Tag: Technical Outlook

On the forex front, the U.S. Dollar Index rose 0.3% on the day at 97.61. The euro slid 0.4% to $1.1090. The British Pound dropped 0.5% to $1.3010, snapping a three-day rally. Official data showed that U.K. retail sales unexpectedly fell 0.6% on month in December (+0.6% estimated), fueling expectations of an interest-rate cut by the Bank of England.

The U.S. government bond prices declined further after the Treasury Department announced plans to sell 20-year government bonds later this year. The benchmark U.S. 10-year Treasury yield advanced to 1.834% from 1.809% Thursday.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.10893 after placing a high of 1.11425 and a low of 1.10862. Overall the movement of the EUR/USD pair remained strongly bearish that day.

On Friday, the EUR/USD pair was dropped near its January low amid the broad U.S. dollar strength after the upbeat macroeconomic data. 

The US-China phase-one trade deal was under whole focus week but failed to impress as it did not include the rolling back of tariffs in it, which was essential for boosting global growth. According to Trump, there would be rolling back of tariffs in Phase-two of a trade deal. The uncertainty from the trade front, as well as Brexit front, continued to weigh on the market.

On Thursday, the closely watched Retail Sales data from the United States exceeded the expectations and supported the U.S. dollar. The stronger U.S. dollar after December Retail Sales removed risk appetite from the market and dragged its rival currency Euro on Friday.

The upbeat data from the United States indicated that the economy was doing well then its significant counterparts and weighed on EUR/USD prices.

On Friday, from the European side, at 12:45 GMT, the French Government Budget Balance was announced for November, which showed a deficit of -113.9B. At 14:02 GMT, the Current Account Balance for the whole bloc was released, which also came in short of expectations as 33.9B against the forecasted 34.3B and weighed on Euro.

At 14:02 GMT, the Italian Trade Balance for November showed a decline of 4.87B against the expected 7.22B and weighed on single currency Euro. At 15:00 GMT, the Final Consumer Price Index (CPI) for the year remained flat at 1.3%. The Final Core Consumer Price Index from Eurozone for the year also remained the same as expected at 1.3%. Weaker than expected Trade Balance from Eurozone weighed on EUR/USD and dragged its prices near its month lowest point.

On the other hand, the U.S. dollar was in strength already due to Retail Sales data from Thursday and got even stronger after the release of Housing Starts on Friday. At 18:30 GMT, the number of Houses that started its construction in December exceeded the expectations of 1.38M and came in as 1.61M and supported the U.S. dollar.

The stronger U.S. dollar dragged further the prices of EUR/USD pair and gave the pair a strong bearish candle at the ending day of the week.

Daily Support and Resistance

• S3 1.1056
• S2 1.1101
• S1 1.1119
• Pivot Point 1.1146
• R1 1.1164
• R2 1.1191
• R3 1.1236

EUR/USD– Trading Tips

On the 4 hour timeframe, the EUR/USD is trading at 1.1096, having formed a bullish engulfing pattern. The bullish engulfing pattern is suggesting the odds of a bullish trend in the EUR/USD. The EUR/USD can show bullish correction until 1.1106 and 1.1112 before showing further selling.

GBP/USD– Daily Analysis

The GBP/USD pair was closed at 1.30094 after placing a high of 1.31187 and a low of 1.30076. Overall the movement of GBP/USD pair remained bearish that day. On Friday, the British Pound was lower against the U.S. dollar as the Retail Sales data from the U.K. came in short of expectations, and the U.S. dollar gained traction at the end of the week amid robust data.

The member of Bank of England Monetary Policy Committee, Gertjan Vlieghe, who previously was in favor of rate hike said earlier this week that he would vote for a rate cut in the next meeting if the data continuously show signs of weakness.

The chances for a rate cut by Bank of England increased on Friday after the release of Retail Sales from Great Britain. At 14:30 GMT, the Office for National Statistics from the United Kingdom published Retail Sales report for December, which showed that Retail Sales slumped to -0.6% from the expectations of 0.5% and weighed on single currency Pound.

The GBP/USD prices rose in the early trading session on Friday before the release of Retail Sales, which decreased the size of the decline in prices of GBP/USD after the publication of data. The pair GBP/USD fell to 1.30 level on the back of the 5th consecutive monthly decline in Retail Sales. 

It should also be noted that in December, there were general elections in the United Kingdom, which could be a cause for the decline in Retail Sales as the political uncertainty could have weighed on consumer minds for spending on Christmas presents.

The next monetary policy decision by Bank of England will take place on coming Thursday, January 30. Only major data to be released by then from the United Kingdom is Manufacturing & Services PMI, which will also be released next week.

