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The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13383
Open: 1.13191
% chg. over the last day: -0.10
Day's range: 1.13146 – 1.13300
52 wk range: 1.1214 – 1.2557

EUR stabilized after a long fall since the beginning of the month. Right now EUR/USD quotes are consolidating. The key support and resistance levels are 1.13150 and 1.13350. A US/China trading conflict is in the spotlight. Keep in mind that the countries made a truce until March 1 to find a compromise. The investors are waiting for the next round, set to commence this week. Keep an eye on the relevant intel regarding and open positions from the key levels.

The Economic News Feed for 11.02.2019 is calm.

The price fixed below 50 MA and 200 MA which points to the power of the sellers.

The MACD histogram is in the negative zone but above the signal line, which gives a weak signal to sell EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.13150, 1.13000, 1.12500
Resistance levels: 1.13350, 1.13600, 1.13800

If the price fixes below the local support 1.13150, expect the quotes to fall toward 1.12800-1.12600.

Alternatively, the quotes can recover toward 1.13600-1.13800.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.29480
Open: 1.29289
% chg. over the last day: -0.05
Day's range: 1.29075 – 1.29386
52 wk range: 1.2438 – 1.4378

GBP/USD has an ambiguous technical picture. The pound is being traded in a flat. The key range is 1.29000-1.29450. The financial market participants are waiting for new information regarding Brexit. This week the UK will publish some important reports which may change the GBP/USD balance in the short-term. Open the positions from the key levels.

The Economic News Feed for 11.02.2019:

GDP Report (GB) – 11:30 (GMT+2:00);

Volume of Industrial Production (GB) – 11:30 (GMT+2:00);

The price fixed below 50 MA and 200 MA, which points to the power of the sellers

The MACD histogram is in the negative zone and below the signal line, which points to the bearish mood.

The Stochastic Oscillator is near the oversold zone, the %K line is below the %D line which gives a weak signal to sell GBP/USD.

Trading recommendations

Support levels: 1.29000, 1.28600
Resistance levels: 1.29450, 1.29750, 1.30000

If the price fixes below the round 1.29000 consider selling GBP/USD. The movement will tend toward 1.28600-1.28400.

Alternatively, the quotes can grow toward 1.29750-1.30000.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32979
Open: 1.32630
% chg. over the last day: -0.23
Day's range: 1.32629 – 1.32965
52 wk range: 1.2248 – 1.3664

USD/CAD had a little sell-off on Friday and updated the local minimums. The demand on the CAD grew after an optimistic Labour Market report and the primary construction data. Right now USD/CAD is consolidating around 1.32600-1.32950 and can correct further. Open the positions from the key levels.

The Economic News Feed for 11.02.2019:= is calm.

The indicators do not provide precise signals, the price has crossed 50 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which gives a signal to sell USD/CAD.

Trading recommendations

Support levels: 1.32600, 1.32300, 1.32000
Resistance levels: 1.32950, 1.33250

If the price fixes below 1.32600 expect the quotes to correct toward 1.32300-1.32000.

Alternatively the quotes can grow toward 1.33250-1.33500.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.790
Open: 109.736
% chg. over the last day: -0.07
Day's range: 109.722 – 110.028
52 wk range: 104.56 – 114.56

USD/JPY keeps trading in a long flat. There is no single defined trend. The financial market participants are waiting for additional drivers. The USD/JPY quotes are testing the 110.000-110.150 zone. The local support is 109.750. You should open positions from the key levels and keep an eye on the US/China trading conflict.

Today the trading activity and volatility on USD/JPY may be smaller than usual due to the celebrations in Japan.

The price fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is in the positive zone and keeps rising which points to a bullish mood.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 109.750, 109.550, 109.200
Resistance levels: 110.000, 110.150, 110.500

If the price fixes above 110.150, expect it to grow toward 110.500-110.700.

Alternatively, the price can fall toward 109.500-109.300.

Last week, the US dollar strengthened against currency majors. On Friday, February 8, the dollar index (#DX) updated monthly highs and closed in the positive zone (+0.13%). The trade conflict between Washington and Beijing is still in the spotlight. Today, there will be a meeting between representatives of the US and China delegations in Beijing. The US delegation will continue to insist on the fulfillment of Washington’s requirements regarding the protection of intellectual property.

Quite optimistic statistics from Canada were published on Friday. Thus, the employment rate improved in January and counted to 66.8K, while experts expected 8.0K. However, the unemployment rate rose to 5.8% in January instead of 5.7%. Housing starts counted to 208.0K and exceeded market expectations at the level of 205.0K.

