Sample Category Title

Notes/Observations

• ECB rate decision later today and seen adding a dovish tilt as recent data highlighted that balance of risks appear tilted to the downside
• Major European PMI data mixed in session but the overall tone of the data highlighting that growth risks were tilted to the downside; France beats on manufacturing as it moves back into expansion; Germany misses on Manufacturing and contracts for 1st time in 4 years; Euro Zone also missed expectations but barely held onto expansion

Asia:

• Bank of Korea (BOK) left its 7-Day Repo Rate unchanged at 1.75% (as expected). Decision to keep policy steady was unanimous. Reiterated stance to maintain accommodative monetary policy and would judge if necessary to adjust policy further. Analysts note that BOK not likely rush change policy at all this year
• Australia Dec Employment Change was solid and slightly better than expected (+21.6K v : +18.0Ke); Unemployment Rate falls to its lowest level in almost 8 years (5.0% v 5.1%e)
• Japan Jan Preliminary PMI manufacturing registers its weakest reading since 2016 (50.0 v 52.6 prior)

Europe:

• Almost two dozen UK ministers said to been secretly meeting in Parliament to discuss plans to stop a no-deal Brexit. Agroup of ministers (approx 20) and said to include five members of the Cabine have held discussions on the best way to avoid the economic damage of a no deal Brexit.
• UK Chief Brexit negotiator Robbins said to have sent PM May nine options to break Brexit deadlock, including withholding Brexit divorce bill; unilateral exit mechanism to backstop/ time limit; and a UK-wide regulatory alignment during backstop

Americas:

• President Trump confirmed that he would make State of Union Address once shutdown was over (changing his earlier statement of "doing an alternative")
• Bank of Canada (BOC) Gov Poloz: Canada economy was in good shape; policy was data dependent. Reiterated neutral rate is between 2.50-3.50%

Energy:

• Weekly API Oil Inventories: Crude: +6.6M v -0.6M prior

Macro

• (UK) United Kingdom: The Bank of England's Haldane said he still sees room for further rate hikes. Haldane said in an interview that "if the economy continues to tick along, as we expect, then we might expect some further limited and gradual rises." However, he also stressed that "if the economy begins to change direction, we will be flexible in the face of that".
• (EU) Eurozone: PMI readings disappointed again in January with business growth is close to stalling after hitting a 5.5 year low during the month. The Composite output PMI fell back to a 66 months low of 50.7, from 51.1 in December. The services PMI dropped to 50.8 from 51.2 and the manufacturing PMI fell back to 50.5 from 51.4. That the German manufacturing PMI fell below the 50 supposed contraction/expansion level will be of major concern. Companies reported the first drop in demand for over four years and said data suggests that GDP is rising at a quarterly rate of just 0.1%, which will back the arguments for a dovish response from the ECB today. It is looking increasingly likely that they missed their window of opportunity for further policy normalization and is going into a downturn with rates already negative territory.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.42% at 356.38, FTSE -0.12% at 6,835.00, DAX +0.57% at 11,135.07, CAC-40 +0.66% at 4,872.41, IBEX-35 +0.85% at 9,203.00, FTSE MIB +1.18% at 19,628.50, SMI -0.01% at 8,951.50, S&P 500 Futures +0.14%]
• Market Focal Points/Key Themes: European Indices trade mostly higher following firmer US markets yesterday and slightly higher futures this morning ahead of today's ECB rate decision. On a busy morning on the corporate front shares of STM Micro trade sharply higher after an earnings beat, with Infineon trading higher in sympathy and vague M&A chat. Elsewhere, Fever-Tree Drinks, Tribal Group, Bankinter, Elior among the names higher on earnings while Gama Aviation, NCC Group, Brooks MacDonald, Restaurant Group and Zooplus trade lower after earnings and trading updates. In other news Vodafone trades lower on contribution of INR110B towards Vodafone India's rights issue. Looking ahead notable earnings include airliners American Airlines, Jetblue and Southwest Airlines, as well as Bristol Myers Squibb, Union Pacific, Textron and Freeport among others.