On the other hand, the U.S. dollar remained firm on the back of strong Housing Starts figures. At 18:30 GMT, the number of buildings that started their construction in December came in as 1.61M against the expectations of 1.38M and supported the U.S. dollar.

The member of the Federal Reserve Open Market Committee, Harker, also gave comments in favor of the U.S. economy. He said that the economy was doing well, and data will be monitored to decide the further fate of monetary policy and interest rates.

His comments also supported the upward trend of the U.S. dollar on Friday and added in the fall of GBP/USD prices at the ending day of the week.

Daily Support and Resistance

• S3 1.2946
• S2 1.3004
• S1 1.304
• Pivot Point 1.3062
• R1 1.3098
• R2 1.312
• R3 1.3178

GBP/USD– Trading Tip

On Monday, the GBP/USD pair continues to trade bearish as it tested and failed to violate the downward channel, which was formed on the 4-hour chart. At the moment, the GBP/USD pair is trading at 1.2078, and it seems to extend bearish bais until 1.2925. 

The GBP/USD pair may find support around 1.2925 area today. Whereas, the RSI and MACD support the bearish bias. Let’s look for selling trades below 1.2980.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 110.161 after placing a high of 110.287 and a low of 110.046. Overall the movement of the USD/JPY pair remained bullish that day.

At 9:30 GMT, the Tertiary Industry Activity for November from Japan exceeded the market expectations and supported the Japanese Yen when it came in as 1.3% against the forecasted 1.0%. 

At 2:00 GMT, the TIC Long-Term Purchases data from the United States for November was released by the U.S. Department of Treasury. The report showed a decline of 22.9B from the expected 34.5B and weighed on the U.S. dollar.

At 18:30, the Building Permits for December from the United States showed a decline to1.42M from the expected 1.47M and weighed on the U.S. dollar. However, the Housing Starts in December were increased to 1.61M from the expected 1.38M and supported the U.S. dollar.

At 19:15 GMT, the Capacity Utilization Rate from the U.S. remained flat at 77.0%. But the Industrial Production for December dropped and came in negative as -0.3% from forecasted 0.0% and weighed on the U.S. dollar.

At 20:00 GMT, the Prelim Consumer Sentiment from the University of Michigan came as 99.1, almost in line with the expectations of 99.3, and gave null effect to the U.S. dollar. However, the release of JOLTS Job Openings weighed on the U.S. dollar when it dropped to 6.80M against the expectations of 7.24M for November.

The Prelim Inflation Expectations from the University of Michigan increased in January to 2.5% from December’s 2.3%. The increased Housing Starts and Increased expectations of rising Inflation gave a boost to the U.S. dollar on Friday. The U.S. dollar was further supported by the comments of Patrick Harker, the President of Philadelphia Federal Reserve Bank.

Daily Support and Resistance

• S3 109.57
• S2 109.83
• S1 110
• Pivot Point 110.1
• R1 110.27
• R2 110.36
• R3 110.62

USD/JPY – Trading Tips

On Monday, the USD/JPY pair is trading with a bullish bias at 110.200 after consolidating in a narrow trading range of 109.800 – 110.150. Recently, the USD/JPY pair has formed Three While Soldiers pattern on the 4-hour timeframe, which typically suggests a bullish trend in the market. 

The USD/JPY is now supported above 110.100, and we may see further buying above this level until 110.490 today. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 110.1 levels with a target of 110.570. 

All the best for today! 

On Friday, China’s industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

Whereas, the 4th-quarter GDP came in at 6% as expected, while China reported the full-year growth at 6.1%, the slowest in 29 years. Let’s take a look at the trade setups worth trading today. 

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD is facing selling pressure and dropped to 1.1131 from the high of 1.1173 despite the better-than-expected China data. As of writing, the EUR/USD currency pair is currently trading at 1.1134 and consolidates in the range between the 1.1131 – 1.1143. The greenback is seen strong in the wake of better-than-expected U.S. Retail Sales Data, and this is the main reason behind the EUR/USD pair declines.

At the USD front, the greenback picked up the bids across the board. The DXY rose for the day, above 97.30, recovering from weekly lows. The U.S. yield is up as well, with the ten-year at 1.81%, offering support to the greenback.

The EUR currency pair hit the peak of 1.1160 yesterday, confirming an upside break of the descending channel from December 31 and January 6 highs.

At the China data front, the Industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

Whereas, the 4th-quarter GDP came in at 6% as expected, while China reported the full-year growth at 6.1%, the slowest in 29 years. 

It is worth to mention that the markets priced in China recession during 2019, and the economy have been struggling to shift in the recovery mode since the last few weeks in the wake of Sino-US trade truce. Moreover, the Industrial production data shows that the economy will likely regain some stability.

