EUR/USD Between Levels Of Significance

'Multiple EUR/USD tests of support usually indicate the support is more likely to fail. Also, support areas are wide areas, not precise levels.' - Adam Grimes, Waverly Advisors (based on investing.com)

Pair's Outlook

During the early hours of Friday's trading session the common European currency began the day and traded against the US Dollar between the levels of significance, which together have provided the pair with support for the past three consecutive trading sessions. At the start of the session the currency exchange rate was above the monthly PP, which is at 1.0650. The forecast of a decline remains in force, as it can be clearly seen that slowly but surely the pair is moving lower. After passing the monthly PP the rate is most likely set to fall to the 55-day SMA at 1.0688.

Traders' Sentiment

Traders have abandoned the bearish outlook, as 51% of trader open positions are long on Friday. In the meantime, 60% of trader set up orders are to sell the Euro.

'Broader signals suggest that 1.2675 may be reachable in the next few days if the Pound can hold support in the low 1.25s.' – Scotiabank (based on PoundSterlingLive)

Pair's Outlook

The GBP/USD pair erased its intraday gains on Thursday and slid back under the 1.25 threshold, due to US President Trump's comments boosting the US Dollar. No major changes in the Cable's performance are anticipated today, as the support cluster around 1.2440 is still sufficient to prevent the Pound from edging lower. At the same time, technical indicators are now giving bullish signals, implying fundamental data could restore the Sterling's bullish momentum today. Other technical signs also suggest the British currency is to begin appreciating soon, but political events keep causing aberrations.

Traders' Sentiment

There were barely no changes in the market sentiment over the day, as it remains bullish at 61% (previously 62%). As for the pending orders, the share of buy ones declined from 50 to 44%.

"The [US-Japan] summit may be a quick attempt by Japan to deal with pressure from the United States to allow the yen to appreciate." – SMBC Nikko Securities (based on Reuters)

Pair's Outlook

The US President Trump's promise to reveal a tax plan in the upcoming weeks caused the Greenback to soar, reaching a one-week high against the Japanese Yen. Yesterday's rally allowed the Buck to approach the six-week down-trend, which is expected to be put to the test today. The 20-day SMA is bolstering the trend-line, suggesting a breach is doubtful, unless another political event sparks USD-buying. In that case, the USD/JPY pair's main target will become the cluster around 114.40, formed by the monthly PP and the weekly R1. Meanwhile, technical indicators are unable to confirm the possibility of another positive outcome, as they keep giving bearish signals.

Traders' Sentiment

Today 61% of traders are long the Buck, compared to 63% on Thursday. The number of buy orders inched up from 47 to 59%.

'The reversal was almost entirely due to the surge in the dollar that took place after President Trump revealed he had a 'phenomenal' tax plan ready for unveiling in a few weeks' time.' – Edward Meir, INTL FCStone (based on Reuters)

Pair's Outlook

No matter how strong the technical perspective of a Gold surge can be, changes in the fundamental situation of the US Dollar are capable of destroying any kind of forecast, by changing the whole base of the markets. Due to a decision made by the President of US Donald Trump, the yellow metal fell on Thursday and continued to do so on Friday. If the situation persists, the bullion will fall at least to the 1,219.20 mark, where the 38.20% Fibonacci retracement level is located at. On the other hand, the yellow metal might rally and surge back up to the weekly R1 at 1,233.81.

Traders' Sentiment

SWFX traders have not changed their open positions during the last 24 hours, as 54% of open positions remain long. Meanwhile, 58% of trader set up orders are to buy the metal.

'There is no sign of a pickup in layoff activity. We continue to view the signal of extremely subdued layoffs from the jobless claims data as evidence of companies attempting to retain their workers in a tight labor market'. - John Ryding, RDQ Economic

The number of Americans filing for first-time unemployment benefits declined to an almost 43-year low, official figure revealed on Thursday. Last week's drop in claims was driven by tightening labor market, which is likely to prompt wage growth. According to the US Department of Labor, national jobless claims declined 12,000, to 234,000, during the week ending February 4 from the preceding week's upwardly revised 246,000. Meanwhile, economists anticipated a slighter deceleration to 250,000 during the reported period. Filings have been below 300,000 for 101 straight weeks — the longest streak since 1973. In the meantime, the less volatile four-week moving average of initial claims dropped 3,750 to 244,250, the lowest level since November. Furthermore, continuing claims increased 15,000 to 2.08 million during the week ended January 28, while their four-week moving average fell 3,750 to 2.08 million. These claims, reported with a one-week delay, reflect the number of people already collecting unemployment benefits. Other data released by the Commerce Department on Tuesday showed US wholesale inventories climbed 1% in December, following a similar gain in November. Excluding automobiles, wholesale stocks grew 0.9% in December. The change in private inventories contributed 1% to GDP growth in the final quarter of 2016.