Equities

• Consumer discretionary: Tod's Spa [TOD.IT] -6% (preliminary earnings), Ashtead [AHT.UK] +1.5% (United Rentals earnings), Elior [ELIOR.FR] +1.5% (earnings), Gama Aviation [GMAA.UK] -23% (trading update), Adidas [ADS.DE] -2.5% (analyst action)
• Consumer staples: Fevertree Drinks [FEVR.UK] +5% (trading update)
• Healthcare: Novozymes [NZYMB.DK] -3.5% (earnings), Pharma Mar [PHM.ES] +10% (positive opinion)
• Industrials: Anglo American [AAL.UK] -1% (trading update)
• Technology: STMicroelectronics [STM.FR] +8% (earnings), Infineon Technologies [IFX.DE] +5% (STMicro earnings; press speculation on M&A in industry), NCC Group [NCC.UK] -21.5% (earnings), Blue Prism Group [PRSM.UK] -2% (earnings; placing)
• Telecom: Vodafone [VOD.UK] -3% (Vodafone Group to contribute to Vodafone Idea's raise of funds)

Speakers

• SNB's Jordan: reiterated stance that negative rates and FX intervention pledge remains sufficient; no need to change monetary policy. Still have room to maneuver on rates
• Norway Central bank (Norges) Policy Statement noted that the decision to keep policy steady today was unanimous. Reiterated view that outlook and balance of risks imply a gradual rate hike path. Development largely unchanged from December; inflation slightly higher; economic Growth and labor market broadly as projected
• EU Brexit Chief Negotiator Barnier stated that he did not believe that more time was needed but must make decisions. If request for expanding delay would be made by UK then up to EU member States to decide if possible. If no positive proposal made by UK then there would be no Brexit deal. EU had already negotiated the best deal that could be achieved. Backstop agreement was about reassuring the Irish that there would be no hard border; cannot have time limit reassurances on issue
• EU Parliament Brexit Steering Group reiterated region's call that UK must overcome the Brexit deadlock
• EU Trade Min Malmstrom: Trying to reach common ground with President Trump on trade; did not want Trump tariffs. Reiterated view that if US imposes auto tariffs then EU would respond
• Italy set up to guarantee markets functioning in the event of a 'no-deal' Brexit
• China Commerce Ministry (MOFCOM) spokesperson Gao refuted press reports that mid-level talks with US were cancelled (**Reminder: On Jan 22nd White House Adviser Kudlow stated that reports of a trade story about canceled China trade meeting was not true)
• Malaysia Central bank policy statement reiterated that degree of monetary accommodation was consistent with intended stance. Domestic economy was expected to remain on a steady growth path in 2019; but risks were tilted to the downside due to trade concerns. saw 2019 inflation to average moderately higher compared to the 1.0% average in 2018

Currencies/Fixed Income

• EUR/USD was softer in the session and probing the lower end of its 1.13-1.15 trading range. Analysts noted that doubts continued to creep in over ECB tightening after another round of soft Euro Zone data. Major European PMI data was mixed in session but the overall tone of the data highlighted that growth risks were tilted to the downside. ECB rate decision later today and seen adding a dovish tilt as recent data highlighted that balance of risks appear tilted to the downside. Some analysts looking for a change in wording on growth front (from "broadly balanced" to "tilted to the downside") . Also eyed would be any change in the forward guidance that currently stands at 'rates to stay at their present level at least through the summer of 2019"
• GBP/USD moved off 2-month highs but remained above the 1.30 level. Dealers awaited the next move to break the Brexit stalemate ahead of the UK Parliamentary vote on Tuesday, jan 29th. EU still noted that the next move must come from the UK side