Looking forward, the EUR currency may take further steady declines if the Untied States Industrial Production ignore past expectation; by the way, the data is scheduled to release at 14:15 GMT. As well as, the Eurozone current account surplus and the final consumer price index figures for December are also scheduled to release in Europe.

Daily Support and Resistance

• S3 1.1056
• S2 1.1101
• S1 1.1119
• Pivot Point 1.1146
• R1 1.1164
• R2 1.1191
• R3 1.1236

EUR/USD– Trading Tips

The bullish setup of EUR/USD shifted dramatically into bearish setup on the release of U.S. Fundamentals. The retail sales and Philly Fed Manufacturing index surprised the market big times, beating the economist’s forecast. The EUR/USD drop from 1.1170 to 1.1130. 

Today, we don’t have any high impact economy which could rive such kind of movement again. Therefore the EUR/USD pair may continue treading in a bearish tone below 1.1145 resistance level. The immediate support can be found around the 1.1125 area. Below this, the next support can be found around 1.1100.

GBP/USD– Daily Analysis

The GBP/USD currency pair stopped its three-day recovery streak and dropped to 1.3065 from the above 1.3100 level, mainly due to broad-based greenback weakness and the European Union sturdy stand on the Brexit. The GBP/USD currency pair is trading at 1.3074 and consolidates in the range between the 1.3065 – 1.3080. The market traders await for the U.K.’s December month Retail Sales for the fresh move.

At the Brexit front, the European Union Trade Commissioner Phil Hogan was the newest man to join the regional diplomat’s voices who shook the Boris Johnson’s Brexit optimism. Moreover, the German minister struck a friendly tone while saying that the U.K. must get post-Brexit defense privileges.

At the USD front, the greenback got support from the upbeat data and over the news of Trump administration’s ability to strike the key trade deals with China, Mexico, and Canada.

Risk-sentiment is still inactive in the market despite China’s positive Industrial production data, and Retail Sales that crossed the forecast figures. The U.S. ten-year treasury yields rose by 1-basis-points to 1.82%. 

Looking forward, the U.K.’s December Retail Sales will be key to watch after the latest disappointment from inflation data, which increased the probabilities of the BOE’s rate cut. Economists are expecting an increase of 2.6% against 1.0% in the YoY figure, whereas the monthly growth might have reversed -0.6% prior growth to 0.7%. As a result, the U.S. housing figures, consumer sentiment, and industrial production will be closely observed for fresh direction.

Daily Support and Resistance

• S3 1.2946
• S2 1.3004
• S1 1.304
• Pivot Point 1.3062
• R1 1.3098
• R2 1.312
• R3 1.3178

GBP/USD– Trading Tip

On Friday, the GBP/USD pair continues to trade bullish as it has already violated the downward channel, which was formed on the 4-hour chart. At the moment, the GBP/USD pair is trading at 1.3077, and it seems to extend bullish rally until 1.3165. However, this heavily depends upon the British Retail Sales data, which is due later in the day. 

The GBP/USD pair may find support around 1.3030 area today, but the RSI and MACD support the bullish bias. Let’s look for buying trades above 1.3060.  

USD/JPY – Daily Analysis

The USD/JPY currency pair rose mainly due to the strong greenback, and upbeat Industrial data which came out from China. The USD/JPY hit the high level above 110.00 and recently crossed the Tuesday high level of 110.20. The USD/JPY currency pair is trading at 110.25, representing 0.10% gains on the day. The bullish U.S. stocks markets and the positive U.S. data boosted the pair.

At the USD front, the greenback was trading slightly bearish in previous sessions. Still, currently, but currently, the currency has shifted into the bullish territory, mainly due to the release of U.S. economic data. The U.S. dollar index erased losses and climbed to 97.35, rebounding from weekly lows. Moreover, the US Jan Philly Fed index at 17.0 also helped a bid in the U.S. dollar, beating expectations (est. 3.7, prior 2.4) to retest mid-2019 highs.

On the other hand, another positive factor behind the risk sentiment recovery is the U.S. Senate approved the USCMA trade agreement, which now awaits Canada to agree on it and for Trump’s imminent signing.

Daily Support and Resistance

• S3 109.57
• S2 109.83
• S1 110
• Pivot Point 110.1
• R1 110.27
• R2 110.36
• R3 110.62

USD/JPY – Trading Tips

On Friday, the USD/JPY pair is trading with a bullish bias at 110.200 after consolidating in a narrow trading range of 109.800 – 110.150. Recently, the USD/JPY pair has formed Three While Soldiers pattern on the 4-hour timeframe, which typically suggests a bullish trend in the market. 