'Overall, the forecasts for year-ended GDP growth are lower over the next three quarters than those presented in the November statement, almost entirely due to the base effect of the weak September quarter'. - Reserve Bank of Australia

Australia's Central bank stated on Friday that the economy remained on a relatively strong footing during the second half of 2016. In its Monetary Policy Statement, the Reserve Bank of Australia said that the possibility of a widely expected downturn in the Australian housing market remained low. The Bank also said its forecasts for 2016 GDP growth were revised down, following sluggish growth in the Q3, when the economy unexpectedly contracted 0.5% after two straight quarters of economic growth. However, the RBA said this contraction was largely due to temporary factors, such as a slowdown in building activity related to bad weather and coal supply disruptions. As to inflation, the Bank said the inflation rate would likely remain below its inflationary 2-3% target band until the middle of 2019. In the meantime, according to the Central bank's estimates, the annual rate of population growth would probably remain around 1.5-1.6% but the economy would likely fail to create more jobs over the next years. The unemployment rate, which rose to 5.8% in December from the prior month's 5.7%, would remain in a range of 5-6% until the middle of 2019. The Central bank also said that a possible slowdown in the Chinese economy would remain a key risk to Australia over the next several years.

The pair trades within narrowing consolidation range between fresh high at 0.7694 and strong support at 0.7600 zone.

Near-term price action was so far supported by daily Tenkan-sen that turned north after sideways phase, with strong bullish setup of daily MA's, still keeping upside bias.

However, fresh dollar's strength on Trump's tax plan talks, so far did not stronger affect the pair's near-term action, but caution is required.

Stronger downside risk could be expected on firm break below 0.7600 handle.

Res: 0.7664' 0.7694' 0.7730' 0.7750
Sup: 0.7617' 0.7600' 0.7584' 0.7510

The pair extends Thursday's strong bullish acceleration on Friday and is eventually firmly above daily Tenkan-sen, former pivotal barrier.

Near-term risk is shifted towards the upside, following repeated rejections at 111.50, where near-term base has formed.

Fresh rally approaches pivotal barrier at 113.91 (Fibo 61.8% of 115.36/111.57 downleg), break of which would expose daily Kijun-sen at 114.55).

Corrective pullback on overbought hourly studies should be contained at 112.70 zone (broken Tenkan-sen / 50% of 111.61/113.84 rally).

Res: 113.91, 114.55, 114.93, 115.36
Sup: 113.31, 113.00, 112.70, 112.46

Quick pullback from 1.2580, yesterday’s strong rally peak, sidelined strong upside potential and shifted near-term focus lower.

The pair dipped to 1.2470 so far, where rising 20SMA offered support. However, downside remains at risk, as near-term technicals are weakening and bearish momentum building on daily chart.

Extension towards key support, daily cloud (spanned between 1.2400 and 1.2442) would further weaken the structure and risk return to Tuesday’s spike low at 1.2345.

Daily Tenkan-sen is again acting as resistance and marks strong barrier at 1.2525. Only firm break above here would revive hopes of fresh attempts at 1.2567/80 upper pivots (Fibo 61.8% of 1.2704/1.2345 / Wednesday’s spike high).

Res: 1.2500, 1.2525, 1.2567, 1.2580
Sup: 1.2470, 1.2442, 1.2400, 1.2345

The Euro is pressuring strong support at 1.0641 (Wednesday's low/Fibo 38.2% of 1.0339/1.0827 rally/daily Kijun-sen), following double rejection at 1.0700 zone, where 20SMA repeatedly capped recovery attempts. As the dollar remains supported by yesterday's announcement from US president Trump about ambitious tax reform play, the single currency is expected to remain under strong pressure in the near term. Firm break below 1.0641 pivot would generate strong bearish signal for fresh acceleration lower. Immediate support lies at 1.0603 (55SMA), ahead of near-term targets at 1.0550 /25 (daily cloud base/Fibo 61.8% retracement). Alternatively, sustained bounce above 20SMA (currently at 1.0706) would sideline immediate downside risk and re-expose falling 100SMA (currently at 1.0762) that so far capped recovery leg from 1.0339.

Res: 1.0666, 1.0706, 1.0730, 1.0762
Sup: 1.0619, 1.0603, 1.0583, 1.0550