Economic Data

• (MY) Malaysia Central Bank (BNM) left its Overnight Policy Rate unchanged at 3.25% (as expected)
• (NO) Norway Nov AKU Unemployment Rate: 3.8% v 4.0%e
• (FI) Finland Dec PPI M/M: -0.7% v -0.3% prior; Y/Y: 3.8% v 4.8% prior
• (FI) Finland Dec Unemployment Rate: 5.4% v 6.2% prior
• (FI) Finland Dec Preliminary Retail Sales Volume Y/Y: -1.4% v +2.3% prior
• (ZA) South Africa Q4 BER Consumer Confidence: 7 v 9e
• (CZ) Czech Jan Consumer Confidence Index: 6.8 v 6.8 prior; Business Confidence: 15.0 v 15.8 prior; Composite Confidence (Consumer & Business) 13.4 v 14.0 prior
• (FR) France Jan Preliminary Manufacturing PMI: 51.2 v 50.0e (moves back into expansion); Services PMI: 47.5 v 50.5e; Composite PMI: 47.9 v 51.0e
• (TW) Taiwan Dec M2 Money Supply Y/Y: 3.1% v 3.1% prior; M1 Money Supply Y/Y: 5.7% v 5.1% prior
• (DE) Germany Jan Preliminary Manufacturing PMI: 49.9 v 51.5e (1st contraction in 49 months); Services PMI: 53.1 v 52.1e; Composite PMI: 52.1 v 51.9e
• (SE) Sweden Dec Unemployment Rate: 6.0% v 5.8%e; Unemployment Rate (Seasonally Adj): 6.4% v 6.2%e; Unemployment Rate Trend: 6.2% v 6.3% prior
• (EU) Euro Zone Jan Preliminary Manufacturing PMI: 50.5 v 51.4e (67th month of expansion but lowest since Nov 2014); Services PMI: 50.8 v 51.5e; Composite PMI: 50.7 v 51.4e
• (NO) Norway Central Bank (Norges) left the Deposit Rates unchanged at 0.75% (as expected)
• (PL) Poland Dec Unemployment Rate: 5.8% v 5.8%e

Fixed Income Issuance

• (FR) France Debt Agency (AFT) sold total €8.957B vs. €8.0-9.0B indicated range in 2022, 2024 and 2025 Bonds (4 tranches)
• (SE) Sweden sold SEK500M in 0.125% 2027 I/L bonds; Avg Yield: -1.3909% v -1.4731% prior; Bid-to-cover: 4.44x v 2.78x prior

Looking Ahead

• 05:30 (HU) Hungary Debt Agency (AKK) to sell in 12-month Bills; Avg Yield: % v 0.41% prior; bid-to-cover: x v 2.70x prior (Jan 10th 2019)
• 05:50 (FR) France Debt Agency (AFT) to sell €1.0-1.5B in Inflation-linked oats (Oatei)
• 06:00 (IL) Israel Nov Manufacturing Production M/M: No est v 0.4% prior
• 06:45 (US) Daily Libor Fixing
• 07:45 (EU) ECB Interest Rate Decision: Expected to leave key rates unchanged: 7-day Main Refinancing Rate seen unchanged at 0.00%; Deposit Facility Rate seen unchanged at -0.40%; Marginal Lending Facility seen unchanged at 0.25%
• 08:00 (RU) Russia Gold and Forex Reserve w/e Jan 18th: No est v $472.6B prior
• 08:00 (UK) Baltic Dry Bulk Index
• 08:30 (US) Initial Jobless Claims: 218Ke v 213K prior; Continuing Claims: 1.73Me v 1.737M prior
• 08:30 (US) Weekly USDA Net Export Sales data
• 08:30 (EU) ECB's Draghi post rate decision press conference
• 09:00 (MX) Mexico Nov IGAE Economic Activity Index (Monthly GDP) Y/Y: 1.2%e v 2.9% prior
• 09:45 (US) Jan Preliminary Markit Manufacturing PMI: 53.5e v 53.8 prior; Services PMI: 54.0e v 54.4 prior; Composite PMI: No est v 54.4 prior
• 10:00 (US) Dec Leading Index: -0.1%e v +0.2% prior
• 10:30 (US) Weekly EIA Natural Gas Inventories
• 11:00 (US) Weekly DOE Crude Oil Inventories
• 11:00 (US) Jan Kansas City Fed Manufacturing Activity: 3e v 3 prior
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 14:00 (AR) Argentina Nov Economic Activity Index (Monthly GDP) M/M: No est v 0.9% prior; Y/Y: -6.0%e v -4.0% prior

