 level; however, the bullish breakout of the 1.3397 level can trigger a buying trend until the 1.3454 level. On the lower side, the Cable is supported over 1.3350 level, supported by an upward channel on the four hourly charts. The MACD suggests a buying trend, and we should look for a buy trade over the 1.3325 level or 1.3400 level today.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.289 after placing a high of 104.384 and a low of 103.830. After placing losses for two consecutive days, the USD/JPY pair rose on Monday as the U.S. dollar rebounds.

The broad-based U.S. dollar weakness in the early trading session pushed the USD/JPY pair lower after the hopes for the U.S. stimulus measure raised. However, Wall Street’s main indexes’ poor performance allowed the U.S. dollar to remain firm against its peers. The Dow Jones Industrial Average and the S&P 500 indexes lost about 1.2% and 0.78% respectively on Monday, which added strength to the U.S. dollar and pushed the USD/JPY pair higher.

Meanwhile, on Monday, US Health Secretary Alex Azar said that Americans could get their first shot of coronavirus vaccine before Christmas if all thing went well. These comments from Azar added further strength in risk-sentiment and weighed on the safe metal Japanese Yen that added gains in USD/JPY pair. Furthermore, on Monday, Moderna applied for emergency authorization with the U.S. Food and Drug Administration to start using its vaccine to reduce the effect of coronavirus. Pfizer and BioNtech, which has already filed for similar FDA approval earlier this month, sent the first mass shipment of its COVID-19 vaccine to Chicago through United Airlines on Friday. This positive news from the drug companies added optimism in the market and weighed on the safe-haven Japanese Yen that added further gains in the USD/JPY pair.

On the data front, at 04:50 GMT, the Prelim Industrial Production for October from Japan raised to 3.8% against the forecasted 2.3% and supported the Japanese Yen that capped further gains in the USD/JPY pair. The Retail Sales for the year from Japan stayed the same as expected by 6.4%. At 10:00 GMT, the Housing Starts for the year came from Japan came in as -8.3% against the forecasted -9.0% and supported the Japanese Yen.

On the U.S. dollar front, at 19:45 GMT, the Chicago PMI for November declined to 58.2 against the expected 59.4 and weighed on the U.S. dollar that capped further gains in the USD/JPY pair. At 20:00 GMT, the Pending Home Sales for October fell to -1.1% against the estimated 1.1% and weighed on the U.S. dollar that capped further gains in the USD/JPY pair.
Another factor involved in the risk sentiment that supported the upward momentum of the USD/JPY pair on Monday was the start of a brief session of Congress over the issue of a second stimulus bill for the coronavirus pandemic. The Democrats and Republicans were under dispute over the size of the stimulus package, and now that the Presidency has shifted from Republicans to Democrats after the victory of Joe Biden, it could be expected that a massive stimulus is on its way that would curb the effects of COVID-19 and support the risk sentiment of the market. The improved risk demand added pressure on the safe-haven Japanese yen and supported the USD/JPY pair on Monday. Another factor involved in the gains of the US/JPY pair was Pfizer’s vaccine’s shipment to Chicago on Monday, along with the latest application by Moderna to FDA for emergency use authorization of its vaccine.

Daily Technical Levels

Support   Resistance

104.03       104.16
103.97       104.23
103.91      104.29
Pivot point: 104.10

USD/JPY – Trading Tips

The USD/JPY is trading with a sideways trading range of 104.475, holding below an immediate resistance level of 104.478. On the lower side, the safe-haven currency pair may find support at the 103.719 level. The pair seems to disrupt the resistance level of 104.478, and if this happens, the USD/JPY may soar until the next resistance area of 105.030 level. The MACD and RSI support the buying trend, but we should only take buying positions over the 104.500 level today. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, November 30 – Top Trade Setups In Forex – ECB President Lagarde Speaks!

On the news front, the eye will remain on the ECB President Lagarde Speaks, OPEC Meetings, Chicago PMI, and Pending Home Sales m/m. The U.S. events are expected to perform badly, and the dollar index can bear a bearish hit.

Economic Events to Watch Today  


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.19637 after placing a high of 1.19637 and a low of 1.19060. EUR/USD pair raised near its highest level since August amid the increasing risk-on sentiment. Due to Thanksgiving celebrations, the EUR/USD pair continued to move higher in the upward direction in the absence of U.S. traders.

The risk perceived EUR/USD pair gained traction on Friday after the optimism surrounding the market related to the coronavirus vaccine increased. The hopes for a quick economic recovery also increased along with the vaccine progress and supported the market’s risk sentiment that lifted the global equity market on Friday.

The news regarding vaccines from several candidates and their efficacy rates raised hopes that the economy would come back to its pre-pandemic levels, and that weighed on the safe-haven greenback. The U.S. dollar was also weak across the board after the smooth transition of the White House. Joe Biden is set to take power on January 20, and he is expected to work on a second stimulus bill that would weigh on the U.S. dollar.

The U.S. Dollar Index (DXY) that measures the U.S. dollar value against the six currencies basket was also under pressure and at a new monthly low level at 91.8 level on Friday. The U.S. dollar weakness combined with the vaccine optimism added strength in the EUR/USD pair and helped it reach near its highest since mid-August level.

Meanwhile, the single currency Euro was also strong on Friday after releasing strong macroeconomic data from the European Union. At 12:00 GMT, German Import Prices for October raised to 0.3% against the expected 0.1% and supported Euro. At 12:45 GMT, the French Consumer Spending for October also raised to 3.7% from the forecasted 3.6% and supported the single currency Euro. The French Prelim CPI for November surged to 0.2% against the forecasted 0.0% and supported Euro. The French Prelim GDP for the quarter also surged to 18.7% against the anticipated 18.2% and supported Euro. The Euro’s strength added further gains in the already rising EUR/USD pair and pushed it higher on board.
The rising risk sentiment in the market also supported the stock market worldwide as the outlook of the upcoming year 2021 was improved due to the successful development of the coronavirus vaccine.

Furthermore, the victory of Joe Biden in the U.S. Presidential elections also added positivity to the market mood because he has signaled a more promising approach toward international relations, unlike Trump. Due to his promise of keeping smooth trade relations with China and other countries, the favorable global trade conditions improved the global risk sentiment and supported the riskier assets like EUR/USD pair.