The USD/JPY is now supported above 110.100, and we may see further buying above this level until 110.490 today. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 110.1 level with a target of 110.570. 

All the best for today! 

On the forex front, the U.S. dollar eased against other major currencies on Friday, as growth in December nonfarm payrolls missed expectations. The Dollar Index slipped 0.1% on the day to 97.36. The euro gained 0.1% to $1.1122.

The British pound fell 0.1% to $1.3061. Gertjan Vlieghe, a Bank of England policymaker, said in a Financial Times interview that he would vote for an interest-rate cut this month in case no signs of economic improvement show up after the general election. Later today, U.K. monthly GDP and industrial production for November will be reported (both flat on month expected).

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD currency pair took an active bid mainly due to the greenback weakness on the back of weak jobs data and wage growth figures, which were released on Friday. As of writing, the EUR/USD currency pair is currently trading at 1.1130 and representing 0.10% gains on the day. The pair is consolidating in the range between the 1.1113 – 1.1131. 

The Nonfarm Payrolls data confirmed the economy added 145K jobs in December and disappointed the forecasted figure of 164K additions by a big margin. 

Especially, the average hourly earnings increased by 2.9% year-on-year in December compared to the 3.1% projection. That was the first under 3% figure since July 2018. The weak wage growth almost renewed disinflation concerns, and as a result, the U.S. ten-year treasury yield dropped by 7-basis points to 1.81% on Friday, which continued to add losses on the day and supported EUR/USD currency pair further.

The EUR currency will be likely to continue its recovery rally because of the United States and China trade optimism. The United States Treasury Secretary Steve Munchin told the markets that there would be negotiations regarding phase-two of the US-China trade deal when the Chinese representatives arrive on January 15.

Looking forward, the German Wholesale Price Index for November is scheduled to release at 07:00 GMT. However, the data rarely leave an impact on the markets. Generally, the EUR/USD pair is at the mercy of the action in the treasury yield for now.

Daily Support and Resistance

• S3 1.1023
• S2 1.1068
• S1 1.1094
• Pivot Point 1.1112
• R1 1.1138
• R2 1.1156
• R3 1.12

EUR/USD– Trading Tips

The EUR/USD is trading sideways as investors didn’t find any solid reason to determine the trend. The EUR/USD pair is trading at 1.1120, below a strong resistance level of 1.1140. The closing of Doji candle below 1.1140 is supporting the bearish bias. 

On the lower side, the EUR/USD has the opportunity to drop until 1.1070. Below this, the next support stays around 1.1040. The MACD is trying to cross below 0 to support the bearish bias, but there’s still no strong bearish fundamental which can push the pair lower. Consider staying bearish below 1.1125 today.

GBP/USD– Daily Analysis

The GBP/USD currency pair is flashing red and continuing its 4-day losing streak mainly due to dovish tone from the Bank of England, and the European Union-Irish uncertainty surrounding the Brexit. Whereas, the pair is still trading bearish despite the greenback’s weakness. As of writing, the GBP/USD currency pair is currently trading at 1.3026 and consolidates in the range between the 1.3026 – 1.3045.

At the Brexit front, the Irish Deputy Prime Minister Simon indicated uncertainty on the United Kingdom Prime Minister Boris Johnson’s deadline of December 31, 2020, for Brexit, which was also supported by the European Union chief Brexit negotiator and European Council President.

On the other hand, a survey led by the Confederation of British Industries (CBI) and the Price Water Cooper (PwC) showed that the business moral amongst the U.K.’s financial firms jumped for the first time in 4-years.

At the USD front, the greenback’s weakness could be attributed to weak employment figures released on Friday as well as the recent decrease in the U.S. Dollar’s demand. Notably, the rising optimism surrounding the United States & China trade front and decreased chances of the United States & Iran war are the reasons behind the risk-on sentiment in the market. 

Apart from this, the stocks in Asia and the S&P 500 Futures are still flashing green while the U.S. ten-year treasury yields show no signs of movement due to the Japanese holiday. It should also be mentioned that Iran recently arrested the United Kingdom’s ambassador to Tehran, and the global leaders do not like it.

Looking forward, the traders will keep their eyes on the U.K.’s November month Industrial Production, Manufacturing Production, monthly GDP and Trade Balance figures. There, a possible contraction in the production numbers to -0.3%, a fall in trade numbers, and no change in the GDP figure of 0.0% is expected, which would keep the pair’s movement under check. 

On the flip side, the Sino-US and Iran-US headlines will remain under the focus because no critical data and events are scheduled from the United States.