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13597
Open: 1.13803
% chg. over the last day: +0.24
Day's range: 1.13405 – 1.13738
52 wk range: 1.1214 – 1.2557

EUR/USD was in a bullish mood yesterday, but today the quotes started to descend. The investors are watching the US/China trading conflict. The key support and resistance levels are 1.13550 and 1.13850. You should open positions from these levels. The trading instrument has a tendency to descend.

The Economic News Feed for 24.01.2019:

Industrial PMI (GER) – 10:30 (GMT+2:00);

Key Interest Rate Announcement (EU) – 14:45 (GMT+2:00);

Composite PMI by Markit (US) – 16:45 (GMT+2:00);

The indicators do not provide precise signals, the price is testing 50 MA.

The MACD histogram is in the positive zone but below the signal line, which gives a weak signal to buy EUR/USD.

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

Trading recommendations

Support levels: 1.13550, 1.13200
Resistance levels: 1.13850, 1.14100, 1.14500

If the price fixes above 1.13550 the quotes can descend further toward 1.13200-1.13000.

Alternatively the quotes can rise toward 1.14100-1.14300.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.29565
Open: 1.30680
% chg. over the last day: +0.96
Day's range: 1.30273 – 1.30696
52 wk range: 1.2438 – 1.4378

Yesterday USD/CAD is in an aggressive buyout. The quotes have grown by 120 points. The financial market participants hope that the UK will avoid leaving the EU without an agreement. The key support and resistance levels are 1.30250 and 1.30750. A technical correction is possible soon.

The Economic News Feed for 24.01.2019 is calm.

The indicators point to the power of the buyers, the price is above 50 MA and 200 MA.

The MACD histogram is in the positive zone but below the signal line, which gives a weak signal to buy GBP/USD..

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line.

Trading recommendations

Support levels: 1.30250, 1.29700, 1.29100
Resistance levels: 1.30750, 1.31100

If the price is below 1.30250, expet the quotes to correct toward 1.29700-1.29500.

Alternatively, the quotes can grow toward 1.31100-1.31300.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32903
Open: 1.33400
% chg. over the last day: -0.10
Day's range: 1.33554 – 1.33575
52 wk range: 1.2248 – 1.3664

Yesterday USD/CAD was in a variety of trends, following a weak report on the retail sales. The basis index in November lowered by 0.6 while the experts were waiting for 0.4. The retail sales volume in November also lowered by 0.9% instead of 0.6%. The key support and resistance levels are 1.33400 and 1.33650. You should open positions from these levels.

The Economic News Feed for 24.01.2019 is calm.

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 above the signal line, which gives a strong signal to buy USD/CAD.

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: 1.33400, 1.33100, 1.32800
Resistance levels: 1.33650, 1.34000

If the price fixes above 1.33650, expect the quotes to grow toward 1.34000.

Alternatively the quotes can descend towar 1.33100-1.32800.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.651
Open: 109.564
% chg. over the last day: +0.11
Day's range: 109.656 – 109.689
52 wk range: 104.56 – 114.56

USD/JPY is in an variety of trends. The investors are waiting for addtional drivers. The key support and resistance levels are 109.500 and 109.800, you should open positions from them. Keep an eye on the US Treasury 10-year bonds yield.

The Economic News Feed for 24.01.2019 is calm.

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

The MACD histogram is close to 0. There are no signals.

The Stochastic Oscillator is close to the overbought zone, the %K line is crossing the %D line. There are no signals.

Trading recommendations

Support levels: 109.500, 109.200, 108.900
Resistance levels: 109.800, 110.100

If the price fixes above the key resistance of 109.800 consider selling USD/JPY. The movement will tend toward 110.100-110.300.

