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The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13603
Open: 1.13644
% chg. over the last day: +0.02
Day's range: 1.13500 – 1.13636
52 wk range: 1.1214 – 1.2557
EUR/USD overview

The Economic News Feed for 22.01.2019:

Economic mood index ZEW (GER) – 12:00 (GMT+2:00);

Secondary Real Estate Sales (US) – 17:00 (GMT+2:00).

Indicator point to the power of the sellers, the price fixed below 50 MA and 200 MA.

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

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which points to the bullish mood.

Trading recommendations

Support levels: 1.13450, 1.13100
Resistance levels: 1.13750, 1.14100, 1.14500

If the price fixes below 1.13450 mark, consider selling EUR/USD. The movement will tend toward 1.13100-1.12900

Alternatively, the quotes can grow toward 1.14100-1.14300.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.28766
Open: 1.28911
% chg. over the last day: +0.30
Day's range: 1.28832 – 1.28902
52 wk range: 1.2438 – 1.4378

Yesterday GBP/USD was in a bullish mood. The GBP received support after Theresa May attempted to resolve the Brexit conundrum and asked the EU for more leniency. Right now the price is testing the key resistance at 1.29000, with the key support being 1.28600. You should open positions from these levels. The trading instrument has prospects for further growth.

At 11:30 (GMT +2:00) the UK will publish the Labour Market reports.

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

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is above %D line, which points to the bullish mood.

Trading recommendations

Support levels: 1.28600, 1.28200, 1.27700
Resistance levels: 1.29000, 1.29400, 1.29800

If the price fixes above 1.29000, consider opening long positions. The price will move toward 1.29400-1.29600.

Alternatively the quotes can fall toward 1.28200-1.28000.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32597
Open: 1.32903
% chg. over the last day: +0.15
Day's range: 1.33267 – 1.33356
52 wk range: 1.2248 – 1.3664

USD/CAD is in a bullish mood. Right now the key support and resistance levels are 1.33150 and 1.33400. You should open positions from these levels. The trading instrument has growth prospects. Keep an eye on the oil quotes dynamics.

The Economic News Feed for 22.01.2019 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 overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.33150, 1.32800, 1.32500
Resistance levels: 1.33400, 1.33700

If the price fixes above 1.33400, expect further growth toward 1.33700-1.34000.

Alternatively, the quotes can fall toward 1.32800-1.32500.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.695
Open: 109.651
% chg. over the last day: +0.00
Day's range: 109.417 – 109.478
52 wk range: 104.56 – 114.56

USD/JPY has an ambiguous technical picture. The quotes are moving sideways. The investors are waiting for additional drivers. The key support and resistance levels are 109.300 and 109.600. You should open positions from these marks. Keep an eye on the US Treasury 10-year bonds yield.

The Economic News Feed for 22.01.2019 is calm.

The price fixed between 50 MA and 200 MA which act as the dynamic support and resistance levels.

The MACD histogram is in the negative zone, which gives a weak signal to sell USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which points to a bullish mood.

Trading recommendations

Support levels: 109.300, 109.000, 108.700
Resistance levels: 109.600, 109.900

If the price fixes below 109.300, expect the USD/JPY quotes to fall toward 109.000.

Alternatively, the quotes can grow toward 109.900-110.100.

The US dollar did not change a lot against the basket of major currencies during yesterday's trading session. Yesterday, the International Monetary Fund revised down the estimate for global GDP growth to 3.5% for 2019 from 3.7% forecasted earlier due to trade tensions, which persisted for most of 2018, as well as due to the weakening of the Eurozone figures. For 2020, the forecast counted to 3.6%. The US dollar index (#DX) has kept current levels (0.00).

The British pound slightly strengthened against the US dollar. Yesterday, British Prime Minister Theresa May attempted to resolve the situation with Brexit, proposing to ask the European Union to make new concessions on the Brexit issue. The Prime Minister believes that London should strive to achieve an agreement with Brussels. Some members of parliament stand for a second Brexit referendum. However, Theresa May does not support this idea and believes that the second referendum may damage the economy and society as a whole.

The "black gold" prices are falling. At the moment, futures for the WTI crude oil are testing the mark of $53.70 per barrel.

Market Indicators

• Yesterday, the US stock market was closed due to the holiday.
• The 10-year US government bonds yield is at the level of 2.74-2.75%.

