News Update for Currency Pairs

USDJPY managed to rebound by 20pips, but still in red

The pair bounces of lows on Thursday, but still in the red zone. There is now a pause to its bearish slide for the time being. The US Treasure Yields picked up and helped the pair to find support near the 112.65 region.

The Japanese Yen continues to suffer from the prevalent cautious sentiment around European equity and might be a blockage to any meaningful recovery amid pre-holiday thin liquid conditions. USDJPY watchers now look forward to the US economic docket, which includes the initial weekly jobless claims, Chicago PMI and some goods trade balance data, for fresh signs of movement during the NA session.

 

AUD Under Pressure From Economic Data

Global Head of Currency Strategy at BBH reported news of a sharp decline in the Australian Trade Balance in October and November, which managed to halt the AUD uptick. Here is a quote from the analyst:

The Aussie was trading near $0.7500 in early December and finished the year near $0.7800. The gains were extended to almost $0.7870 before the trade report. Initial support in the $0.7835-$0.7840 area was tested. The RSI has turned down, and the MACDs are poised to do so in the coming days. The MACD needs more work. A break of $.07760-$0.7780 is needed to boost confidence a top is in place. Note too that the Australian two-year yield is set to fall back below the US two-year rate (as was the case for most of the first half of December).”

 

EUR/USD struggles below mid-1.1900s, hangs near 1-1/2 week lows

The EURUSD edges closer to its previous one week low as the U.S Treasury bond yields get an upsurge. This has been a major factor weighing on the major. Investors believe that the Fed would continue with its gradual monetary policy tightening cycle through 2016, which helped the 10-year bond yield to a 10-month high and pulled the greenback upward.

The key focus, however, would be on this week's other US macro data, namely the latest inflation figures, which might turn out to be a key determinant of the pair's near-term trajectory.

 

EUR/USD moves past the 1.20 handle after ECB meeting

The EURUSD continued its bullish momentum and moved passed the key level 1.20 (Psychological mark), making it to a three day highs early Thursday NA session. The pair previously fell to the 1.1930 region before regaining its feet during the mid-European session.

The Bulls were strengthened after the ECB meeting that a possible shift in guidance could come in early 2018. There was also the release of US economic data, which fell short of consensus estimates and added pressure on the dollar. The dollar continued to weaken during the early NA session after the released Data showed that Producer prices plunged in December, missing expectation dramatically and deflating the most since August 2016.

Fxstreet indicates the following Technical Levels to Watch:

“Immediate resistance is now pegged near 1.2065-70 zone, above which the pair is likely to make a fresh attempt to clear 2017 yearly highs resistance around the 1.2090 region and aim towards testing its next major hurdle near the 1.2165 region. On the flip side, 1.2015 level, closely followed by the 1.20 round figure mark now seems to protect the immediate downside, which if broken might accelerate the slide back towards 1.1930 horizontal support en-route the 1.1900 handle.”

 

EUR/GBP likely to remain in the hands of investor appetite


EUR/GBP bounced above 0.89 yesterday driven by the EUR rally, which was triggered by hawkish ECB headlines, points out Senior Analyst, Jens Nærvig Pedersen at Danske Bank.

Key Quotes

“In the near term, EUR/GBP is likely to remain in the hands of investor appetite for EUR and Brexit news, and we still look for the cross to remain within the 0.8650- 0.90 range. Longer term, we still see potential for a break lower in EUR/GBP driven by possible clarification on Brexit negotiations and valuations. However, yesterday’s ECB minutes and the rally in EUR is a reminder that while GBP is set to strengthen on a lower Brexit risk premium, a general EUR recovery driven by the ECB moving towards an exit could potentially limit the downside potential.”

“We target 0.87 in 6M and 0.86 in 12M, but stress the risks are that a break lower in the cross could come sooner than our forecast indicates.”

 

EURUSD Met With Multiple Obstacles as it Tries to Continue Its Recovery

The Pair started the week on a bullish note and witnessed two good price movements in a positive direction. However, its recovery was put to a stop in early Europe session on Tuesday and dropped as low as 1.2216 after the report that the German SPD rejected coalition talks with Merkel’s Conservative parties. The EURUSD was hit hard but the bulls managed to fight back and took control somewhat as the German coalition breakdown fears subsided. The pair moved back toward the 1.2270 region.