Alternatively the quotes can fall toward 109.200-108.900.

All eyes will be on the ECB today as it announces its latest policy decision, before President Mario Draghi faces the press to deliver his statement and answer questions.

The end of quantitative easing in December – or more accurately, balance sheet increases - was meant to mark the end of crisis period stimulus measures but unfortunately for the central bank, that has coincided with an economic slowdown, rising global protectionism and trade wars that pose a risk to the outlook.

You don’t have to look much further than this morning’s PMI data from the eurozone, Germany and France to see that the region is struggling. The data has been on a downward trajectory for the last year and with German manufacturing and French services slipping into contraction territory, talk of possible recession is only going to increase. Not an ideal time to be tightening monetary policy then.

With that in mind, the ECB is widely expected to push back expectations for its first post-crisis era rate hike, which was initially being eyed for the end of the summer. They may hold off on this today though, instead waiting until March when they have new economic projections on which to base it on. That’s not to say that Draghi won’t hint that such a move is likely, with the new projections likely being revised lower based on the numbers we’re already seeing.

There has also been suggestions of a new round of LTROs which Draghi will likely be asked about during the press conference. This will provide further relief for countries in the region, particularly in the periphery that are most exposed to a slowdown having still not recovered from the stress of the financial crisis and debt crisis that followed.

The US dollar slightly weakened against a basket of major currencies. Investors' attention is focused on the trade conflict between the US and China. Advisors to the President of the United States, Donald Trump, said that he did not intend to soften the hard line in trading with China, only if the country would buy more American goods. The US dollar index (#DX) closed in the negative zone (-0.17).

The British pound strengthened again relative to the US dollar. It seems that financial market participants hope that the UK will be able to avoid a chaotic exit from the European Union without an agreement. However, the future of Brexit is still unknown. The Government of Germany does not rule out the postponement of the Brexit.

Yesterday, the Canadian dollar weakened against the US currency after the publication of a weak report on retail sales. Thus, the core retail sales index declined by -0.6 in November, while experts expected a decline of 0.4%. Retail sales also fell by 0.9% in November instead of 0.6%. Today, during the Asian trading session, optimistic data on the Australian labor market have been published: employment level rose to 21.6K in December instead of 16.5K, and unemployment level fell to 5.0% in December instead of the expected 5.1%.

The "black gold" prices show negative dynamics. At the moment, futures for the WTI crude oil are testing the mark of $52.45 per barrel. At 18:00 (GMT+2:00), a report on crude oil inventories will be published in the US.

Market Indicators

• Yesterday, the main US stock indices were recovering: #SPY (+0.21%), #DIA (+0.70%), #QQQ (+0.13%).
• The 10-year US government bonds yield is at the level of 2.74-2.75%.

The News Feed on 24.01.2019:

• German manufacturing PMI at 10:30 (GMT+2:00);
• ECB interest rate decision at 14:45 (GMT+2:00);
• Markit composit PMI in the US at 16:45 (GMT+2:00).

Today's monetary policy meeting at the European Central Bank is expected not to move the Euro with respect to the dollar. We expect ECB President Mario Draghi to be cautious on rates and present a positive view of the broad economy. The EUR/USD is expected to remain stable along 1.13, despite the US federal shutdown that is causing worry over Q1 growth.

Having ended its asset purchasing program in December, the European Central Bank is facing a challenging situation. It won't increase stimulus amid weaker economic data. At least one thing is sure: don't expect a rate hike any time soon! A rise in the ECB's main refinancing operations rate is expected for December 2019, its first since March 2016. Dragging uncertainties over Brexit discussions and Sino-American disputes are not making the ECB any more hawkish, either.

EUR/USD has edged lower in the Thursday session, wiping out the gains seen on Wednesday. Currently, the pair is trading at 1.1349, down 0.29% on the day. On the release front, German and eurozone manufacturing PMIs slowed in December and missed their estimates. Later in the day, the ECB will set interest rates, with a follow-up press conference with ECB President Mario Draghi. In the U.S, the key event is unemployment claims, which is expected to rise to 219 thousand. On Friday, Germany releases Ifo Business Climate.