The Economic Calendar for 22.01.2019:

• Reports on the UK labor market at 11:30 (GMT+2:00);
• German ZEW economic sentiment index at 12:00 (GMT+2:00);
• Existing home sales in the US at 17:00 (GMT+2:00);
• Consumer price index in New Zealand at 23:45 (GMT+2:00).

Stocks are coming down since yesterday, with DAX futures 190 points from recent high so it seems that corrective set-back can already be in progress. This will be a deeper retracement in three legs which may drive DAX back to 10800/10820 area, where it can be an interesting zone for a bounce.

German DAX, 1h

If stocks are in a bearish/temporary set-back then gold may find support. In fact, we see precious metal late stages of a wave C) of four. Well, maybe another leg down to 1273 is coming to clear stops below 1276 from where we would expect a new turn to the upside, for a fifth wave up.

GOLD, 1h

The cross accelerates lower after pound got boosted by UK earnings beat (3.4% vs 3.3% f/c, as pay growth hit 10-year high) and upbeat employment data (employment grew 141K in three months to the end of Nov vs 88K f/c and previous period’s 79K growth).

Negative German ZEW data, although economic sentiment weakened less than expected (Jan -15 vs -18.4 f/c) added to negative sentiment.

Monday’s strong upside rejection (recovery was capped by 200SMA at 0.8861) left bearish daily candle with long upper shadow that weighs on near-term outlook.

Strong bearish momentum and daily MA’s in negative setup, with a number of bear-crosses, add to bearish sentiment.

The pair focuses key near-term support at 0.8763 (17/18 Jan double-bottom / Fibo 76.4% of 0.8656/0.9113), violation of which would open way for full-retracement of 0.8656/0.9113 rally.

Bearish structure is expected to remain intact while the price holds below 200SMA.

Res: 0.8830, 0.8861, 0.8880, 0.8902
Sup: 0.8763, 0.8696, 0.8656, 0.8620

The Euro holds off session low at 1.1345 after fresh bears cracked key support at 1.1350 (daily cloud base / Fibo 61.8% of 1.1215/1.1569 rally).

Bears face strong headwinds here as Monday’s action was shaped in inverted hammer, initial signal that bears may be running out of steam.

Fresh bullish momentum and deeply oversold slow stochastic support reversal scenario, but south-heading MACD and MA’s in bearish setup, weigh and partially offset reversal signals.

Also, downgrade of global growth forecast that sparked fresh risk-off mode, keeps the Euro at the back foot and negative sentiment could be further soured by German ZEW data today (economic sentiment Jan f/c -18.4 vs -17.5 in Dec).

Scenario on firm break below 1.1350 pivot would signal fresh bearish acceleration towards 1.13 (Fibo 76.4%) and would risk extension towards key support at 1.1215 (12 Nov low).

Alternative scenario sees return and close above 55SMA (1.1380) as a minimum requirement to sideline immediate bearish threats and expose a cluster of daily MA resistances / daily cloud top (between 1.1398 and 1.1424) break of which would confirm reversal.

Res: 1.1380, 1.1398, 1.1424, 1.1459
Sup: 1.1350, 1.1309, 1.1300, 1.1270

EUR/USD is showing little movement in the Tuesday session. Currently, the pair is trading at 1.1363, down 0.04% on the day. On the release front, Germany releases ZEW Consumer Sentiment, which is expected to drop to -18.8 points. Eurozone ZEW Economic Sentiment is forecast to improve slightly, with a forecast of -20.1 points. In the U.S., the sole indicator is Existing Homes, which is expected to drop to 5.27 million. On Wednesday, the eurozone releases consumer confidence.

The ECB has been below the radar over the past few weeks, overshadowed by the Federal Reserve. Policymakers at the Fed have shown a significantly more dovish stance since the December policy meeting, which has weighed on the U.S. dollar while sending the stock markets higher. The ECB terminated its massive stimulus package in December, and a natural follow-up move would be a modest hike in interest rates – if the eurozone economy was performing well. That hasn’t been the case, as the economy slowed in the third quarter and all signs are Q4 will also be soft. Analysts had predicted a rate hike in the third quarter, but sluggish economic activity has pushed off that forecast until the fourth quarter. The markets are keeping a close eye on the ECB policy meeting on Thursday, looking for clues with regard to future rate policy.

