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EUR/USD is down slightly in the Thursday session, after posting strong gains on Wednesday. Currently, the pair is trading at 1.1527, down 0.13% on the day. On the release front, the ECB releases the minutes of its December policy meeting. In the U.S., unemployment claims are expected to drop to 231 thousand, and Fed Chair Jerome Powell will speak at event in Washington. On Friday, the U.S. releases CPI reports, which should be treated as market-movers.

The ECB will be in the spotlight for the first time this year, with the release of the December minutes. At this meeting, policymakers finally terminated QE, the bank’s massive stimulus program. Now that the ECB has weaned the eurozone economy off stimulus, investors will be interested in the bank’s view of the economy – are growth prospects forecast to improve? Although the eurozone export and manufacturing sectors have softened due to the global trade war, the euro escaped the fourth quarter with only small losses. If the minutes are hawkish, the euro could capitalize and head higher.

The U.S. dollar’s retreat continued on Wednesday, after the release of the FOMC minutes of the December meeting. At the meeting, the Fed raised rates for a fourth time in 2018, culminating a very aggressive stance. This was reflected in the rate statement, but then came the thumbs-down from investors, who wanted a more dovish approach, and sent the equity markets into a tailspin. Fed policymakers have since made a sharp U-turn and are sounding much more cautious about future rate hikes. The minutes noted low inflation meant that the Fed can “afford to be patient about further policy firming”. Even more striking, the minutes revealed that at the December meeting, some policymakers opposed a rate hike, arguing that inflation was too low to warrant higher rates. The new dovish stance from the Fed has relieved investors and helped stabilize the stock markets, but has hurt the U.S. dollar, with some analysts predicting a cut in rates late this year.

EUR/USD

Current level - 1.1550

Yesterday's attempt at 1.1500 hurdle was successful and next resistance  lies at 1.1630. Despite the positive intraday bias, my outlook is counter-trend, for a return below 1.1500, en route to 1.1410 crucial support.

USD/JPY

Current level - 107.86

The violation of 108.50 shows a negative outlook, for a slide towards 106.70 zone. Initial resistance lies at 108.50.

GBP/USD

Current level - 1.2766

The failure at 1.2710 led to a new rise towards the upper boundary, but 1.2810 hurdle is still intact, so I favor another downswing towards 1.2710 and 1.2620 later on.

The AUD/USD has formed a bullish zig zag pattern that is clearly visible with the ascending trend line, rejection candles and upward motion( arrows are trading signals based on CAMMACD method) .

The AUD/USD could bounce from 0.7165-75 POC zone targeting 0.7203, 0.7230 and eventually 0.7245. However, the ATR of the pair is low so it might needs some time for a trade to develop. However, pay attention to a possible bounce. Ideally, the bounce should be consistent and the pair should stay above 0.7150 for uptrend continuation on intraday timeframes.

Markets pare gains but outlook brighter

Equity markets around the globe are in negative territory on Thursday, with the US seen following suit, but that's nothing to be concerned about with the drop coming after a good run of gains across stock markets.

It's been an impressive rebound over the last week or so, made all the more encouraging by the fact that it's been supported by some genuine positive headlines. While specifics are lacking, talks between the US and China appear to be going well, as the Chinese foreign ministry confirmed on Thursday. This is very good news for investors as it represents one of the primary risks for markets.

Other risks remain – such as the government shutdown in the US, the soap opera that is Brexit and global growth, to name just a few – but this list is significantly reduced compared to a month ago. And the first two of these are more likely to lead a positive conclusion than not over the next few months, turning them from headwinds to tailwinds for markets.

Still reason for caution but optimism is growing

Caution isn't going anywhere though because in much the same way that a number of these could become tailwinds in the coming months, they could also go disastrously wrong so markets will remain vulnerable. The Fed has at least for now, gone some way to reassuring investors that it is listening and has no intention of being the cause of recession by hiking rates too quickly.

All of these developments may have been positive for wider market sentiment but it's playing havoc with the dollar. The commentary from Fed officials, consistent with the minutes on Wednesday, have become far more dovish which is a relief for those worrying about a Fed-led recession but weighs on the greenback. The same is true of the positive progress in talks between the US and China, the dollar benefited during periods of escalation and the opposite is true now.

Gold pushing $1,300 and looks increasingly likely to break

This continues to be supportive for gold which now finds itself pushing $1,300 again and increasingly likely to break above. It failed to do so again overnight and the dollar paring its losses has seen it lose its edge again today but I think this will only be temporary. Risk appetite improving may slow the ascent but I don't think it will prevent it as long as the dollar remains soft, as expected.

