The new Chinese Coronavirus continues to spread, the death toll has risen to approximately 80 people, confirmed cases are nearing 3000 and close to 30,000 people are under close watch. China has extended the Lunar New Year holiday until February 2nd to help contain the spread of infection.
Global stock indices have dropped on risk aversion, with travel and tourism industries taking the biggest toll. HSI Hang Seng Index on a daily TF is trading around 27949.6 and being supported by 48 EMA. The next target down for the index would be around 200EMA 27434.4.
Brent oil has dropped -8.78% from last Monday. The next target down may be considered around 57.22. Resistance will be around 64 followed by 70 per barrel.
Gold opened with a bullish gap on a daily TF. Currently trading around 1584. Next target up may be considered around 1600 per troy ounce and support will be around 1547.
EUR/USD on a Daily TF continues to trade bearish. The pair broke the 61.8% Fibo level down following last Thursdays upbeat United States Initial Jobless claims, reported at 211K, below 215K forecast and 205K previous fact. The pair moved further down following the release on Euro Markit Composite PMI which was released the same as the previous fact at 50.9, slightly below 51.2 forecast, this release proved to be stronger than upbeat German Manufacturing and Services PMIs which were released 30 minutes prior to that at 45.2 and 54.2 respectively. This mornings German IFO business climate which was released at 95.9 instead of increasing to 97.0 from 96.3 previous brought the pair further down to the area of 1.10150, currently trading around 1.10303.
The pair is also driven by USD strength. Fridays composite PMI was above forecast at 53.1 and the greenback is also considered to be a safe haven asset.
Technically: MACD bearish histogram is increasing. Parabolic SAR pointing down. RSI within range 37.67. 13, 48 and 200 EMA are pointing down.
Later today pay attention to U.S. New Home Sales at 3pm GMT, the forecast is 730K in December, an increase of 11K from November.
Resistance: R1 1.10500, R2 61.8% Fibo 1.10798, R3 1.11.
Support: S1 1.10150, S2 1.10, S3 1.09812.
GBP/USD on a Daily TF is trading flat around 1.30630. The main release for the Sterling will be on Thursday with the release on U.K. monetary policy. Last week, macroeconomic releases took a positive turn. Employment, CBI industrial trends orders and PMIs were all released above forecast and the chances of a rate cut on Thursday has decreased. The previous week, markets were pricing in about a 75% chance of a rate cut. The United Kingdom is leaving the European Union on Friday. Strenuous negotiations will follow the rest of the year as the two rivals try to negotiate the terms of exit. The main things that are likely to cause a rift are trade, fishing borders, citizens rights and the future of Northern Ireland.
Resistance: R1 50% Fibo 1.31675, R2 1.32500, R3 1.33327.
Support: S1 1.29500, 38.2% Fibo 1.28821, S3 200EMA 1.28191.
USD/JPY on a Daily TF opened with a gap down as traders rushed to purchase the safe haven Yen. The United Sates Dollar and the coronavirus are going to be the main drivers for the pair until Thursday when we have the release on Japan CPI, industrial productions and retail sales at 11:50pm GMT.
Technically: The price has dropped -1.09% from last Monday. Today the price gapped down to 108.729 and is currently trading slightly below 109, at 108.978. The price has met support at the 23.6% Fibo, 200EMA and trend line up from August 2019. Parabolic SAR has reversed and pointing down, MACD line crossed the signal line down and bearish histogram is increasing. It’s worth noting that the price touched the 61.8% Fibo level from January 6th bullish rally on Tokyo’s start of the trading session and the price is currently at a strong level of support.
Resistance: R1 109.250, R2 109.450, R3 109.688
Support: S1 108.729, S2 108.607, S3 108.423.