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During the previous trading session, the US Dollar appreciated against the Japanese Yen by 32 pips or 0.29%, breaking the resistance level of the weekly R1 at the 109.18 mark. On Friday morning, the rate was located at 109.47.

In regards to the near-term future, it is expected that the currency exchange rate will be retraced by the upper boundary of the pattern line at the 109.50 mark to trade sideways. Moreover, most likely, the rate will stay at the 109.40 level for the day.

However, the rate could be retraced by the 50.00% Fibo at 109.60 to hit the 109.200 level.

During Friday's morning hours, the yellow metal was retraced by the 23.60% Fibonacci retracement level and the simple moving average to trade at the 1,288.11 mark.

In regards to the near-term future, most likely, the gold will continue depreciating against the US Dollar to the 1,284.00 level. Besides, the resistance levels of the simple moving averages and the 23.60% Fibo will prevent the rate from surge during the trading day.

Moreover, none of the technical indicators could support the yellow metal from the fall.

EUR/USD is showing little movement in the Friday session. Currently, the pair is trading at 1.1404, up 0.14% on the day. In economic news, the eurozone current account surplus narrowed to EUR 20.3 billion, down from EUR 23.0 billion. This was well off the estimate of EUR 24.1 billion. In the U.S., today’s key event is UoM Consumer Sentiment. The indicator has slowed over the past three months, and the downward trend is expected to continue, with an estimate of 97.0 points.

The eurozone economy has softened in recent months, although the economy grew in 2018. The U.S-China trade war has taken a bite out of economic activity, and the eurozone export and manufacturing sectors have slowed. Germany, the largest economy in the bloc, has also been affected and growth for 2019 has been revised downwards. If the trade war continues or the U.S. economy slows down in 2019, the eurozone could lapse into a recession. Bottom line? The ECB, which finally terminated its massive stimulus program last month, is unlikely to raise rates before the fourth quarter of 2019. Just a few months ago, analysts were predicting a rate hike in the third quarter. This means that the euro will have to contend against the dollar without the benefit of higher rates, which would make the euro more attractive to investors.

With the eurozone growth down, there are plenty of headaches for ECB policymakers. ECB President Mario Draghi shared some of his concerns on Tuesday, at a plenary session on the ECB annual report. Draghi highlighted Brexit and the U.S-China trade war as significant concerns and noted that eurozone economic conditions have been weaker than expected, adding that the eurozone was undergoing a slowdown but was not heading into recession. The ECB holds its next policy meeting on January 24, with no change in monetary policy expected.

Gold slips as stocks end the week on a high

Stock markets are on course for another positive session, capping off another strong week and a fourth consecutive one in the green. Sentiment is clearly improving and the bulls are gathering momentum as previous headwinds slowly morph into tailwinds for the markets.

A rebound in the dollar over the last week or so has taken some of the shine off gold just as it was toying with the idea of breaking above $1,300. But that doesn’t seem to be responsible for the drop we’re seeing today, with the greenback looking relatively flat as gold slips around half a percent.

Instead, an improvement in risk appetite is probably the main driver here. This hasn’t really weighed on gold over the last few weeks as stocks have rebounded strongly off their lows but indices are now facing some interesting tests as they try to break through levels that prior to the sell-off were strong support zones.

Markets buoyed by progress in Sino-US talks

At the moment they appear to be standing up to the challenge which would suggest the rally in stocks has more to run and this may not just be a corrective move in a bearish market. Earnings season will likely have a big say in whether the rally is sustained, as will the Trump administration which always has an eye on the stock market.

Reports overnight that members of the administration – most notably Steve Mnuchin – are proposing removing some tariffs in order to draw more concessions from their Chinese counterparts are certainly supporting risk appetite. The trade war has been a strong headwind for markets for months and serious progress and the removal of tariffs will turn it into a tailwind.