Today, a number of important economic data from the UK is expected. Investors' attention is also focused on Brexit. Prime Minister, Theresa May, should make significant progress in the Brexit negotiations by February 13, otherwise, the government will come up with an amendment that will allow parliamentarians to control more the Brexit process.

The "black gold" prices show negative dynamics due to the growth of drilling activity in the United States. At the moment, futures for the WTI crude oil are testing a mark of $52.25 per barrel.

Market Indicators

• On Friday, there was a variety of trends in the US stock market: #SPY (+0.12%), #DIA (-0.23%), #QQQ (+0.20%).
• The 10-year US government bonds yield fell slightly. Currently, the indicator is at the level of 2.64-2.65%.

The UK news feed on 11.02.2019:

• GDP data at 11:30 (GMT+2:00);
• Manufacturing production at 11:30 (GMT+2:00).

EURGBP topped its rally at two-week highs last Tuesday and reversed lower to finish the week slightly negative. In the near term, the pair could consolidate as the negative momentum in the RSI seems to be slowing down slightly below the 50 neutral mark, while the MACD continues to improve above its red signal line and towards zero but with softer speed.

On the upside, the pair could retest the two-week high of 0.8820 after surpassing the 0.88 round level, which is the 38.2% Fibonacci retracement of the downleg from 0.9110 to 0.8616. Higher, a break above the 50% Fibonacci of 0.8863 and therefore a move above the 200-day moving average could boost positive sentiment in the market, sending the price next towards the 61.8% Fibonacci of 0.8922, a stronger barrier in previous sessions.

Should negative pressure resume below the 23.6% Fibonacci of 0.8732, support could be found between 0.8690 and 0.8655. Lower, the bears would target the 0.8616 bottom. If this proves a weak obstacle too, the next stop could be seen near 0.8540.

Turning to the medium-term picture, the neutral outlook came back into play following the rebound on the 0.8616 trough. A decisive close above the 0.9110 top would activate the bullish profile, though there is still some way to go.

The USD remained rather stable against a number of its counterparts despite trade and global growth worries are pushing in the safety of the greenback. Analysts point out that US-Sino trade talks are expected to be the major focus for the coming week, as US negotiators are to visit China. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. The US negotiating team is expected to press China on intellectual property for a deal to emerge from the talks. We could see the USD gaining further should uncertainty about the issue linger on. EUR/USD dropped on Friday and during today’s Asian session, testing the 1.1345 (R1) resistance line, yet failing to break it. We maintain a bearish outlook for the pair and for our opinion to change we would require the pair to break the downward trendline incepted the beginning of the month. Should the pair’s direction be dictated by the bears, we could see it breaking the 1.1300 (S1) support level and aim for lower grounds. Should on the other hand the bulls take over, we could see it breaking the prementioned downward trendline, the 1.1345 (R1) resistance lien and aim for the 1.1385 (R2) resistance level.

Theresa May courts with the Labour party

UK’s PM Theresa May wrote a conciliatory letter to Labour leader Jeremy Corbyn, in which she questions, yet not rejects his plan for the UK to remain within the EU customs union. Analysts point out that UK’s PM may be playing for time as the UK parliament is to have another vote on the 14th of February and could take control of the process itself. There seems to be limited room for Theresa May as last week’s talks with the EU, had no result with EU leaders refusing to alter the Irish backstop clause. As uncertainty lingers on about the issue and the clock is ticking, the pound may weaken. Cable maintained a sideways movement breaking the downward trendline incepted since the 29th of January and remaining below the 1.2960 (R1) resistance line. As the pair’s price action has broken the prementioned downward trendline we switch our bearish outlook for a sideways movement, yet we maintain some reservations for the reappearance of the bears, as the financial releases today could weaken the pound and Brexit uncertainty lingers on. Should the pair come under the selling interest of the market, we could see it aiming if not breaking the 1.2830 (S1) support line. Should on the other hand, the market favor the pair’s long positions, we could see cable breaking the 1.2960 (R1) resistance level and aim for the 1.3070 (R2) resistance barrier.

Today’s other economic highlights

In today’s European session we get Norway’s inflation rates for January and from the UK the preliminary GDP for Q4, the manufacturing production for December as well as the trading balance for December. Please be advised that the Eurogroup is scheduled to have a meeting today and could affect the common currency’s direction.