Daily Technical Levels

Support   Resistance

1.1885      1.1934

1.1859      1.1957

1.1836      1.1983

Pivot point: 1.1908

EUR/USD– Trading Tip

The EUR/USD pair is trading with a bullish bias at the 1.1974 area, facing immediate resistance at the 1.1975 area. Closing of candles below this level suggests chances of bearish correction as the pair has entered the overbought zone. However, the bullish breakout of the 1.1975 level can extend the buying trend until the next resistance level of the 1.2010 level. The bullish bias remains dominants today. Let us consider taking a selling trade below the 1.1979 level, and above this, the next target stays at 1.1997.


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.33066 after placing a high of 1.33815 and a low of 1.32856. The GBP/USD pair continued its previous day’s bearish move and extended its losses on Friday amid the increased Brexit worries. Despite the positive risk environment in the market, the currency pair GBP/USD pair posted losses for the day on Friday as the deadline for the transition period was coming closer day by day, and a deal has still not been secured. With only 34 days left for the Brexit-transition period to end, the pressure on both sides, the E.U. and the U.K., has increased to reach a deal by Saturday to complete the required paper-work legislation process in time.

Chief EU negotiator Michel Barnier reached London for in-person talks after completing his quarantine, and this was the only positive news surrounding Brexit. UK PM Boris Johnson has said that the U.K. will prosper with or without a deal, and the likelihood of a deal is dependent on the E.U. There were still disagreements on Fisheries, governance, and level playing field that needed to sort out to reach a deal.

The rising uncertainty regarding Brexit has been weighing on the local currency British Pound. The E.U. Commission President Ursula von der Leyen, along with the E.U. chief negotiator Barnier, said that they do not know if a deal was possible as the talks were in progress.

On Friday, Barnier told MEPs that he was prepared for a further four days of make-or-break Brexit negotiations, with growing skepticism among E.U. member states about the utility of further talks. Barnier has said that he would work through the weekend and then maybe one-or-two more days in the last-ditch attempt to bridge the large gaps between both sides and reach a deal.

E.U. sources have said that there was a growing feeling that the lack of progress and the need to prepare businesses for the consequences of a no-deal British departure from the E.U. made it unwise for talks to continue beyond then. These concerning statements from both sides have weighed on British Pound and added losses in GBP/USD pair.
Whereas, the U.K.’s foreign minister Dominic Raab said on Sunday that the next week would be very significant for Brexit, in reply to how near the deadline was in trade talks with the European Union. He said that this was a very significant week, the last real major week, subject to further postponement.

As the last 4-6 days for securing a Brexit deal have reached, the local currency pressure also increased and weighed on Sterling that ultimately weighed o GBP/USD pair ahead of any decision despite the improved risk sentiment in the market because of vaccines progress.

Daily Technical Levels

Support   Resistance

1.3319     1.3397
1.3281     1.3437
1.3241     1.3475
Pivot point: 1.3359

GBP/USD– Trading Tip

The GBP/USD traded in line with our previous forecast to hit the support level of 1.333, which is extended by an upward channel. On the higher side, Cable may find resistance at 1.3400 level that’s extended by the double top pattern on the two-hour timeframe. Simultaneously, the bullish crossover of the 1.3400 level is likely to open additional room for buying until the 1.3446 level. On the 4 hour timeframe, the GBP/USD pair has formed a bullish channel that supports the pair at the 1.333 area, and violation of this level on the lower side can drive a sharp selling trend until the 1.3270 mark. The RSI and MACD are suggesting a selling trend in sterling. However, I will prefer to open a buying trade over the 1.3330 area and selling trade below the same level today.


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.064 after placing a high of 104.279 and a low of 103.904. Despite the improved risk-on market sentiment, the USD/JPY pair dropped for the second consecutive session amid the U.S. dollar weakness. The U.S. dollar weakness was driven by the increased expectations of a large-scale stimulus from the new Biden administration to combat the coronavirus pandemic. Joe Biden has been fighting to provide massive stimulus support to the economy to fight against the COVID-19 pandemic. As he has won the U.S. Presidential elections and is now due to take power on January 20, the chances for a massive stimulus fiscal support to the economy has increased and weighed on the U.S. dollar.

The U.S. Dollar Index (DXY) that tracks the greenback against a basket of six other currencies was down by 0.1% to a 3-months lower level at 91.8. The trade market volume was also limited, keeping the U.S. dollar under pressure due to Thanksgiving Holiday in the U.S. as many traders were enjoying a long weekend.

Meanwhile, the environment around U.S. politics also got better with President Trump’s latest decision to leave office regarding Electoral College votes for Biden. This smooth transition of power in the White House also supported the risk-on market sentiment and weighed over the safe-haven greenback that added losses in the currency pair USD/JPY.
Furthermore, on the data front, at 04:30 GMT, the Tokyo Core CPI for the year came in as -0.7% against the expected -0.6% and weighed on the Japanese Yen and capped further losses in the USD/JPY pair on Friday.
The risk-on market sentiment failed to impress the USD/JPY buyers. The traders were more focused on the U.S. dollar’s weakness instead of the rising optimism surrounding the global economic recovery due to vaccine development.

Several candidates worldwide, including Pfizer & BioNtech, Moderna, and AstraZeneca, have reported a 60-95% efficacy rate of their vaccine ad said that it would be available for use within weeks as some have applied for US FDA approval for emergency authorization use.

AstraZeneca vaccine is considered the cheapest vaccine as it can be stored at ordinary room temperature or refrigerator temperature, but it requires two dosages to reach a 90% efficacy rate. The hopes for global economic recovery and the outlook for 2021 have improved and weighed on the safe-haven U.S. dollar that ultimately added pressure on the USD/JPY pair.

Daily Technical Levels

Support   Resistance

104.27      104.63

104.09      104.79

103.92      104.98

Pivot point: 104.44

USD/JPY – Trading Tips

The USD/JPY pair’s recent price action has violated the choppy trading range of 104.700 – 104.056. On the lower side, the USD/JPY pair can drop further until the next support level of 103.667 level, especially after the breakout of the 104.150 support level. On the higher side, a bullish breakout of 104.700 resistance can extend the buying trend until the next resistance area of 104.700 and 105.063 level. On the lower side, the support continues to hold around the 103.667 level. The MACD suggests selling bias in the USD/JPY pair; thus, we should consider selling trade below 104.150 and buying above the same. Good luck!