Daily Support and Resistance

• S3 1.2958
• S2 1.3013
• S1 1.3038
• Pivot Point 1.3068
• R1 1.3093
• R2 1.3122
• R3 1.3177

GBP/USD– Trading Tip

The GBP/USD continues to trade with bearish bias around 1.2980 after violating the 1.3045 support level. On the 4 hour timeframe, the pair has formed a strong bearish candle which is supporting the bearish trend in GBP/USD. In addition to this, the UK GDP and Manufacturing figures have also disappointed the market.

The pair is currently trading in a bearish channel, which is extending resistance around 1.3034 along with support around 1.2906. While the MACD is still staying in the selling zone. I will be looking to take sell trades below 1.3000 today to target 1.2925 and 1.2906. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the bullish track and is trading just above the 100-week average, mainly due to the safe-haven Japanese yen lost ground in the wake of the Sino-US and Iran-US optimism. As of writing, the USD/JPY currency pair is currently trading at 109.64 and representing 0.17% gains on the day, as well as the pair consolidates in the range between the 109.50 – 109.65.

As we already mentioned, the anti-risk Japanese yen is losing ground in Asian trading hours due to risk-on sentiment in the market and pushing USD/JPY higher on the back of positive trade-related news flow. 

At the Sino-US front, the United States and China trade tensions continue to ease. Both countries are ready to sign an official trade deal this week. As well as, the White House Economic Advisor, Larry Kudlow, has said during the weekend that everything depends on the China trade deal. In contrast, the U.S. Treasury Secretary Steve Mnuchin told markets that there would be talks on the phase-two of the US-China trade deal when the Chinese delegates arrive on January 15.

Notably, the USD/JPY currency pair has failed many times to secure a weekly close above the key average since the last week of November. Moreover, the pair may face a hard time to beat a breakout because markets are likely to offer greenback on disinflation concerns. 

At the data front, the data released on Friday showed the average hourly earnings increased by just 2.9% year-on-year in December compared to the 3.1% projection. That was the first below-3% reading since July 2018. 

While the Nonfarm payrolls showed, the economy added 145K jobs in December, missing the expected print of 164K additions by a big margin.

Looking forward, the Sino-US and Iran-US headlines will remain under the focus because of no major data and events scheduled from the United States.

Daily Support and Resistance

• S3 109.02
• S2 109.28
• S1 109.38
• Pivot Point 109.54
• R1 109.64
• R2 109.8
• R3 110.06

USD/JPY – Trading Tips

The USD/JPY pair is trading bullish around 109.820 after breaking above a resistance level of 109.550. The way USD/JPY has closed three while soldiers on the 4-hour timeframe, which is likely to extend buying trend until the next resistance level of 110.570.  

Leading indicators are massively overbought, and USD/JPY is looking for a reason to trigger bearish retracement. Let’s keep an eye on 110.570 level to capture a sell positon below level. All the best! 

On the forex front, the U.S. Dollar Index was little changed at 96.84 on Friday. Being regarded as a haven-asset, the Japanese yen strengthened against the greenback as geopolitical risks increased. USD/JPY dropped 0.5% to 108.09, the lowest level since mid-October.

The euro slipped 0.1% to $1.1160. Official data showed that German’s jobless rate was steady at 5.0% in December as expected, while CPI grew 1.5% on year (+1.4% expected). 

Besides, Iran vowed “severe revenge” on the U.S., while President Donald Trump threatened major retaliation on Iran if they do anything.

Economic Events to Watch Today

 EUR/USD – Daily Analysis

The EUR/USD currency pair hit the bullish track mainly due to U.S. Treasury yields, which dropped in the wake of risk-off sentiment. Besides, the greenback is also struggling to gain the ground. The EUR/USD pair is consolidating at 1.1164, consolidating in the range between the 1.1156 – 1.1172. 

The on-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. The country also announced that it would not follow any restrictions imposed by the 2015 nuclear deal.

On the other hand, the United States President Donald Trump also gave warning regarding retaliation if the Iran attacks on United States personnel or assets.

The yield on the United States ten-year Treasury note dropped to a one-month low of 1.757% in Asia and is currently seen at 1.777% – down ten basis points on the day.

At the data front, the German retail sale for November and final PMI indices for December are scheduled for release. However, these data will likely avoid in the wake of geopolitical development.

Daily Support and Resistance

• S3 1.1082
• S2 1.1133
• S1 1.1153
• Pivot Point 1.1183
• R1 1.1203
• R2 1.1234
• R3 1.1284

EUR/USD– Trading Tips

On the 2 hour chart, the EUR/USD has tested the support level of 1.1130, which was being extended by the old triangle pattern. The U.S. Iran war sentiments are making EUR/USD weaker and are very likely to drive bullish bias until 1.1200 and 1.1245 level today. 

Speaking about the leading indicators, the RSI and MACD are holding in the buying zone, demonstrating the bullish trend in the EUR/USD pair today. Consider staying bullish until 1.1240 today.