As for the week ahead

On Tuesday, from New Zealand we get RBNZ’s interest rate decision. On Wednesday, we get UK’s inflation rates for January, from Eurozone’s industrial production for December, the US inflation rates for January. On Thursday, we get Japan’s GDP for Q4, China’s Trade Balance, Germany’s and Eurozone’s preliminary GDP for Q4, and the UK parliament is to have another vote on Brexit. On Friday, we get China’s CPI for January and UK’s retail sales for January.

EUR/USD H4

Support: 1.1300 (S1), 1.1260 (S2), 1.1215 (S3)
Resistance: 1.1345 (R1), 1.1385 (R2), 1.1425 (R3)

GBP/USD H4

Support: 1.2830 (S1), 1.2710 (S2), 1.2610 (S3)
Resistance: 1.2960 (R1), 1.3070 (R2), 1.3175 (R3)

Cable moved lower in early European trading on Monday after quiet narrow range action in Asia.

Fresh weakness pressures again pivotal 1.29 support zone (Fibo 38.2% of 1.2397/1.3217 / 30SMA / 100SMA) which was cracked last week, but without clear break lower.

Near-term bias remains with bears and favors fresh weakness in extension of pullback from 1.3217 peak (2019 high), following three-day consolidation last week.

Fresh bearish momentum is building on daily chart and along with multiple bear-crosses (5/200, 5/20, 10/200SMA) maintains pressure.

Brexit uncertainty which triggered flow of investments from UK, adds to negative sentiment.

Traders await release of a batch of data from UK today (Q4 GDP 1.4% f/c vs 1.5% prev, IP Dec 0.1% f/c vs -0.4% prev, Manufacturing production Dec 0.2% f/c vs -0.3%, Trade balance Dec -12B vs -12.02B) which are expected to provide fresh signals.

Sustained break below 1.29 zone would confirm bearish stance and open way towards supports at 1.2807 (50% retracement) and 1.2786 (daily cloud top).

Repeated failure at 1.29 zone supports would signal possible stall of bears, however, extended congestion could be expected as long as the price action holds below falling 200SMA (1.3027).

Only sustained break here would neutralize downside threats and revive bulls.

Res: 1.2938, 1.3000, 1.3027, 1.3078
Sup: 1.2904, 1.2893, 1.2830, 1.2807

The Euro maintains bearish bias at the beginning of the week and holding below broken 200WMA (1.1334) as last Friday's close below here generated bearish signal, as the moving average limited downside attempts in more than one year and marks very important support.

The pair holds in red for the sixth straight day, pressured by strong rally of US dollar and bearish daily technical studies and eyes key near-term support at 1.1289 (2019 low posted on 24 Jan), as full retracement of 1.1289/1.1514 rally would open way for further weakness.

Deeply oversold slow stochastic warns of hesitation on approach to 1.1289 support and possible bounce.

Corrective action could be seen as positioning before bears resume with falling 5SMA offering initial resistance at 1.1348, with converged 55/20SMA's (1.1387/89) expected to cap extended upticks and keep bears in play.

Res: 1.1330, 1.1348, 1.1389, 1.1407
Sup: 1.1312, 1.1289, 1.1267, 1.1215

US futures are kick-starting the week on the back foot and the risk assets are out of luck again. Investors are less optimistic because of the lack of any progress on the trade negotiations between the US and China. Nonetheless, this particular week is going to be full of actions and investors need to be fully prepared because of issues around Brexit and US-China trade relation.

Fears about global growth running slow are pushing the bonds higher. The equity rally which we have seen so far this year is under a major threat. The S&P 500 is up 8.02% year-to-date, the NASDAQ index is up 9.99% YTD and the Dow Jones is up 7.63% YTD. These gains can vanish fairly fast if the above-mentioned concerns continue to disturb the markets.

We are going to start the week with the most important economic reading for the UK: GDP m/m reading. It is widely expected that the number is going to show the economy was flat in December. As for the overall progress during the quarter, we may see a little growth but nothing overwhelming at all. A lot of emphases will also be on Brexit developments. Theresa May will be fighting for more time after her recent defeat in Brussels. She has promised that she will be able to secure another deal and put that deal back in the parliament for a vote. But, the time is running out and there is no progress so far. She has asked the opposition leader Jermyn Corbyn to give her some more time, until 26th February, so that she can negotiate some parts of the deal with the EY.

The British pound is clearly vulnerable to this and it is trading below the critical level of 1.30 against the dollar. For bulls to remain optimistic about the uptrend, the price really needs to break above 1.30 other the path of the least resistance will remain to the downside.