Categories
Forex Market Analysis

Daily F.X. Analysis, November 26 – Top Trade Setups In Forex – Thanksgiving Day! 

The economic calendar is a bit muted amid the Thanksgiving holiday. Most Forex brokers remain open for every holiday except Christmas and New Year’s Day. Stock markets and banks have slightly different holiday schedules. In addition to this, the eyes will remain on ECB Monetary Policy Meeting Accounts during the European session. It’s a detailed record of the ECB Governing Board’s most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. 

Economic Events to Watch Today  

  


EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.19136 after placing a high of 1.18959 and a low of 1.18334. EUR/USD pair extended its upward momentum on Wednesday amid the broad-based U.S. dollar weakness and the rising optimism around the market. 

The risk sentiment was triggered by the latest vaccine development that suggested a quick economic recovery and pushed riskier assets like EUR/USD pair on the higher levels. The currency pair EUR/USD rose and placed fresh highs on Wednesday after reaching its highest level since mid-August.

The U.S. dollar was weak on Wednesday after the release of mixed and depressing data from the U.S. The Unemployment claims rose unexpectedly and weighed on the U.S. dollar, and supported the upward momentum in EUR/USD pair.

On the data front, there was no data from the Europe side on Wednesday, while from the U.S., at 18:30 GMT, the Prelim Gross Domestic Product for the third quarter came in line with the anticipations of 33.1%. The Unemployment Claims from last week rose to 778K against the projected 732K and weighed on the U.S. dollar. The Core Durable Goods Orders for October rose to 1.3% against the estimated 0.5% and supported the U.S. dollar. The Durable Goods Orders also rose to 1.3% from the projected 1.0% and helped the U.S. dollar. The Goods Trade Balance from the U.S. for October came in as forecasted -80.3B. The Prelim Wholesale Inventories for October rose to 0.9% against the estimated 0.4% and weighed on the U.S. dollar that added strength to EUR/USD pair.

At 18:36 GMT, the Prelim GDP Price Index for the third quarter also remained as expected at 3.6%. At 20:00 GMT, the Revised UoM Consumer Sentiment for November also came in line with the projections of 76.9. The Core PCE Price Index for October remained flat with the predictions of 0.0%. The New Home Sales for October surged to 999K against the anticipated 972K and supported the U.S. dollar. The Personal Income declined to -0.7% from the projected 0.0% and weighed on the U.S. dollar added in the gains of EUR/USD pair. The Personal Spending raised to 0.5% from the forecasted 0.4% and supported the U.S. dollar. The Revised UoM Inflation Expectations also came in line as expected at 2.8%.

On Wednesday, the European Central Bank released its review on the economy’s financial stability. The central bank warned that European banks would not see profits return to the pre-pandemic level before 2022. According to ECB, the Eurozone leaders have struggled to make sizeable profits over the last decade after the 2008 global financial crisis with more robust regulatory scrutiny and low-interest rates. While the recent coronavirus crisis has worsened bottom lines further, and that will continue to affect the financial sector in the coming months.

In simple words, the banks’ profitability will remain weak, which could hurt their ability to lend money to businesses and individuals that would also reflect the economy’s weak health. These comments from ECB failed to break the upward momentum of the EUR/USD pair on Wednesday.

Daily Technical Levels

Support   Resistance

1.1888     1.1936

1.1861     1.1957

1.1841     1.1984

Pivot point: 1.1909

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at the 1.1936 level, holding below an immediate resistance level of 1.1979. On the higher side, the EUR/USD pair may find resistance at 1.1979, and a bullish breakout of 1.199 level can extend the upward trend until 1.1942. On the 2 hour timeframe, the EUR/USD pair has violated the symmetric triangle pattern that was extending resistance at the 1.19052 level, and now this level is working as a support. Let’s consider taking a buying trade over the 1.1905 level, and above this, the next target stays at 1.1997.


GBP/USD – Daily Analysis

The GBP/USD pair closed at 1.33864 after a high of 1.33935 and a low of 1.33037. GBP/USD pair extended its gains for the 4th consecutive session on Wednesday amid the U.S. dollar weakness and the rising global market confidence due to vaccine progress. Meanwhile, the currency pair GBP/USD also remained under pressure on Wednesday after the Brexit uncertainty returned to the market.

The GBP/USD pair has been trading with an upside bias since the start of this week due to rising optimism in the market regarding the latest vaccine developments. Pfizer and BioNtech first reported its vaccine’s efficacy rate, followed by Moderna and AstraZeneca within two weeks. The back to back vaccine progress and the fact that Pfizer and BioNtech have already filed for emergency use authorization of their vaccine and others being in line for it has further supported the market’s risk sentiment.

The risk perceived GBP/USD pair gained traction and saw a jump in demand on expectations that the U.K. and the E.U. were getting closer to reaching a deal on Brexit. However, on Wednesday, the lack of recent progress raised uncertainty in the market and weighed on British Pound.

The French Foreign Minister Jean-Yves Le Drian recently commented that British proposals in the latest negotiations were insufficient. He also accused the U.K. of slowing talks over secondary subjects and playing with the calendar. He urged that securing a deal over fisheries will not be the adjustment variable in the talks.

Meanwhile, a BBC reporter Katya Adler also tweeted that E.U. sources have said that there were doubts about the E.U. Brexit negotiator Michelle Barnier going to London to negotiate once he leaves quarantine on Friday and that the talks were not going well. These updates were also confirmed by the President of the European Commission, Ursula von der Leyen, who said on Wednesday morning that she could not say if there will be a deal and the next few days would be decisive.

All this Brexit news dented the expectations that the two sides will eventually reach a deal on key sticking points. However, market participants decided not to react to such news for Wednesday and continued following the market’s optimism.

On the data front, at 18:30 GMT, the Prelim Gross Domestic Product for the third quarter remained flat with the expectations of 33.1%. The Unemployment Claims from last week surged to 778K against the anticipated 732K and weighed on the U.S. dollar. 

The Core Durable Goods Orders for October raised to 1.3% against the forecasted 0.5% and supported the U.S. dollar. The Durable Goods Orders increased to 1.3% from the estimated 1.0% and helped the U.S. dollar. The Goods Trade Balance from the U.S. for October remained flat at -80.3B. The Prelim Wholesale Inventories for October raised to 0.9% against the projected 0.4% and weighed on the U.S. dollar that added strength to GBP/USD pair.