The eurozone manufacturing sector continues to show worrying signs of a slowdown. Eurozone manufacturing PMI fell to 50.5, just above the 50-point threshold which separates contraction from expansion. This marked a six successive drop in the score. Germany fared even worse, as manufacturing PMI slipped to 49.7, pointing to contraction. It was the lowest reading since June 2013. The weak reading underscore the toll that the global trade war has taken on the eurozone and German economies, with less demand for exports weighing on manufacturing production.

With the eurozone economy showing signs of a slowdown, the ECB is likely to maintain current monetary policy. The ECB terminated its massive stimulus package in December, although stimulus has continued as the ECB is reinvesting bonds that mature, so the balance sheet has not been reduced. With the economy struggling, any rate increase remains a long way off. Analysts had predicted a rate hike in the third quarter just a few months ago, but are now saying that the ECB won’t raise rates before the fourth quarter. The markets will be looking for clues from the ECB statement and remarks from Mario Draghi with regard to future monetary policy.

The pair extends bearish acceleration from Wednesday that eventually broke below four-day congestion and testing key 200SMA support (5.2606).

Lira remains steady and benefited from recent uncertainty, with additional support from CBRT’s promise to maintain tight monetary policy and to revise the policy in case conditions significantly change.

Bearish techs were additionally boosted by formation of 10/20 SMA bear-cross and eventual break and close below the base of thick daily cloud.

Positive sentiment around lira suggests that lira longs could extend through 200SMA and expose next key support at 5.1323 (29 Nov low of pullback from all-time high at 7.1074).

Alternative scenario on USDTRY dip-buying at 200SMA which acts as strong support, should not be ignored, but such scenario requires sustained break above pivotal resistance zone between 5.3426 and 5.3672 (10/20/30/55SMA’s) to signal reversal and stronger recovery.

Res: 5.2989, 5.3184, 5.3360, 5.3550
Sup: 5.2606, 5.2539, 5.2232, 5.2012

The European Parliament's Brexit group issued a statement today, reiterating that the Brexit agreement must include Irish backstop solution. The group noted that the "Withdrawal Agreement is fair and cannot be re-negotiated. This applies especially to the backstop since it is the guarantee that under no circumstances will there be a hardening of the border on the island of Ireland while at the same time safeguarding the integrity of the Single Market."

Also, "the EU remains clear, firm and united on this even if the negotiated backstop is not meant to be used. Therefore, the BSG insists that, without such an "all-weather" backstop-insurance, the European Parliament will not give its consent to the Withdrawal Agreement."

Additionally after rejection by UK Commons, the group urged "the UK Government must work together with all political parties in the House of Commons to overcome this deadlock. It expects the UK side to come back as quickly as possible with a positive and viable proposal on the way forward."

Full statement here.

Separately, EU Chief Brexit negotiator Michel Barnier rejected the idea of time-limited backstop. He said "We have to maintain the credibility of this reassurance ... it cannot be time-limited... It's not just about Ireland."

Apple

Apple’s stock price is trading in a downward channel on a intra-day time frame (4-hour). This gives us the confirmation that the trend is skewed to the downside and it is likely that it will continue in this direction unless it breaks the upper line of the downward channel. The price has a serious battle with the 50-day moving average. If it breaks to the upside, and remains above it, it would be a good signal for the bulls. However, if the price falls below the 50-day moving average, it is likely that bears are going to remain in control of the price.

The support is shown by green horizontal line and the resistance is shown by red line.

Facebook

The upward trend line is under threat (shown in orange colour) and it is likely that Facebook’s stock price may break this trend line. Just below the upward trend line, we also have the 50-day moving average and it is likely that the price may actually find some strength there. But the momentum looks strong and there is no sign of any bullish candle pattern emerging. The balance of power is the only indicator which is supporting the price the bull case to a certain degree.