Back in the US, trade negotiations between the US and China are going to take the centre stage and the tone of these negotiations is changing every day. Given that the deadline is just around the corner before the US slaps more tariffs on China, it is highly likely that both sides choose to extend the current deadline. As long as the US does not slam more tariffs on China and the negotiations process continues, I believe the overall situation would remain a lot more optimistic. Of course, betting on Trump is not something which many investors feel comfortable and it is something you will have to keep in mind as a trader.

As for Bitcoin and Ethereum, the sentiment seems to find some strength today as Ethereum price has strongly defended its support zone of $100. I think as long as Ethereum price stays above the $100, the hopes would be that we have seen another bull run soon or the worst case is just consolidation.

Daily Pivots: (S1) 1.1306; (P) 1.1341; (R1) 1.1359; More...

Intraday bias in EUR/CHF remains on the downside for 1.1259 support first. Break will target 1.1181 low again. On the upside, above 1.1376 minor resistance will turn bias to the upside for 1.1444.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by 1.1154/98 support zone to complete it and bring rebound. Decisive break of 1.1501 (38.2% retracement of 1.2004 to 1.1173 at 1.1490) will confirm completion of the correction, on bullish convergence condition in daily MACD. Further rise should be seen to 61.8% retracement at 1.1687 and above next.

• Dollar ticks up, stocks mixed as risk sentiment remains fragile
• Swiss franc had a mini 'flash crash' overnight, amid thin liquidity conditions
• UK GDP data due today, but focus remains on Thursday’s Brexit vote in Parliament

Dollar climbs, stocks steady as sentiment remains wobbly

The dollar advanced for a 7th straight session against a basket of currencies on Friday, albeit only modestly, as investors sought the security of the world’s reserve currency amid concerns around the health of the global economy and the outlook for trade. Attesting to this risk-off mood, the defensive Japanese yen outperformed all its major peers outside of the loonie, which was propelled higher by robust employment data out of Canada. Meanwhile, the major US equity indices were mixed, but little changed overall.

It will be a deciding week for the trade saga, and thus for risk appetite in general, as the US negotiating team – led by Secretary Mnuchin and Trade Representative Lighthizer – has arrived in Beijing for another round of talks. This comes after President Trump said recently that he won’t meet President Xi this month after all, pouring cold water on hopes for a swift resolution to the dispute. Still, this may be yet another 'hardball' US negotiating tactic aimed at generating leverage, implying that an eventual deal still seems like the most probable scenario, though the risk of a delay beyond the March 1 deadline has risen markedly.

Also keep an eye on US politics, as reports suggest another government shutdown may be looming as early as Friday, after talks on border funding broke down. While investors typically remain oblivious to shutdowns as they see through the ‘political theater’, the more frequent they become, the greater the impact on the real economy and by extent on markets via the uncertainty channel.

Franc experiences 'mini flash crash' amid thin liquidity

The Swiss franc nosedived as markets opened on Monday, falling by more than one big figure versus both the dollar and the euro within a few minutes, but jumped right back to recover all its losses almost immediately. Since there were no material news during the early Asian session, the move seems owed mainly to some large orders being executed in an environment of very thin liquidity. Remember that Chinese investors returned today after an entire week of being on holiday, and so may have had several older orders pending, while Japanese markets were closed on the day, exacerbating the illiquidity.

UK GDP figures on the docket; Brexit always in the background

The highlight on the economic calendar today will be the preliminary estimate of UK GDP for Q4. The UK economy has clearly shifted down gears as political uncertainty saw business investments collapse, and the latest PMIs for January suggest this weakness has carried over – and even became more pronounced – in the new year.

More importantly, for the pound at least, will be any developments on the Brexit front. On Thursday, the UK Parliament will vote on an amendable statement, which means lawmakers will have another chance of taking more control over the Brexit process, for instance by requiring the government to ask for an extension of Article 50, delaying the exit date. This is probably the best-case scenario for sterling, and if it materializes could provide some support in the near term, as any meaningful concessions from the EU on the Irish backstop remain highly unlikely.

Daily Pivots: (S1) 141.77; (P) 142.15; (R1) 142.44; More...

Intraday bias in GBP/JPY remains neutral at this point. On the upside, above 144.84 will extend the rebound from 131.51. But we'd expect strong resistance from trend line (now at 146.93) to limit upside, at least on first attempt. On the downside, firm break of 140.62 will suggest completion of the rebound and turn bias to the downside.

In the bigger picture, the strong rebound from 131.51 suggests that medium term fall from 156.59 (2018 high) has completed already. The corrective structure of such decline is turn argues that it's the second leg of the corrective pattern from 122.36 (2016 low). And this pattern is starting the third leg. On the upside, decisive break of 149.38 will pave the way to 156.59 resistance and above.