GBP/USD– Daily Analysis

The GBP/USD currency pair shifted to bullish track from the two-day losing streak, mainly due to broad-based greenback weakness. As of writing, the GBP/USD is trading at 1.3160.

Just like the EUR/USD, the GBP/USD is also being influenced by the geopolitical tensions. On-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. The country also announced that it will not follow any restrictions imposed by the 2015 nuclear deal. As a result, the U.S. dollar is getting weaker.

At the Brexit front, the United Kingdoms’ opposition Labour Party will decide the schedule for the election to choose the next leader on Monday. Moreover, it seems like the contender Keir Starmer already accepted the Brexit while Jess Phillips says if Brexit fails, she will likely to rejoin the European Union.

The United Kingdom Prime Minister will meet the Ursula von der Leyen, European Commission President on Wednesday, and will likely discuss the Brexit process ahead. However, the daily mail hints that the senior Tory leaders are supporting Boris Johnson to kick off parallel post-Brexit trade talks with the U.S. to put pressure on the E.U. 

Daily Support and Resistance

• S3 1.2932
• S2 1.3047
• S1 1.3094
• Pivot Point 1.3163
• R1 1.321
• R2 1.3278
• R3 1.3393

GBP/USD– Trading Tip

The GBP/USD is also trading bullish around 1.3185 due to weakness in the U.S. dollar. The recent bullish engulfing candle is suggesting odds of bullish trend continuation in the GBP/USD pair. 

On the higher side, the GBP/USD may find resistance near 1.3185 level today while the support still stays at 1.3060. A bullish breakout of 1.3185 level can extend the bullish trend until 1.3285. Let’s stay bullish above 1.3125 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair found on the bearish track due to the risk-off sentiment in the market and a greenback’s weakness. The USD/JPY pair is trading at 108.00 and consolidates in the range between the 107.77 – 108.12.

On the front of main headlines, the on-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. As a consequence, the markets have turned into risk-off sentiment, boosting demand for safe-haven assets like U.S. treasury, gold, and Japanese yen.

On the other hand, the United States President Donald Trump also gave warning regarding retaliation if Iran attacks the United States personnel or assets. Notably, we can expect further conflicting updates.

The United States’ two-year Treasury yields declined from 1.57% to 1.51%, the lowest since early Nov, ten-year yields from 1.88% to 1.79%. Markets are pricing a near-zero chance of rate cut at the next Fed meeting on January 29 but a terminal rate of 1.28%.

Daily Support and Resistance

• S3 107.24
• S2 107.9
• S1 108.23
• Pivot Point 108.55
• R1 108.89
• R2 109.2
• R3 109.86

USD/JPY – Trading Tips

The USD/JPY is trading in a bearish channel, which is keeping it support near 107.750 for now. At the same time, the resistance is likely to be found around 108.250. The RSI and MACD are staying above 50 and 0, suggesting a bullish trend in the USD/JPY.

Technically the pair has the potential to drop further until 107.800 level, and violation of this could extend selling until 107.600. All the best!

On the forex front, the U.S. Dollar Index was little changed at 97.65 in thin holiday trading. The Euro edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The USD/JPY climbed 0.2% to 109.54.

The U.S. Labor Department reported that initial jobless claims fell to 222,000 in the week ended December 21 (220k expected) from 235,000 in the prior week. Today, the focus is going to be on the technical side of the market as the economic calendar remains muted. 

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The U.S. President Donald Trump said on Tuesday that he and Chinese President Xi Jinping would have a ceremony to sign the phase-one of the trade deal reached earlier this month. 

Mr. Lowe also added that the E.U. was failing, so they rammed the Euro in. He said that Euro was destined to fail and would have collapsed by now if it was not for massive quantitative easing by ECB.

On the other hand, the macroeconomic calendar remained empty on Thursday except for the U.S. jobless claims for the previous week. The U.S. unemployment claims during last week were recorded as 222K, which came in line with the expectations. 

Daily Support and Resistance

• S3 1.0974
• S2 1.1031
• S1 1.1053

Pivot Point 1.1089

• R1 1.1111
• R2 1.1146
• R3   1.1203

EUR/USD– Trading Tips

The EUR/USD is trading with the slightly bearish sentiment, and it’s very likely to test the next support area around 1.1110 on the 4-hour chart. The bearish breakout of this level can trigger further selling until 1.1085. Conversely, the bullish bias can lead the EUR/USD to 1.1125 and 1.1160 resistance levels. Let’s wait for the buy trade above 1.1110 today.  