The support is shown by horizontal green line and the resistance is shown by the red line.

Various reports and according to Liam Fox, the UK Secretary of State for International Trade, the UK parliament is aiming to avoid a hard or No deal Brexit. Strong action is also said to be taken by British lawmakers against a No deal Brexit. We must note, as time passes, the UK is heading towards an expiration date and a decision must be taken to avoid the worst case scenario which is a hard Brexit. However, the possible outcomes of the situation still consist of a no-deal Brexit, a last-minute deal, a delay or a snap election. Furthermore, during the previous days the news had a positive effect on the GBP, as the UK is seemingly leaning towards an agreement and so the market has increased demand for pounds working the British currency effectively. Further developments on the pre mentioned news could create volatility for the GBP. Since Monday, GBPUSD has been on an upsurge with the cable breaking various levels, due to the pre mentioned news and positive financial data. GBP/USD rose even further yesterday, breaking the 1.2960 (S1) resistance line (now turned to support) and today tested the 1.3070 (R1) resistance line. We could see the pair rising if there are more positive headlines about Brexit over the next couple of days. Should the pair find fresh buying orders along its path, we could see it surpassing the 1.3070 (R1) resistance line and aim for the 1.3175 (R2) resistance level. However, due to the fact that in the previous days Cable's advancement was very evident, we may see some profit taking with the pair remaining in a sideways movement between the 1.3070 (R1) resistance level and the 1.2960 (S1) support level. In a bearish scenario, we could see the pair aiming for the 1.2960 (S1) support line with the 1.2880 (S2) support level being next and the 1.2795 (S3) support barrier being even lower.

ECB Interest Rate Decision In Focus

The ECB is highly probable to keep interest rates on hold at 0.00%, with a current probability of 97.57%, according to EUR OIS. A significant subject to be discussed could be the dropping inflation levels in December, and having to deal with sovereign-debt pressures by some members, especially Mediterranean countries. Based on a recent reduced growth outlook, the ECB could be forced to apply a conditional interest-rate guidance, leaving open the possibility of a new quantitative-easing program, should economic conditions deteriorate further. Other matters that could also be discussed, are the future effect from potential trade tensions and analysis on world growth and were the Eurozone stands according to the subjects. Should the dovish elements prevail in the accompanying statement and following press conference, we could see volatility for the EUR. EURUSD has managed to break the bearish momentum it had formed during last week and moved in a sideways movement with some bullish tendencies. During the past week, EURUSD has been trading in-between the 1.1387 (R1) resistance level and the 1.1350 (S1) support level. In the previous hours the pair has moved higher and tested the 1.1387 (R1) resistance level attempting to move even higher. If in the accompanying statement of the ECB meeting today, Mario Draghi sends some positive signals, the pair could trade in a bullish momentum with chances of breaching the 1.1387 (R1) resistance level and the 1.1425 (R2) or even the 1.1465 (R3) resistance barriers. On the contrary, if dovish signals are released during the statement or from European financial releases today, the pair could move downward towards the 1.1350 (S1) support level with the 1.1305 (S2) and the 1.1265 (S3) levels following even lower.

Today's other economic highlights

In today's European session, we get from Germany the Preliminary Manufacturing PMI, along with Eurozone's Preliminary Composite PMI, both for January. Then, Norway's Norgesbank interest rate Decision is to be released. Later in the European session, the star of the day is the Eurozone's ECB Interest rate decision and shortly after we have ECB's Mario Draghi press conference. In the American session, we get from the US the Preliminary Markit Mfg PMI and later on again from the US, the EIA crude oil inventories.

GBP/USD H4

Support: 1.2960 (S1), 1.2880 (S2), 1.2795 (S3)
Resistance: 1.3070 (R1), 1.3175 (R2), 1.3280 (R3)

EUR/USD H4

Support: 1.1350 (S1), 1.1305 (S2), 1.1265 (S3)
Resistance: 1.1387 (R1), 1.1425 (R2), 1.1465 (R3)