The markets were treated to disappointing news on Monday, with the release of Chinese data. The number 2 economy in the world grew 6.6% in 2018, marking its lowest level since 1990. GDP for the fourth quarter dipped to 6.4%, compared to 6.5% in the previous quarter. The soft GDP release comes on the heels of soft trade and manufacturing data, pointing to a slowdown due to the ongoing U.S-China trade war. The Trump administration has threatened further tariffs if a deal is not reached by March 1, but a second round of negotiations between the sides is scheduled for the end of the month in Washington. Chinese officials will be under pressure to show more flexibility in the talks, in order to stem the economic bleeding.

Cable stands at the back foot in early Tuesday’s trading, pressured by fresh risk-off mode, sparked by IMF’s downgrade of global growth forecast.

Also, traders remain concerned about the Brexit scenario after PM May revealed her plan B yesterday, opposing second referendum and saying that March 29 deadline won’t be extended, even on no-deal Brexit.

Despite weaker tone, the pair holds above daily cloud top (1.2866), following Monday’s close above cloud after spike lower to 1.2830.

Near-term action is also supported by rising 10SMA (1.2860) and fresh bullish momentum on daily chart that so far keeps the downside limited, while south-heading slow stochastic maintains pressure.

Solid resistance at 1.2897 (100SMA) continues to cap for the second day, with break of either side to generate fresh direction signal.

UK jobs data are in focus today, with earnings expected to stay unchanged at 3.3% in Nov, jobless claims forecasted lower (20.0K vs 21.9K previous) and unemployment also unchanged at 4.1% in Nov.

Positive scenario on stronger than expected UK wages would boost pound through 100SMA and re-expose psychological 1.30 barrier.

Weaker than expected wages data would put pound under pressure and risk dip into thick daily cloud for test of supports at 1.2770/80 (converging 20/55SMA’s), possibly to extend towards key support at 1.2715 (daily cloud base, reinforced by 30SMA).

Res: 1.2892, 1.2953, 1.3000, 1.3088
Sup: 1.2860, 1.2830, 1.2780, 1.2715

• IMF downgrades growth forecasts; stocks feel the pinch
• May keeps “no-deal Brexit” scenario alive
• Oil reverses lower amid signs of slowing global economy

Risk appetite stays bearish amid growing global growth fears

Stocks in Asia had another weak session on Tuesday as pessimism about global growth kept funds away from risky assets, with Chinese equities losing more than 1%.

A couple of hours after China reported its slowest quarterly economic expansion since the financial crisis and the lowest annual growth in 30 years, the International Monetary Fund (IMF) decided to cut its growth forecasts for 2019 and 2020 by 0.2 and 0.1 percentage points to 3.5% and 3.6% correspondingly (from last October's projections), adding more fuel to concerns that the global economy could come under stronger pressure in the coming months, if it has not already. Apart from China's slowdown, the global lender which delivered its second downgrade in three months also cited weakness in Europe and emerging economies as key challenges, while not surprisingly, the institution believes that a failure to resolve trade conflicts and the Brexit saga could further destabilize welfare globally.

The gloomy news and the downbeat sentiment are likely enough to keep risk-off appetite front and center in subsequent sessions and persuade two key central banks to maintain their already-loose policy stance this week. Note that both the Bank of Japan and the European Central Bank are deciding on rates on Wednesday and Thursday respectively, but neither is expected to change its ultra-easy policy amid a low-confidence economic and political environment.

The yen's strength today, the selling in the risk-sensitive aussie, and the support around gold serve as evidence that investors are quickly responding to any signs of a hard economic landing. Yet whether this will be potentially a hard or soft landing is still a question.

May gives little insight on her Brexit plan B

In Europe, the euro and the pound extended declines on Tuesday as Theresa May gave little detail yesterday on how she plans to change her Brexit plan which was overwhelmingly rejected by the British Parliament last week and particularly how she will address worries over a hard border between the Republic of Ireland and the British Province of Northern Ireland. While she reiterated that a no-deal Brexit is still possible and expressed willingness to continue seeking amendments to the Irish backstop from the EU, the missing clarity is expected to keep MPs in confusion next Tuesday when they will gather to vote on May's modified Brexit deal version, and therefore buying interest for the pound muted.

Meanwhile, turning to the economic calendar, employment readings out of the UK will be closely watched later today even if forecasts suggest no change from November's numbers. Still, any upside surprise in the data could be easily forgotten, with any potential gains appearing short-lived as the focus remains on Theresa May who will face another cloudy day before legislators. It is also worth noting that the odds for a second referendum are also increasing according to betting websites

Oil gives up gains

Oil was also a victim of global growth fears on Tuesday as the IMF's pessimism reminded investors that demand for crude could follow a downtrend this year. WTI crude and the London-based Brent were erasing yesterday's gains, falling by 0.78% and 0.81% respectively in the day. The OPEC's supply cuts that started in early 2019, however, seem to have prevented bigger losses in the market.