GBP/USD– Daily Analysis

The GBP/USD gained 0.3% to $1.3001. Boris Johnson has announced to make his Brexit deal as law, and in case of not reaching a trade deal with E.U. by the end of next year, then U.K. will leave E.U. without any agreement. However, it was highly unlikely because PM Johnson now holds the majority of the U.K. Parliament. 

The Parliament has already approved his deal for leaving E.U., and there are fewer chances that E.U. & U.K. will not reach a trade deal. Furthermore, PM Johnson has also said that he would make sure the departure of the U.K. from the European Union on January 31.

The British economy has been showing weaknesses for some time, and it is possible that Bank of England would start easing its monetary policy soon, which will drag the GBP/USD pair back from 1.30 level.

In the U.K., the British Banker’s Association will report November finance loans for housing (41.2 billion pounds expected).

Daily Support and Resistance

• S3 1.2757
• S2 1.2901
• S1 1.2955

Pivot Point 1.3044

• R1 1.3099
• R2 1.3188
• R3 1.3331

GBP/USD– Trading Tip

The GBP/USD has broken the support mark of 1.3060, and currently, this level is expected to serve as a resistance for the GBP/USD. On the downside, the GBP/USD can exhibit further selling until the next target level of 1.2940.

The RSI and MACD have now crossed over 50 and 0 zone, suggesting odds of a bullish reversal in the GBP/USD pair. Consider staying bullish above 1.2995 and bearish below 1.3100 today. 

USD/JPY – Daily Analysis

The USD/JPY fell to 109.48. This morning, official data showed that Japan’s jobless rate dropped to 2.2% in November (2.4% expected and in October), while industrial production slid 0.9% on the month (-1.0% expected). Also, retail sales grew 4.5% (+5.0% expected).

The Bank of Japan Governor Haruhiko Kuroda said on Thursday that the central bank would ease its monetary policy further without hesitation if the momentum toward its 2% inflation goal came under threat.

He also offered a brighter view of the global economic outlook and said that the Bank of Japan would not rush to change its current policy for now. After a week after Central bank kept its short term rates target at -0.1% and long-term at 0%, Kuroda said that the trend of Japan’s economy was at moderate growth.

However, the easing of global trade tensions has reduced the chances that the central bank would ease its monetary policy further. Reduction in uncertainties over the US-China trade war has played an essential role in facilitating global economic conditions.

Daily Support and Resistance

• S3 108.56
• S2 108.97
• S1 109.17

Pivot Point 109.38

• R1 109.58
• R2 109.8
• R3 110.21

USD/JPY – Trading Tips

The USD/JPY has already completed the 38.2% Fibonacci retracement around 109.200 level. Now, this level is supporting the safe-haven pair along with an immediate resistance around 109.350. 

The RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.50 to target 109.200 and even below to 108.950 today. 

All the best!

The market continues to trade mixed risk sentiment due to diminishing expectations of no interest rate cuts by the Fed and delay in the trade deal. The top White House Economic Adviser, Larry Kudlow, confirmed on Friday that the December 15 deadline to impose new tariffs on around $156 billion worth Chinese products remains in place.  

At the same time, he also said that the U.S. President Donald Trump is satisfied with the recent progress in trade discussions. Yet he is not looking to go with the current phase one trade deal. 

Today, the trader’s focus will stay on the British GDP and further events from the Eurozone. Let’s brace for it. 

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD currency pair continues its bullish moves mainly due to the greenback’s bearish reversal across the board and weaker United States Treasury yields. As of writing, the EUR/USD pair is trading near the 1.1064 and consolidates in the narrow range between the 1.1053 – 1.1078.

Besides, the currency pair picked up the fresh buying during the last hour, in the wake of the revived trade war between the United States and China. The dismal of China trade data also depressed the market mood.

The lowered demand for higher-yielding assets such as the Treasury yields pushed the U.S. dollar broadly lower. The USD index corrects Friday’s positive U.S. payrolls led upsurge to 97.84, now trading at session lows of 97.63, -0.15% on the day.

Even after the recent bullish moves, the currency pair still in the red zone because the greenback may remain supported by the stronger United States employment data that diminished the 2020 rate cut expectations by the Federal Reserve.

At the ECB front, the European Central Bank (ECB) President Largerde will deliver her first speech as a president regarding monetary policy during this Thursday. She will likely provide a hint about the ECB’s commitment to the recent stimulus package that included a rate cut and the restarting of the quantitative rate cut(Q.E.) program.

Meanwhile, the markets now await the Eurozone Sentix Investor Sentiment data, which is de during the European session today. Better-than-expected German Trade and Current Account data also collaborate with the positive tone around the shared currency.

Furthermore, the investor’s confidence in the Eurozone increased sharply in December, despite rising US-China trade tensions and the German slowdown, the latest data published by the Sentix research group showed on Monday.