At 18:36 GMT, the Prelim GDP Price Index for the third quarter also came in line with the projections of 3.6%. At 20:00 GMT, the Revised UoM Consumer Sentiment for November also remained flat at 76.9. The Core PCE Price Index for October stayed the same at 0.0%. The New Home Sales for October raised to 999K against the estimated 972K and supported the U.S. dollar. The Personal Income fell to -0.7% from the forecasted 0.0% and weighed on the U.S. dollar added in the GBP/USD pair’s gains. The Personal Spending rose to 0.5% from the projected 0.4% and supported the U.S. dollar. Revised UoM Inflation Expectations also remained flat at 2.8%.

Daily Technical Levels

Support   Resistance

1.3325     1.3416

1.3269     1.3451

1.3235     1.3507

Pivot Point: 1.3360

GBP/USD– Trading Tip

The GBP/USD is trading bullish around 1.3396 level, facing resistance at 1.3400 level. The resistance level is extended by the double top pattern at 1.3400 level, and a bullish crossover of 1.3400 level is likely to open further room for buying until 1.3446 level. On the 4 hour timeframe, the GBP/USD pair has formed a bullish channel that supports the pair at the 1.333 area. The RSI and MACD are suggesting a buying trend in sterling. However, I will prefer to open a buying trade over the 1.3396 area today. 


USD/JPY – Daily Analysis

The USD/JPY pair closed at 104.456 after a high of 104.596 and a low of 104.253. The USD/JPY pair stayed relatively low, around 104.5 level for the majority of the day, and remained more down during the American trading hours due to mixed macroeconomic data releases from the U.S.

The U.S. Dollar Index (DXY) edged lower in the late American session, remained at the 91.97 level, and kept the U.S. dollar depressed. On the data front, at 18:30 GMT, the Prelim Gross Domestic Product for the third quarter remained flat at 33.1%. The Unemployment Claims from last week rose to 778K against the expected 732K and weighed on the U.S. dollar. The Core Durable Goods Orders for October rose to 1.3% against the expected 0.5% and supported the U.S. dollar. The Durable Goods Orders surged to 1.3% from the anticipated 1.0% and helped the U.S. dollar. 

The Goods Trade Balance from the U.S. for October remained flat with the expectations of -80.3B. The Prelim Wholesale Inventories for October rose to 0.9% against the estimated 0.4% and weighed on the U.S. dollar.

At 18:36 GMT, the Prelim GDP Price Index for the third quarter remained flat at 3.6%. At 20:00 GMT, the Revised UoM Consumer Sentiment for November stayed at 76.9. The Core PCE Price Index for October came in line with the expectations of 0.0%. The New Home Sales for October surged to 999K against the projected 972K and supported the U.S. dollar. The Personal Income dropped to -0.7% from the expected 0.0% and weighed on the U.S. dollar. The Personal Spending surged to 0.5% from the forecasted 0.4% and supported the U.S. dollar. The Revised UoM Inflation Expectations also came in line with the anticipations of 2.8%.

The rising unemployment claims and declined personal income weighed on the local currency while the durable goods orders and new home sales, along with the personal spending, supported the U.S. dollar on Wednesday.

Meanwhile, from the Japanese side, the year’s SPPI declined to -0.6% from the forecasted -0.5% and weighed on the Japanese Yen. At 09:59 GMT, the BoJ Core CPI for the year raised to 0.0% from the forecasted -0.1% and supported the Japanese Yen that added weight on the USD/JPY pair on Wednesday.

The currency pair USD/JPY remained bullish throughout the day despite the U.S.’s mixed economic data on the back of rising optimism in the market. The global market sentiment remained confident due to the rising number of vaccine candidates reporting progress. The race to file for emergency use authorization of vaccine started with Pfizer and BioNtech has extended to AstraZeneca and Moderna that has helped raised hopes for a pre-pandemic economic environment and supported the risk sentiment.

The rising risk sentiment added weight on the safe-Haven Japanese Yen and supported the USD/JPY pair’s upward momentum on Wednesday. Another factor involved in the USD/JPY pair’s upward movement was the beginning of the transition of the presidency of President-elect Joe Biden.

Daily Technical Levels

Support   Resistance

104.27     104.63

104.09     104.79

103.92     104.98

Pivot point: 104.44

USD/JPY – Trading Tips

The USD/JPY continues to trade in a fresh choppy range of 104.700 – 104.056 level. On the higher side, a bullish breakout of 104.700 resistance can extend the buying trend until the next resistance area of 104.700 and 105.063 level. On the lower side, the support continues to hold around 104.056 and 103.667 level. The MACD suggests an overbought situation of the USD/JPY pair; thus, we should look for selling trade below 104.598 and buying above the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, November 25 – Top Trade Setups In Forex – Unemployment Claims Eyed! 

The economic calendar is filled with medium impact economic events such as Unemployment Claims, UoM Consumer Sentiment, and Prelim GDP q/q from the United States on the news front. The market may show some price action during the U.S. session on the release of U.S. Jobless Claims.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18897 after placing a high of 1.18959 and a low of 1.18334. After placing losses for two consecutive days, the EUR/USD pair rose and started to post gains on Tuesday amid the rising optimism and risk sentiment surrounding the market.

The safe-haven appeal suffered after AstraZeneca’s latest news that its vaccine could reach a 90% efficacy rate on the second dosage from 70% in the first one. However, the EUR/USD pair traders remained confused on Tuesday and moved the currency pair between gains and losses throughout the day and ended the day with gains as optimism regarding vaccine overshadowed the U.S. dollar’s strength. The U.S. dollar was strong in the market ahead of Wall Street’s opening; however, it fell under selling pressure after the U.S. Consumer Confidence fell in November. 

On the data front, at 12:00 GMT, the German Final GDP for the third quarter raised to 8.5% against the forecasted 8.2% and supported the single currency Euro that added further gains in EUR/USD pair. AT 14:00 GMT, the German IFO Business Climate for November also raised to 90.7 against the expected 90.3 and supported EUR/USD pair. At 19:00 GMT, the Housing Price Index for September elevated to 1.7% against the projected 0.8% and supported the U.S. dollar from the U.S. side. 

