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Japan GDP sinks to 2014 lows. China to boost stimulus. US and Canada closed for holiday. EUR/USD, GBP/USD, USD/JPY

Feb 17 2020, 09:53 PM (BDT) |

There is a holiday in the United States as well as Canada and the markets are subdued. Even so, the markets are experiencing mild optimism. Investors are pricing in that the coronavirus effects will be short lived. The markets are calmed by the fact that the coronavirus is for the most part contained within China. The number of the infected is decreasing and there is information that the Chinese are coming quite close to having a vaccine. Beijing has also promised to increase stimulus by reducing corporate taxes to help support the economy and the impact of the coronavirus.

As a result, Gold and safe haven Japanese Yen are trading slightly lower and the CSI, China Securities Index which includes 500 companies listed in the People's Republic of China, Hong Kong, and Taiwan rose over 3%.

Late last night, Japan released the worse GDP figures since 2014, annualized growth for the 4Q came in at -6.3%, below -3.7% forecast. Both now and in 2014 the slump in GDP follows Japan’s consumption tax hike.

From the Eurozone, on Tuesday February 18th pay attention to the release of German ZEW Economic Sentiment for February at 10am GMT.

EUR/USD on a daily TF continue to tread in oversold area, RSI 25.02. The price is trading slightly higher around 1.08370 but unable to break above local trend line down. United States FOMC Member Kashkari speaks at 7pm GMT on Tuesday.

Resistance: 1.08580, R2 1.09, R3 1.09425.

Support: S1 1.07775, R2 1.07.


We have several releases from the United Kingdom. On Tuesday we have employment figures at 9:30am GMT. The forecast is that the number of unemployed in January increased by 22.6K up from 14.9 in December.

GBP/USD on a Daily TF continues to trade in a flat, around 1.30, being supported by 13EMA.

Resistance: R1 1.31, R2 50% Fibo 1.31693, R3 1.32500.

Support: S1 1.29500, S2 38.2% Fibo 1.28835, S3 200EMA 1.28450.

USD/JPY on a Daily TF was unable to break above 5-year resistance dating back to June 2015 and currently trading around 109.876. We are likely to see a correction but pay close attention, if the price breaks above resistance, we could see a rally all the way to 111.

Resistance: R1 110, R2 110.214, R3 110.717.

Support: S1 109.515, S2 109.270, S3 109.

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