The quote climbed to +0.7 in December from -4.5 in November and against a figure of -4.9 expected. The investors’ confidence hit the highest since March 2018.

Daily Support and Resistance

• S3 1.093
• S2 1.1
• S1 1.1031

Pivot Point 1.107

• R1 1.1101
• R2 1.1141
• R3 1.1211

EUR/USD– Trading Tips

The EUR/USD has disappointed in its first test of the 5-month downtrend at 1.1113. The EUR/USD is trending lower but has not gained any support until now. The EUR/USD has next support near 61.8% Fibonacci support level of 1.1040.  

While the resistance stays around 1.1070, and the 1.1075 horizontal resistance mark strictly follows it. Considering the recent crossover on MACD, the pair may trade bearish below the 1.1070 level today. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and representing declines to 1.3135 from the highest level since early April of 1.3180 after the release of a new poll ahead of the snap December elections in the United Kingdom. The Cable experienced a slight bearish reversal on Monday and mostly traded at 1.3155/60, up 20 pips for the day. 

The GBP/USD currency pair was seen on the bullish track on Monday, but it remains under 1.3200. The GBP continues to be supported by the polls showing a top position of the Conservatives Party. Just minutes ago, the fresh opinion poll by ICM revealed that the United Kingdom Prime Minister Boris Johson’s Conservative Party remain unchanged at 42%. In contrast, support for the party rose by 1 point to 36%. The Tory slightly pushed lower the GBP in advance.

The reversal in the GBP/USD currency pair was limited as the volatility remain low, and the U.S. dollar continued to show slight bearish bias. 

Looking forward, the critical event in the U.S. will be the FOMC meeting on Wednesday. Analysts and traders are also focusing on trade progress as the December 15 deadline for hiking tariffs on Chinese goods remains in highlights. 

Daily Support and Resistance

• S3 1.3004
• S2 1.3069
• S1 1.3103

Pivot Point 1.3134

• R1 1.3168
• R2 1.32
• R3 1.3265

GBP/USD– Trading Tip

On the technical side, the cable pair holds a bullish tone, but it is showing some short-term bearish signals after being unable to stay on top of 1.3160. Nevertheless, the trend in the pair points clearly to the upside, and consolidation of the GBP/USD above 1.3180 would expose the pair towards 1.3200. 

The prices need to cross May month high near 1.3180 to target 1.3200 and 1.3270 figures to the north, declining to do so highlights Wednesday’s top surrounding 1.3120 as immediate support.

In the daily timeframe, the GBP/USD has an upward crossover on MACD. Lastly, the three white candles on the daily timeframe are suggesting bullish bias among traders. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the five-days low below the 108.50 ahead of important macroeconomic events. The pair struggle to stage a recovery on Monday and was last seen trading at 108.49, a few pips above the 5-day low that it set at 108.43 in the last hour.

The economic figures showed that the business sentiment grew slightly during November with the Eco Watchers Survey’s Outlook and the Current indexes both coming out better than their October figures.

Looking forward, the trader will keep their eyes on the fresh progress surrounding the United States and China trade talks. If both sides could make a deal and sign the phase-one of the trade deal ahead of the United States tariff hike on Chinese imports on December 15, a relief rally will likely cause the Japanese Yen to lose interest as a safe-haven and support the pair gain bullish moves.

The U.S. Federal Open Market Committee (FOMC) will be publishing its monetary policy decisions on Wednesday. In contrast, the FOMC is not expected to make any changes to its policy rate. It will be interesting to see how the Fed estimates the positive Gross Domestic Product (GDP) and Nonfarm Payrolls (NFP) data. 

Last week on Friday, the U.S. Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 266,000 during November to cross the market expectation of 180,000 and provided a boost to the U.S. Dollar Index. Consequently, the USD/JPY pair got bullish support. Meanwhile, the S&P 500 futures are virtually unchanged on the day, hinting that Wall Street is likely to open flat to reiterate the neutral market sentiment.

Daily Support and Resistance   

• S3 107.85
• S2 108.26
• S1 108.44

Pivot Point 108.68

• R1 108.85
• R2 109.1
• R3 109.51

USD/JPY – Trading Tips

On Tuesday, the demand for haven assets and weaker U.S. dollar has driven sharp selling in the USD/JPY currency pair this week. For now, the pair is trading above 108.550, which is working as a double bottom support level.

A bearish breakout of this level can trigger selling until 108.250. The USD/JPY has already completed 81% retracement on three hourly charts, and this level can give some support to USD/JPY. Above this, the pair may find resistance around 108.900. Let’s wait for NFP to determine the further trend of USD/JPY. 

All the best!