The S&P/CS Composite -20 HPI for the year also surged to 6.6% against the expected 5.3% and supported the U.S. dollar that ultimately capped further gains in EUR/USD pair. At 19:59 GMT, the Richmond Manufacturing Index dropped to 15 points from the projected 20 and weighed on the U.S. dollar that added gains in EUR/USD pair. The most awaited C.B. Consumer Confidence from the U.S. was released at 20:00 GMT also fell to 96.1 against the anticipated 97.7 and weighed on the U.S. dollar that added further gains in EUR/USD pair on Tuesday.

Meanwhile, the reports that the U.S. President Trump has agreed with the transition process with Joe Biden and that the White House has given the go-ahead to Biden raised the risk sentiment and added further gains EUR/USD pair. Furthermore, the vaccine hopes also kept the market sentiment improved with the news that the new vaccine developed by AstraZeneca, a British Pharmaceutical, can provide 90% protection against the coronavirus and be cheaper against the previous Pfizer and Moderna due to its comfortable storage facility. These reports raised hopes that the global economy will start recovering now, and the riskier asset EUR/USD pair gained traction and started posting gains.

Daily Technical Levels

Support   Resistance

1.1851     1.1911

1.1814     1.1934

1.1791     1.1972

Pivot point: 1.1874

EUR/USD– Trading Tip

The EUR/USD is trading with a bullish bias at the 1.1895 level, holding below an immediate resistance level of 1.1912. On the higher side, the EUR/USD pair may find resistance at 1.1912, and a bullish breakout of 1.1912 level can extend the upward trend until 1.1942. On the 2 hour timeframe, the EUR/USD pair was supported by an upward trendline, which got violated, and now the same trendline is supporting EUR/USD pair at 1.1862. Let’s look for a selling trade below the 1.1866 level today. 


GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.33615 after a high of 1.33802 and a low of 1.32929. The currency pair GBP/USD continued its bullish movement on Tuesday for the 3rd consecutive day. The GBP/USD pair continued getting support from the British Pound’s strength after the rising Brexit optimism in the market. The hopes that a Brexit deal will be reached soon between the U.K. and the E.U. kept underpinning the Sterling and forced GBP/USD pair to remain on the market’s positive side.

Although nothing has been confirmed about the Brexit deal, the talks between both nations have been extended into this week. On Tuesday, a member of the Bank of England’s monetary policy committee said Tuesday that vaccine news had provided some light at the end of the tunnel.

He also said that he saw a long-term scarring effect from the coronavirus outbreak. He added that it was too early to say that vaccine news will significantly improve the Bank’s economic outlook for 2021. He said that even if the economy came back because of the vaccine, it would have to face the economy-Brexit’s further long-term problem.

On the data front, at 16:00 GMT, the CBI Realized Sales for November came in as -25 against the forecasted -34 and supported British Pound and added in the gains of the GBP/USD pair. At 19:00 GMT, the Housing Price Index for September rose to 1.7% against the expected 0.8% and supported the U.S. dollar from the U.S. side. The S&P/CS Composite -20 HPI for the year also raised to 6.6% against the estimated 5.3% and helped the U.S. dollar that ultimately capped further gains in GBP/USD pair. At 19:59 GMT, the Richmond Manufacturing Index fell to 15 points from the anticipated 20 and weighed on the U.S. dollar that added gains in GBP/USD pair. The most awaited C.B. Consumer Confidence from the U.S. was released at 20:00 GMT, also fell to 96.1 against the projected 97.7 and weighed on the U.S. dollar that added further gains in GBP/USD pair on Tuesday.

Furthermore, the GBP/USD pair was also supported by the latest optimism in the market that had kept the risk-on market sentiment improved. The risk perceived British Pound was supported by the risk sentiment raised by the AstraZeneca vaccine news. Its vaccine was proven to be 90% effective in the second dosage. It was said to be cheaper as it can be stored in an ordinary refrigerator compared to Pfizer, and Moderna’s vaccines that provide 95% protection against the virus were not so easy to store. This optimism also kept the market’s risk sentiment on the upper side and continued supporting the GBP/USD pair on Tuesday.

Daily Technical Levels

Support   Resistance

1.3289     1.3312

1.3274     1.3320

1.3266     1.3336

Pivot point: 1.3297

GBP/USD– Trading Tip

The GBP/USD traded bearishly at 1.3340, having bounced off over the support area of the 1.3292 level. On the higher side, the pair may go after the resistance level of 1.3394. Over there’s an upward trendline that is supporting Sterling on the 2-hour timeframe. The Cable below the 1.3292 level may find support at the 1.3240 level while the RSI and MACD support buying. Thus we should consider taking buying trade over the 1.3292 level to target 1.3394. 


USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.439 after placing a high of 104.759 and a low of 104.144. The pair USD/JPY seesawed on Tuesday as it moved in an upward direction in early trading hours and reached near 104.76 level while in the late trading session, the USD/JPY pair started to lose its earlier gains and continued its bearish bias. The selling bias in the currency pair USD/JPY raised on Tuesday after posting massive gains on Monday amid the mixed market sentiment. The safe-haven Japanese Yen was under pressure on Tuesday after the positive market mood circulated due to progress in AstraZeneca’s coronavirus vaccine.

The equity market rallied after the latest optimism regarding the 90% adequate protection against the coronavirus with a comfortable storage facility compared to Pfizer’s and Moderna vaccine’s 95% protection against the virus with a difficult storage facility. The market participants continued following the optimism and shifted towards riskier assets against the safer ones.

The equity market was also boosted on Tuesday, with Dow Jones moving up at 30,000 points and the three main indexes in Wall Street rising by 1.5% each. The risk rally in Wall Street added pressure on the safe-haven Japanese Yen and supported the USD/JPY pair’s upward momentum on Tuesday. The USD/JPY pair could not remain on the upper side for long and started to lose its earlier gains after releasing the U.S. Macroeconomic data. At 19:00 GMT, the Housing Price Index for September from the U.S. rose to 1.7% against the anticipated 0.8% and supported the U.S. dollar. The S&P/CS Composite -20 HPI for the year also raised to 6.6% against the estimated 5.3% and helped the U.S. dollar. At 19:59 GMT, the Richmond Manufacturing Index was dropped to 15 points from the forecasted 20 and weighed on the U.S. dollar that added pressure on the USD/JPY pair. The most awaited C.B. Consumer Confidence from the U.S. was also released at 20:00 GMT that fell to 96.1 against the estimated 97.7 and weighed on the U.S. dollar that ultimately added in the losses of the USD/JPY pair on Tuesday.