Stock markets are on the ‘wall of worry’ over various events. After initial excitement that US and Chinese representatives talked trade for three days, the lack of apparent progress and the silence from the participants are pushing investors towards caution. Has a truce been reached? We don’t know yet. Despite a rise in the Hang Seng index, which rose for the fifth consecutive day by +0.22%, Asian equities are facing difficulties. A slowdown in China’s economy is emerging: softer-than-expected December CPI and PPI data at 1.90% and 0.90%, at 6-month and 27-month lows; a drop in 2018 car sales, the first in 20 years; and American tariffs of 25% (up from 10%) on USD 200 billion of Chinese goods start on 2 March 2019. European equities are also weak, UK Prime Minister May’s Brexit plan is not pleasing the UK Parliament, which is expected to reject the proposed Withdrawal Agreement terms on 15 January.

The USD is in recovery, after a sharp decline yesterday (-0.71%), hitting its lowest since October 2018, after the US Federal Reserve Bank said it will be cautious about interest-rate tightening in 2019. Currently at 1.1525, EUR/USD is expected to drop toward 1.15.

The US dollar is back under pressure against the Japanese yen currency, with price earlier falling back under the 108.00 level. Despite progress made in Sino-US trade talks, the lack of a concrete resolution to the ongoing dispute is underpinning intraday strength in the Japanese yen. The USDJPY pair is likely to remain under pressure while trading below the 108.40 level, which represents key resistance from the of start of the Ichimoku cloud.

The USDJPY pair is bearish while trading below the 108.40 level, key technical support is found at the 107.75 and 107.00 levels.

If the USDJPY pair trades above the 108.40 level, buyers may test towards the 108.80 and 109.10 resistance levels.

The euro currency has moved lower against the US dollar during the European trading session after buyers failed to sustained price above the 1.1550 level. EURUSD buyers now need to defend the December trading high, or they risk deeper intraday losses towards the 1.1460 level. To the upside, a move back above the 1.1550 level puts the 1.1600 resistance level back in focus.

The EURUSD pair is intraday bullish while trading above the 1.1490 level, key technical resistance is found at the 1.1550 and 1.1600 levels.

If the EURUSD pair moves below the 1.1490 level, sellers may test towards the 1.1460 and 1.1430 support levels.

The UK economy will be in focus on Friday as November data on monthly GDP, industrial output and trade are due at 09:30 GMT. But with the crucial Parliamentary vote on Theresa May’s much-criticised Brexit deal coming up just a few days later, the normally closely-watched indicators may fail to generate notable reaction in forex markets.

After notching up growth of 0.6% quarter-on-quarter in the September quarter, the British economy is expected to have cooled in the final three months of 2018, with early indications suggesting GDP growth could slow to just 0.1%. On a month-on-month basis, GDP was up 0.1% in October and is anticipated to have expanded by a similar amount in November. With the Markit/CIPS services PMI slowing sharply in November and picking up only modestly in December, a growth rate higher than 0.1% in Q4 would be difficult to achieve unless the mini-bounce in manufacturing activity proves strong enough to offset the services weakness.

The manufacturing PMI was boosted in December from stockpiling by companies in preparation of a possible no-deal Brexit. But this is seen by investors as only a temporary lift and is unlikely to translate to a higher pound even if the trend continues in the coming months. As for the official November numbers, manufacturing production is forecast to have risen by 0.3% m/m, recovering partially from a 0.9% decline in the prior month, while broader industrial output is projected to have edged up by 0.2% after dropping by 0.6% in October.

Trade figures are also due on Friday and are expected to show a small narrowing of the UK’s goods deficit with the rest of the world. A weaker pound has so far had only a marginal effect in improving the UK’s massive trade deficit as this has coincided with slower growth in other EU countries – Britain’s biggest export market.

The pound could see some small moves from the data but Brexit headlines will likely be triggering greater volatility. British MPs look set to vote down the prime minister’s Brexit deal in a vote scheduled for January 15. Although lawmakers have been turning increasingly vocal in their opposition to a no-deal scenario, providing little comfort to markets, all possibilities remain wide open until there is more clarity as to how events will unfold if the deal is rejected.

An overall positive set of numbers could nevertheless help sterling climb higher if the US dollar stays on the backfoot. Pound/dollar could initially target the December top of 1.2814 before attempting to reach the 123.6% Fibonacci extension of the upleg from 1.2436 to 1.2814, which is just above the 1.29 handle.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.14401
Open: 1.15413
% chg. over the last day: +0.98
Day's range: 1.15344 – 1.15697
52 wk range: 1.1214 – 1.2557

The demand for USD is weakened after the FOMC Minutes publication. Some federal reserve representatives consider that they should keep the key interest range at the same level. The EUR/USD growth increased by 120 points and updated the key extremums. At the moment the quotes are consolidating around 1.15300-1.15700, positions should be opened from these levels. The financial market participants are waiting for the protocol of the last ECB meeting regarding the monetary policy.