Oil gains on improved sentiment

Oil has been another benefactor of the improvement in risk appetite. This time last month, doom and gloom had engulfed the markets and people’s expectations for 2019 were becoming more pessimistic by the day, weighing heavily on oil prices. The bounce in markets and improvements on the fundamental outlook have prompted a similar rebound in oil which is continuing today.

WTI and Brent still face significant tests around $55 and $65, respectively, but momentum is very much with the bulls and I wouldn’t be surprised if they’re broken in the not-too-distant future.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13923
Open: 1.13912
% chg. over the last day: -0.07
Day's range: 1.13824 – 1.13985
52 wk range: 1.1214 – 1.2557

EUR/USD is still showing an ambiguous technical picture. The quotes are moving sideways. Yesterday the EU and the US published important economic reports. The consumer price index grew by 1.6%, as expected. The PMI by the Federal Reserve of Philadelphia grew to 17 in January, while the experts expected 9.7. The local support and resistance levels are 1.13850 and 1.14100. Positions should be opened from these levels.

The Economic News Feed for 18.01.2019:

Consumer Mood Index by the Michigan University (US) – 17:00 (GMT+2:00);

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 crossing the %D line. There are no precise signals.

Trading recommendations

Support levels: 1.13850, 1.13500
Resistance levels: 1.14100, 1.14500, 1.14850

If the price fixes above 1.14100 expect the quotes to grow toward 1.14500-1.14700.

Alternatively the quotes can fall toward 1.13500-1.13300.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.28775
Open: 1.29845
% chg. over the last day: +0.78
Day's range: 1.29368 – 1.29473
52 wk range: 1.2438 – 1.4378

Yesterday the GBP/USD was in a bullish mood. The quotes grew by more than 100 points. Right now the quotes started to correct. The key levels are 1.29200 and 1.29700, you should open positions from these levels. The trading instrument has a tendency to descend.

The Economic News Feed for 18.01.2019:

Retail Sales Volume Report (UK) – 11:30 (GMT+2:00);

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

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 oversold zone, the %K line is below the %D line, which points toward a bearish mood.

Trading recommendations

Support levels: 1.29200, 1.28700, 1.28200
Resistance levels: 1.29700, 1.30100

If the price fixes above 1.29700 you should look for the market entry points to open long positions. The movement will tend toward 1.30100-1.30300.

Alternatively the quote can fall toward 1.28700-1.28500.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32530
Open: 1.32740
% chg. over the last day: +0.20
Day's range: 1.32769 – 1.32880
52 wk range: 1.2248 – 1.3664

USD/CAD currently has a variety of trends. Investors are waiting for additional drivers. The key levels are 1.32500 and 1.32850. You should open positions from these levels. Keep in mind the US News Feed.

The Economic News Feed for 18.01.2019:

Basic Cusomer Price Index (CAD) – 15:30 (GMT+2:00);

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 crossing the %D line. There are no precise signals.

Trading recommendations

Support levels: 1.32550, 1.32300, 1.32000
Resistance levels: 1.32850, 1.33100, 1.33500

If the price fixes above 1.32850 expect the quotes to grow toward 1.33100-1.33300.

Alternatively the quotes can fall toward 1.32300-1.32000.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.102
Open: 109.212
% chg. over the last day: +0.05
Day's range: 109.462 – 109.596
52 wk range: 104.56 – 114.56

USD/JPY is in a bullish mood. During the last two days the quotes grew by 70 points. Right now the key levels are 109.350 and 109.650. You should open positions from these leves. A technical correction is possible soon.

The Economic News Feed for 18.01.2019 is calm.

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

The MACD histogram is in the positive zone above the signal line, which gives a strong signal to buy USD/JPY.

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

Trading recommendations

Support levels: 109.350, 109.000, 108.650
Resistance levels: 109.650, 110.00

If the price fixes below 109.350 expect the quotes to correct toward 109.000-108.650.

Alternatively the quotes can grow toward the round 110.000.