The decline in Consumer Confidence in November weighed on the local currency U.S. dollar as the rising number of coronavirus cases in the U.S. was raising questions over the economic recovery in the absence of further stimulus aid. The talks were set to resume between Republicans and Democrats to discuss the possibility of delivering an additional aid package in December.

Furthermore, the latest news from the White House that the U.S. President-elect Joe Biden was formally given the go-ahead by the federal agency to begin his transition to the presidency also capped further losses in the USD/JPY pair on Tuesday. The U.S. General Services Administration (GSA), an independent agency, determined that Biden was the outward winner of the election and informed Biden that his transition until January 20 could officially begin. The go-ahead was given by the White House to Biden to intensify the fight against the coronavirus. All these positive news kept the risk-on market sentiment supported and continued supporting the USD/JPY pair.

Daily Technical Levels

Support   Resistance

103.76     103.87

103.69     103.93

103.64     103.99

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY continues to trade in a fresh choppy range of 104.700 – 104.056 level. On the higher side, a bullish breakout of 104.700 resistance can extend the buying trend until the next resistance area of 104.700 and 105.063 level. On the lower side, the support continues to hold around 104.056 and 103.667 level. The MACD suggests an overbought situation of the USD/JPY pair; thus, we should look for selling trade below 104.598 and buying above the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, November 24 – Top Trade Setups In Forex – Consumer Confidence in Focus!

On the news front, the focus will remain on the U.S. Prelim Consumer Confidence and C.B. Leading Index m/m, which are expected to report mixed outcomes and drive choppy movement in the U.S. dollar. Let’s focus on technical levels today.

Economic Events to Watch Today  

 


 


EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.18402 after placing a high of 1.19058 and a low of 1.17997. The EUR/USD pair rose to its highest since November 9 and reversed its direction after that, and continued placing losses for the day. The decline in the EUR/USD pair despite the improved risk sentiment was due to the U.S. dollar’s strength. The risk-on market sentiment was supported by the latest optimism from various vaccine developments. In contrast, the strength in the U.S. dollar was derived from better-than-expected U.S. macroeconomic data on Monday.

A British pharmaceutical AstraZeneca announced that its potential vaccine was more than 90% effective in its clinical trials for protecting the coronavirus. The first dosage of its vaccine provides 70% protection, while the second dosage could increase the efficacy rate to 90%.

AstraZeneca also said that it would be cheaper than its rival Pfizer vaccine as it can be stored at refrigerator temperature while Pfizer’s vaccine requires a frozen temperature that could make its cost of distribution higher.

Meanwhile, the risk sentiment was also supported by the reports that the US FDA has approved the antibody-drug used by U.S. President Donald Trump last month during his treatment of coronavirus for emergency use. These optimistic reports gave the EUR/USD pair strength in the earlier session and pushed its prices to their highest since November 9.

On the data front, at 13:15 GMT, the French Flash Services PMI declined to 38.0 against the forecasted 39.2 and weighed on Euro. The French Flash Manufacturing PMI also fell to 49.1 against the projected 50.2 and weighed on Euro. At 13:30 GMT, the German Flash Manufacturing PMI raised to 57.9 against the forecasted 56.0 and supported Euro. German Flash Services PMI remained flat with the expectations of 46.2. At 14:00 GMT, Flash Manufacturing PMI from Eurozone in November raised to 53.6 from the projected 53.2 and supported single currency Euro. Flash Services PMI declined 41.3 against the expected 42.2 and weighed on Euro.

The mixed data from Eurozone related to business activity failed to provide any significant movement in EUR/USD pair while the currency pair followed the U.S. dollar movement after the release of macroeconomic data in the American session.

At 19:45 GMT, the Flash Manufacturing PMI from the U.S. in November rose to 56.7 against the projected 52.5 and supported the U.S. dollar. The Flash Services PMI surged to 57.7 against the projected 55.8 and supported the U.S. dollar. After the release of better than expected Manufacturing and Services PMI, the strong U.S. dollar exerted pressure on EUR/USD pair on Monday.

Daily Technical Levels

Support   Resistance

1.1855      1.1871

1.1845      1.1877

1.1839      1.1888

Pivot point: 1.1861

EUR/USD– Trading Tip

The EUR/USD traded sharply bearish, falling from 1.1866 level to 1.1816 support level, which is extended by double bottom level. Closing of a candle over 1.1816 is supported by bullish correction, but at the same time, the EUR/USD pair may also head further higher until the 1.1866 resistance mark. On the 2 hour timeframe, the EUR/USD pair was supported by an upward trendline, which got violated on Monday, and now the same trendline is supporting EUR/USD pair. Let’s look for a selling trade below the 1.1866 level today. 


GBP/USD – Daily Analysis

The GBP/USD pair closed at 1.33222 after a high of 1.33975 and a low of 1.32636. The British Pound raised to its 10-weeks high level and then gave up some gains against the U.S. dollar in late trading sessions on the back of U.S. dollar strength. The rise in GBP/USD pair came in after the rising optimism over a Brexit deal after the European Commission reportedly told E.U. ambassadors that 95% of a post-Brexit deal had been agreed. The deal might be announced over the coming days to allow sufficient time for ratification by the European Parliament before year-end, possibly just the week after Christmas.

Meanwhile, on the data front, at 14:30 GMT, the Flash Manufacturing PMI from the U.K. raised to 55.2 against the forecasted 50.5 and supported British Pound and supported GBP/USD pair. The Flash Services PMI for November from the U.K. also raised to 45.8 against the forecasted 43.2 and supported British Pound and added gains in the GBP/USD pair.

From the U.S. side, at 19:45 GMT, the Flash Manufacturing PMI from the U.S. in November surged to 56.7 against the anticipated 52.5 and supported the U.S. dollar that capped further gains in GBP/USD pair. The Flash Services PMI rose to 57.7 against the forecasted 55.8 and supported the U.S. dollar, and GBP/USD pair lost some of its gains.

Meanwhile, on Monday, the Governor of Bank of England Andrew Bailey said that the long-term effects of a no-deal Brexit on the economy would be worse than the coronavirus pandemic’s long-term impacts. He added that he was relatively optimistic about the economy’s ability to recover from the coronavirus outbreak, but it would be more difficult to adjust with the U.K. trading with the E.U. on World Trade Organization terms.

These concerns added pressure on risk-on market sentiment and made GBP/USD pair to lost some of its earlier daily losses.