The Economic News Feed for 10.01.2019:

Publication of the ECB meeting protocol regarding the monetary policy (EU) – 14:30 (GMT+2:00);

You should keep an eye on the US real estate report and the statement by the Head of the Federal Reserve, Jerome Powell.

The price fixed above 50 MA and 200 MA, which points toward 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 EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line which points toward the correction of the EUR/USD quotes.

Trading recommendations

Support levels: 1.15300, 1.14850, 1.14500
Resistance levels: 1.15700, 1.16000

If the price fixes above the resistance level of 1.15700 expect further growth of the EUR/USD. The movement will tend toward 1.16000-1.16300.

Alternatively the quotes can correct toward 1.15000-1.14800.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.27115
Open: 1.27889
% chg. over the last day: +0.63
Day's range: 1.27504 – 1.27997
52 wk range: 1.2438 – 1.4378

The technical picture on the GBP/USD currency pair remains ambiguous. The pound is moving sideways. The key levels are 1.27500 and 1.28000, you should open positions from these levels. A correction is possible soon, consider keeping an eye on the relevant Brexit intel.

The Economic News Feed for 10.01.2019 is calm.

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

The MACD histogram is in the positive zone but below the signal line, which suggests buying GBP/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates a bearish mood.

Trading recommendations

Support levels: 1.27500, 1.27100, 1.26500
Resistance levels: 1.28000, 1.28500

If the price fixes above 1.28000 expect further growth of the quotes toward 1.28400-1.28600.

Alternatively the quotes can correct toward 1.27100-1.26800.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.32739
Open: 1.32061
% chg. over the last day: -0.46
Day's range: 1.32010 – 1.32500
52 wk range: 1.2248 – 1.3664

USD/CAD is in a bearish mood. The CAD is supported by the positive dynamic of the oil quotes. The WTI futures grew by 5% yesterday. The USD/CAD quotes are consolidating around 1.32200-1.32700. Positions should be opened from these levels. A technical correction is possible soon.

The Economic News Feed for 10.01.2019 is calm. At 15:30 (GMT+2:00) Canada will publish some data on the real estate market.

The indicators do not provide precise signals. The price is testing 50 MA which is a strong dynamic resistance.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which points toward a correction of the USD/CAD.

Trading recommendations

Support levels: 1.32200, 1.31800
Resistance levels: 1.32700, 1.33100, 1.33650

If the price fixes above 1.32700 expect further growth of USD/CAD toward 1.33100-1.33500.

Alternatively the quotes can fall toward 1.31800-1.31600.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 108.727
Open: 108.132
% chg. over the last day: -0.52
Day's range: 107.769 – 108.258
52 wk range: 104.56 – 114.56

The USD/JPY quotes started to descend. The yen strengthened against the USD by more than 60 points. The key support and resistance levels are 107.750 and 108.450, you should open positions from these levels. The trading instrument has further descend potential. Keep an eye on the US Tresure bonds yield dynamics.

The Economic News Feed for 10.01.2019 is calm.

The price fixed between 50 MA and 200 MA which points toward the power of the sellers.

The MACD histogram is in the negative zone but above the signal line which provides 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 toward the bearish mood.

Trading recommendations

Support levels: 107.750, 107.200, 106.500
Resistance levels: 108.450, 109.000, 109.500

If the price fixes below 107.750 expect the descend toward 107.200-107.000.

Alternatively the quotes can recover toward 108.750-109.000.

The US dollar weakened against a basket of major currencies after the publication of the FOMC minutes. According to the minutes of the December Fed meeting, some officials support the idea of keeping rates unchanged in 2019. The dollar index (#DX) closed yesterday in the negative zone (-0.72%).

Yesterday, the Bank of Canada published its decision on a key interest rate, according to which the indicator remained unchanged at 1.75%, as investors expected. Today, during the Asian trading session weak economic data have been published in China. Thus, the consumer price index counted to 1.9% (y/y) in December, although experts expected 2.1% (y/y). The producer price index also fell to 0.9% (y/y) in December instead of 1.6% (y/y). Today, we expect important economic statistics from the Eurozone and the United States.

The "black gold" prices are consolidating after rapid growth during yesterday's trading. Oil quotes prices have increased by more than 5%. At the moment, futures for the WTI crude oil are testing $51.65 per barrel.

Market Indicators

Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.47%), #DIA (+0.42%), #QQQ (+0.81%).

The 10-year US government bonds yield is falling. Currently, the indicator is at the level of 2.68-2.69%.

The news feed on 10.01.2019:

ECB monetary policy meeting accounts at 14:30 (GMT+2:00).

We also recommend paying attention to the statistics on the real estate market in the US and the speech by Fed Chairman Powell.