The US currency has been changing slightly against a basket of major currencies. Other majors also do not show active dynamics. The US dollar index (#DX) closed yesterday in the positive zone (+0.05). Yesterday, important economic data from the Eurozone and the US were published. Thus, the consumer price index in the Eurozone counted to 1.6% in December, as investors expected. The Philadelphia Fed manufacturing index rose to 17.0 in January, although experts forecasted 9.7.

Investors' attention is still focused on the US government shutdown. The US government has not worked for the 28th day. At the same time, there are no signals that the conflict between the US President Donald Trump and representatives of the Democratic Party in the US Congress regarding the construction of a wall on the border with Mexico will soon be settled.

The "black gold" prices demonstrate positive dynamics. At the moment, futures for the WTI crude oil are testing the mark of $52.60 per barrel. At 20:00 (GMT+2:00) a report on the US Baker Hughes oil rig count will be published.

Market Indicators

• Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.76%), #DIA (+0.80%), #QQQ (+0.79%).
• The 10-year US government bonds yield is at the level of 2.74-2.75%.

The news feed on 18.01.2019:

• Retail sales in the UK at 11:30 (GMT+2:00);
• Core consumer price index in Canada at 15:30 (GMT+2:00);
• Michigan consumer expectations and sentiment at 17:00 (GMT+2:00).

The Euro holds in consolidative mode above new two-week low at 1.1370, posted on Thursday, as bears repeatedly failed to clearly break below 55SMA (1.1382) despite bearish signal generated on the second straight close below 1.1392 Fibo support (50% of 1.1215/1.1569 rally). Bearish daily studies favor further downside with stronger acceleration lower to be sparked by sustained break below 55SMA and daily cloud base (1.1365) and Fibo 61.8% at 1.1350. Meantime, the pair is expected to consolidate as slow stochastic is oversold. Broken 30SMA marks initial barrier at 1.1401, with more significant barrier provided by daily cloud top (1.1418) reinforced by 20SMA, expected to limit upticks and keep bears intact.

Res: 1.1401, 1.1418, 1.1447, 1.1465
Sup: 1.1382, 1.1365, 1.1350, 1.1309

German stocks market (DAX) can be unfolding the final wave v) since we have seen a break out of a wave iv) triangle. Fibonacci targets and the triangle measurement target points towards 11100-11200 area, so be aware of higher prices, maybe even a spike before a bigger corrective drop starts unfolding. At the same time, DAX may push EURUSD into new lows for wave v) towards 1.13 area.

German DAX, 1h

EUR/USD

Current level - 1.1388

The outlook remains bearish, for a slide towards 1.1310, en route to 1.1214 lows. Initial resistance lies at 1.1415, followed by 1.1450.

USD/JPY

Current level - 109.38

The outlook is positive, for a rise towards 110.20 zone. Initial support lies at 109.10 and crucial low is 108.65.

GBP/USD

Current level - 1.2947

The break through 1.2930 signals a positive bias, for a rise towards 1.3050 area. Initial support is projected at 1.2930-2900 area and crucial is 1.2830 low.

Cable is consolidating under psychological 1.30 barrier which was cracked on Thursday’s 0.8% advance.

Eventual break above three-day congestion signaled continuation of recovery phase from 12 Dec 1.2476 low.

Sterling was boosted by improved sentiment on lowered chances of a no deal Brexit and rising hopes of new referendum.

Fresh bulls broke above 1.2953 pivot (Fibo 61.8% of Sep/Jan 1.3297/1.2397 downtrend) but need weekly close above here to open target at 1.3102 (falling 200SMA).

Bullish daily techs underpin, but overbought conditions and bearish divergence on slow stochastic warn of further easing before fresh attempt through 1.30 barrier.

Solid supports at 1.2894/68 zone (broken 100SMA /daily cloud top) should contain extended dips to keep bulls in play.

The pair is on track for the fifth straight bullish weekly close that supports positive scenario.

Res: 1.3000, 1.3085, 1.3102, 1.3174
Sup: 1.2935, 1.2894, 1.2868, 1.2839