Unfortunately once again a fresh buying wave caught by the US dollar drove the pair to the 1.22 handle, as recovery was pinned.

There is nothing of note for the pair in the day ahead, except for the second-liner US regional manufacturing index. Hence, attention turns towards the Eurozone final CPI and US industrial figures slated for release tomorrow

 

NZDUSD continues its struggle to break through the 0.73 handle

The Pair is still struggling to hold on to its price above the 0.7300 mark. It is did go past this level by a high margin and refreshed 4 months tops. The Pair later witnessed a sharp reversal during the NY trading session.

The US dollar was weakened on Thursday and this gave the pair some positive traction but was capped by mixed Chinese Macro data. Traders are now looking to see if the pair is able to continue its hold on the 0.7300 handle or if the bulls are able to regain control. Some economic data due to be released will give investors some fresh impetus.

The US economic docket along with Philly Fed manufacturing index and the usual weekly initial jobless claim will be available today. We’ll see how it moves the NZDUSD.

 

AUD/USD consolidates around 0.8000, near January highs

AUDUSD has been experiencing a steady consolidation around 0.8000. The pair peaked at the start of the beginning of the US Session ate 0.8026 and then moved down toward 0.8000 after an agreement was reached by Lawmakers in the US to end the US government shutdown.

The Australian dollars have experienced good times. Last week, the Australian economic data was better than expected. The next important data will be Q4 inflation on January 31st. The US political turmoil is the main driving force for the pair.

The pair remains bullish even though it has seen some downside movement. “The rally should resume of an upward acceleration through 0.8045, with scope then to advance up to 0.8124, September monthly high” says an Analyst from fxstreet.

 

GBP/JPY hits a fresh post-referendum high, still unable to rally above 155.50

The GBP/JPY pair rose from 154.35 to levels above 155.00 after the release of UK employment data. Afterward peaked at 155.60, the new post-Brexit referendum high. Near the end of the US session it was hovering around 155.00/10, up 65 pips from yesterday’s close.

The jobs report in the UK showed the highest employment rate since 1971 and a modest increase in wages during the three-month period to November. Average hourly earnings excluding bonus rose 2.4% and including bonus 2.5%. Wages are rising still below inflation but the labor market shows positive signals.

The numbers help GBP/USD rise above 1.4100 and EUR/GBP to drop to 0.8700. Those moves boosted GBP/JPY that climbed to 155.60, the highest since June 2016. The pair pulled back finding support at 154.80.

 

BoE to hike twice this year, EUR/GBP poised to drop further

“The Bank of England (BoE) sent a hawkish message to the market yesterday at its MPC meeting and in our view clearly signaled that it is launching a hiking cycle. We have changed our call on the BoE and now expect two rate hikes in 2018 (in May and November). This is more hawkish than consensus and market pricing”.

“In our view, the case for a lower EUR/GBP has strengthened as we now expect the BoE to ‘out-tighten’ the ECB and we have lowered our EUR/GBP forecast to 0.88 in 1M, 0.87 in 3M (previously 0.88), 0.86 in 6M (0.87) and 0.84 in 12M (0.86). We see risks skewed towards the cross both breaking lower sooner and considerably lower than our forecast indicates”.

 

Stock market Sell-off looms, while AUDUSD trades below the 0.78 level

The AUDUSD is not retreating from previous highs of 0.7829 and trading under that level calmly. Major currencies such as the Yen and the U.S dollar are taking advantage of the risk-off sentiment and lost footing by the AUD.

On the other side, US stocks aren’t doing well on all indices. S&P is down by 2%, having been already down 5% from the start of the year. Still on the AUDUSD, the next important support level is the 0.7730 that capped the pair in November. The recent rally began at the 0.75 level. On the topside, 0.7807 was the previous 2018 low and it was breached during this week. Higher, 0.7870 capped the pair in January. The round number of 0.80 looms above

 

Which pair should I trade in the next week?