Furthermore, Prime Minister Boris Johnson confirmed that the England lockdown would be lifted on December 2, though regional restrictions would be kept to stop coronavirus spread. The second lockdown miscued the U.K. economy that the economy could slip into a double-dip recession and these concerns also added pressure on the GBP/USD pair that lost some of its earlier daily gains.

Daily Technical Levels

Support Resistance

1.3289      1.3312

1.3274      1.3320

1.3266      1.3336

Pivot point: 1.3297

GBP/USD– Trading Tip

The GBP/USD traded bearishly at 1.3290, but it now seems to bounce off over the support area of the 1.3292 level. On the higher side, the pair may go after the resistance level of 1.3394. Over there’s an upward trendline that is supporting Sterling on the 2-hour timeframe. Below the 1.3292 level, the Cable may find support at the 1.3240 level while the RSI and MACD are in support of buying. Thus we should consider taking buying trade over the 1.3292 level to target 1.3394. 


USD/JPY – Daily Analysis

The USD/JPY pair closed at 104.544 after placing a high of 104.635 and a low of 103.681. The USD/JPY pair rose by about 100 pips on Monday after the U.S. dollar became strong across the board. The strength of the greenback was derived from the release of macroeconomic data from the U.S.

At 19:45 GMT, the Flash Manufacturing PMI from the U.S. in November raised to 56.7 against the estimated 52.5 and supported the U.S. dollar. The Flash Services PMI surged to 57.7 against the estimated 55.8 and supported the U.S. dollar that added gains in the USD/JPY pair on Monday.

The better-than-expected U.S. business activity data showed that it was expanded in November at its fastest rate in more than five years and boosted optimism about the U.S. economy’s health that lifted the U.S. dollar, and provided strength to the rising USD/JPY pair.

Other than economic data, the USD/JPY pair was also supported by the market’s rising risk sentiment. The risk sentiment was supported by the latest optimism regarding vaccine developments from different countries. AstraZeneca, the British pharmaceutical, said that its vaccine was 70% effective on the first dosage and 90% effective on the second dosage.

It also reported that it would be cost-effective also as it does not require the frozen temperature to be stored and can only be stored in a refrigerator. These optimistic reports added strength in the risk sentiment and weighed on the safe-haven Japanese Yen that ultimately added strength in the USD/JPY pair.

On Monday, another positive news was that Regeneron’s coronavirus antibody cocktail that President Donald Trump used last month when he was hospitalized with COVID-19 had been approved for an emergency authorization use by the US FDA. There were also reports that the vaccine developed by Pfizer and BioNtech will likely be approved by the US FDA by December 11 and will be available for Americans to use.

With more progress in the vaccine area, lifting the lockdown restrictions increased along with the chances for an economic recovery that raised the risk sentiment and weighed on the safe-haven Japanese Yen that added gains in the USD/JPY pair. However, the pandemic hit economy still needs further support from governments to go through the crisis, and that is why investors were hopeful that the Fed and European Central Banks would likely issue more stimulus aid in December. The USD/JPY pair will likely rise as the risk sentiment has been improved after vaccine development progress.

Daily Technical Levels

Support Resistance

103.76      103.87

103.69      103.93

103.64      103.99

Pivot point: 103.81

USD/JPY – Trading Tips

The USD/JPY has violated a choppy range of 104.056 – 103.667 level. On the higher side, a bullish breakout of 104.056 resistance can extend the buying trend until the next resistance area of 104.59 and 105.063 level. On the lower side, the support continues to hold around 104.056 and 103.667 level. The MACD suggests an overbought situation of the USD/JPY pair; thus, we should look for selling trade below 104.598 and buying above the same. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, November 23 – Top Trade Setups In Forex – PMI Figures in Highlights! 

On the news front, eyes will remain on the Manufacturing PMI and Services PMI figures from the Eurozone, the U.K., and the United States. Almost all economic figures are expected to perform better than previous months, perhaps due to a lift of lockdown. Price action will depend upon any surprise changes in the PMI figures.

Economic Events to Watch Today  

 


EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.18563 after placing a high of 1.18906 and a low of 1.18495. Despite vaccine-related optimism and improved risk sentiment in the market, the currency pair EUR/USD dropped on Friday amid the continuous rise in the number of coronavirus cases along with the latest disagreement between the Fed and U.S. Treasury related to the unused funds of emergency lending programs.

On Thursday, U.S. Treasury Secretary Steven Mnuchin sent a letter to Fed’s Chair Jerome Powell and asked him to return the unused funds in five emergency lending programs that will expire in December. Mnuchin claimed that those funds could be used for other purposes by Congress. Mnuhcin also asked Powell to extend the other four emergency credit facilities.

Meanwhile, the U.S. coronavirus situation got worse as November was not still over, but there have been almost 3 million new cases reported. It is about a quarter of all the U.S. cases since the beginning of the pandemic. The U.S. hospitalization rate was getting higher to an alarming level as it was forcing the health care system to reduce care for even non-COVID-19 patients.

Given the coronavirus situation in the U.S., many states announced restrictive measures to control the spread. On the European side, the situation was a bit under control after the strict lockdown measures. However, the old continent’s situation in Europe was far from getting better, and market players were worried that a steep economic downturn would be seen in the last quarter of the year.

These tensions raised the concerns that economic recovery was under pressure and supported the safe-haven appeal that ultimately weighed on the risk perceived EUR/USD pair on Friday. Furthermore, central banks’ calls for another round of stimulus measures to help support the economy started to increase. In response, the Federal Reserve Chairman Jerome Powell has been refrained to give any hint about any action in December whereas, his European counterpart Christine Lagarde has said that a large easing package will be coming in the next meeting. Lagarde’s comments also weighed on the single currency that ultimately added losses in the EUR/USD pair on Friday.

At 12:00 GMT, The German PPI for October remained flat at 0.1% on the data front. At 19:50 GMT, the Consumer Confidence also came in line with the expectations of -18. There was no macroeconomic figure to be released from the U.S., which means the pair EUR/USD was unaffected by any data on Friday.

Meanwhile, the vaccine news from Pfizer and BioNtech that they were going to apply for US FDA approval for emergency authorization use of their vaccine raised the risk sentiment in the market. Combined with this optimism, the other companies, including Moderna, Oxford, the Russian Sputnik V, and China’s Sinovac, also provided updates about the vaccine’s efficacy and supported the market’s risk of improved sentiment that ultimately capped further losses in the EUR/USD pair.