Other highlights

The World Economic Forum, which discusses politics, economic and cultural issues starts today in Davos, Switzerland. But the absence of the key leaders such as Donald Trump, Theresa May, .Emmanuel Macron and Xi Jinping who decided not to attend the event .because of the challenges they face at home could turn the meeting uneventful.

Elsewhere, New Zealand will be reporting CPI figures for the fourth quarter later in the day, shifting some attention to the kiwi.

In stock markets, the earnings season continues with IBM, UBS, and Johnson & Johnson being among companies to report quarterly results before the US open bell today.

The USD remained relatively stable against a number of its counterparts yesterday, despite concerns for global growth growing. Just ahead of the Davos meeting starting today, the IMF issued a warning about global growth, as it forecasts a wider than expected slowdown for the Chinese economy and the Eurozone. IMF managing director Christine Lagarde, stated that after two years of solid growth the world economy is growing more slowly than expected and risks are rising. Never the less, she refused that a possible recession is just around the corner, however underscored the risks of a sharper decline. On other news, a survey contacted by auditing giant PWC, among 1400 chief executives found that 29 percent expect growth to decline over the next 12 months, which is the highest percentage since 2012. Rising risks could provide support for safe haven currencies in the near future and some volatility could emerge, stemming from the Davos meeting over the next few days. EUR/USD maintained a sideways motion yesterday, near the 1.1350 (S1) support line, without breaking it. Technically it should be noted that the pair’s price action is on the brink of clearly breaking the downward trendline incepted since the 10th of the month. Should the pair clearly break the prementioned trendline we will switch our view of a bearish outlook in favor of a sideways motion. It should be noted that today’s financial releases could cause the pair to drop, as they could weaken the EUR side. Should the pair’s long positions be favored by the market, we could see the pair, breaking the 1.1387 (R1) resistance line. Should on the other hand, the pair come under the selling interest of the market once again, we could see it breaking the 1.1350 (S1) support line and aim if not break the 1.1305 (S2) support level.

BoJ Interest rate decision

Tomorrow Wednesday during the Asian session, BoJ will be announcing its interest rate decision and is widely expected to remain on hold at -0.10%. Currently JPY OIS imply a probability for the bank to remain on hold of 96.09%, strengthening arguments for such a scenario. We could see the market’s attention turn to the accompanying statement, as well as the press conference of governor Kuroda which is to follow later on. After the recent deceleration of the CPI rate for December and the GDP growth rate in the negatives, it may prove difficult for the bank to avoid a more dovish tone. Analysts point out that the slowing global economy and depressed oil prices could force the BoJ to revise down its outlook for economic growth and inflation. Should the bank choose to adopt a more dovish tone either in the accompanying statement or the following press conference we could see the JPY weakening as a result. USD/JPY also maintained rather stable, maintaining a sideways motion between the 109.20 (S1) support line and the 110.15 (R1) resistance level. We could see the market starting to position itself ahead of the BoJ interest rate decision and should the market sentiment be towards a weakening JPY, we could see the pair starting to rise slowly. Should the bulls take over the pair’s direction, we could see it breaking the 110.15 (R1) resistance line and aim for the 111.40 (R2) resistance hurdle. Should on the other hand should the pair come under the control of the bears, we could see it dropping, breaking the 109.20 (S1) support line and aim for the 108.25 (S2) support barrier.

Today’s other economic highlights

In today’s European session, we get UK’s employment data for November and Germany ZEW economic sentiment indicator for January. In the American session, we get Canada’s manufacturing sales for November, while just before tomorrow’s Asian session, we get New Zealand’s CPI rate for Q4.

USD/JPY H4

Support: 109.20 (S1), 108.25 (S2), 107.40 (S3)
Resistance: 110.15 (R1), 111.40 (R2), 112.55 (R3)

EURUSD H4

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

Sterling rises mildly after better than expected job data. Unemployment rate dropped to 4.0% in November, down from 4.1% and beat expectation of 4.1%. That's also the lowest level since February 1975. Wage growth also shows sign of pick up. Average earnings including bonus accelerated to 3.4% 3moy, above expectation of 3.3% 3moy. Average earnings excluding bonus rose 3.3% 3moy, unchanged. Claimant count rose 20.8k in December, slightly above expectation of 20.0k.

Full release here.