Daily Technical Levels

Support  Resistance

1.1831      1.1898

1.1790      1.1924

1.1764      1.1965

Pivot point: 1.1857


EUR/USD– Trading Tip

The EUR/USD is trading with a bearish bias at the 1.173 level, forming an ascending triangle on the 2-hour timeframe. On the lower side, the pattern supports the EUR/USD pair at 1.1850, and here violation of the 1.1850 level can extend the EUR/USD pair towards the 1.1816 level. On the higher side, a bullish breakout of the 1.1889 level can extend the buying trend until the 1.1924 level. The bullish bias remains dominants today as the MACD and 50 periods EMA support a bullish trend. Let’s consider taking a buying trade over 1.1889 with a take profit of 1.1924 level. 

GBP/USD – Daily Analysis

The GBP/USD pair closed at 1.32891 after placing a high of 1.32977 and a low of 1.32403. GBP/USD remained bullish on Friday amid the latest Brexit optimism and the coronavirus vaccine’s rising hopes. The currency pair remained on the upper track this week as Brexit dominated the scene and supported the British Pound. The coronavirus situation in the U.K. was improving as the U.K. was set to announce a wide easing of coronavirus rules for a week at Christmas.

Next week, Boris Johnson will announce a plan for an easing of rules on Covid, and he also warned that the level of restrictions for the rest of next month would depend on how well the public obey the current lockdown in England that will end on 2nd December. Brexit headlines were, however, contradictory during the week as PM Boris Johnson signaled that the U.K. would prosper without a deal and E.U. officials indicated that talks could collapse. The British press talked about a French compromise on the fisheries issue that a key sticking point in the Brexit deal. After the French compromise on fisheries, the Brexit optimism continued supporting the British Pound and added gains in GBP/USD pair.

Another factor involved in the GBP/USD’s bullish sentiment, Pfizer and BioNtech said that they would apply for approval of emergency use of their vaccine on Friday, which also helped risk sentiment improve and support the British Pound. Following Pfizer, Moderna also said that its vaccine was 94.5% effective in preventing the coronavirus and helped raise the market’s optimism that also supported the GBP/USD pair’s upward trend.

On the data front, at 05:01 GMT, GfK Consumer Confidence remained flat with the forecasted -33. At 12:00 GMT, the Retail Sales from the U.K. for October raised to 1.2% against the expected -0.3% and supported British Pound that added further gains in GBP/USD pair. The Public Sector Net Borrowing declined to 21.6 against the forecasted 31.6B and kept British Pound and added improvements in the currency pair GBP/USD pair.

Meanwhile, in the U.S., the need for a stimulus package increased with the rising coronavirus cases, but Fed Chairman Jerome Powell refrained from giving any hint about further aid in the upcoming December meeting. The hospitalization in the U.S. for coronavirus patients increased to a worse level, forcing many state governors to announce restrictive measures to control the virus’s spread. It weighed on the U.S. dollar and helped GBP/USD pair to post gains on Friday.

Daily Technical Levels

Support   Resistance

1.3211      1.3296

1.3161      1.3331

1.3127      1.3381

Pivot point: 1.3246

GBP/USD– Trading Tip

The GBP/USD continues trading bullish at the 1.3307 level, holding over the 1.3303 support level, supporting the buying trend. The recent bullish engulfing candle on the 2-hour timeframe can lead Sterling further higher until the 1.3368 area. The MACD and RSI have crossed over on the higher side, suggesting further odds of bullish trend continuation. Typically such kind of ascending trend breakout can lead the pair further higher, so let’s consider taking buying trade over the 1.3307 level today. 


USD/JPY – Daily Analysis

The USD/JPY pair closed at 103.823 after placing a high of 103.909 and a low of 103.700. After falling for six consecutive days, the USD/JPY pair posted small gains on Friday amid the reports about the resumption of the U.S. fiscal aid talks. The small uptick in the USD/JPY pair after massive selling in the previous six days could be solely attributed to optimism led by reports that U.S. lawmakers have agreed to resume talks on another coronavirus stimulus package.

The positive sentiment was somehow offset by the U.S. Treasury Secretary Steven Mnuchin’s decision to end some pandemic relief for struggling businesses. This came in after the tensions increased about the potential economic fallout from the continuous rise in new coronavirus cases, which held the U.S. dollar bulls from placing aggressive bets.

Meanwhile, the safe-haven appeal came back in the market after the number of coronavirus cases started to increase in the U.S. On Thursday, the U.S. reported about 185,000 cases of coronavirus in a single day and set a record. The number of hospitalized patients in the U.S. also increased by almost 50% in just the last two weeks that eventually urged many states to impose new restrictions to stop the virus from spreading further.

Meanwhile, the Governor of California imposed a 10 PM curfew in most populated U.S. states that will take effect from Saturday. Moreover, the Centre for Disease Control advised Americans not to travel on Thanksgiving holiday as it would increase the infection rate. These concerns added uncertainty in the market and raised a safe-haven appeal that supported the safe-haven Japanese Yen and capped the USD/JPY pair’s gains on Friday.

There was no macroeconomic data from the U.S. on Friday, and from Japan, at 04:30 GMT, the National Core CPI for the year from Japan remained flat with the anticipations of -0.7%. The macroeconomic data failed to impact on currency pair USD/JPY.

Pfizer and BioNtech announced on Friday that they would apply on the day to the US FDA for approval of emergency use of their vaccine on the vaccine front. This, combined with the other companies, included AstraZeneca and Oxford University’s latest reports of their vaccine’s efficacy, added strength in the risk sentiment, and supported the USD/JPY pair’s gains on Friday.

Daily Technical Levels

Support   Resistance

103.56      104.07

103.38      104.40

103.04      104.58

Pivot point: 103.89

USD/JPY – Trading Tips

The USD/JPY extends its bearish trend below the 104.102 level, consolidating within a narrow trading range 104.102 – 103.650. On the lower side, the USD/JPY pair is likely to find support at the 103.650 level, and violation of this level can also extend further selling bias until 103.227. On the higher side, the USD/JPY safe-haven pair may find resistance at 104.400 and may help us capture a selling trades below this level as the MACD and RSI support the selling trend today. Good luck! 

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Forex Market Analysis

Daily F.X. Analysis, November 20 – Top Trade Setups In Forex – Eyes on Retail Sales!