The biggest market moving event today was the European Central Bank decision and ECB President Lagarde’s statement afterwards. The monetary policy was left unchanged and Lagarde stated that accommodative low interest rates will remain for a prolonged period of time to reach the appropriate level of inflation. The ECB is also launching a thorough review of the monetary policy and annual targets. In this regard Lagarde stated that ‘we won’t leave any stone unturned’ when it comes to the review, but no further details. The ECB will continue to monitor any and all developments and act accordingly to sustain the European economy.
EUR/USD on a Daily TF was trading flat ahead of the ECB monetary policy meeting today at 12:45pm GMT. There are more Euro bullish factors than there are bearish. In the most recent releases, the ZEW Economic Sentiment for January was above forecast at 25.6 ahead of the 5.5 forecast and Euro CPI increased to 1.3% YoY for December. German Manufacturing PMI in December were a bit above forecast and November Retail Sales were also above forecast at 2.1% ahead of 1.1% forecast.
Technically: Yesterday the pair dropped down on upbeat U.S. Existing Home sales, which were released at 3.6% MoM for December, ahead of 1.3% forecast and -1.7% previous fact / 5.54M ahead of 5.43M forecast and 5.35M prev. fact. Yesterday the pair dropped to 1.10702, which is the bottom of the Ichimoku Cloud as support. The top of the Ichimoku Cloud coincides with our 48EMA as resistance. MACD is still bearish and Parabolic SAR is pointing down.
During the release the price first reached our resistance target around the 50% Fibo level and then dropped to our support target around 1.10599 and the price is currently using the bottom of the Ichimoku cloud as support around 1.10704.
Resistance: R1 1.11050 (top of Ichimoku) – 1.11103 (50% Fibo), R2 38.2% Fibo 1.11407, R3 23.6% Fibo 1.11784.
Support: S1 1.10575, S2 1.10266, S3 1.09891.
GBP/USD on a Daily TF has had a bullish beginning of the week with 3 consecutive days of growth. There are no releases from the U.K today, but we did see that employment in the United Kingdom is stable and that economic expectations of manufacturing executives have improved. Tomorrow, at 9:30am GMT we’ll have the release on Manufacturing and Services PMI.
Technically: MACD line crossed Signal line up and we have the beginning of a bullish histogram. The price is above 13 and 48 EMA which are pointing slightly up. Parabolic SAR is still pointing down.
It’s interesting to note that the price couldn’t quite reach the 50% Fibo level as previous resistance. If we have further GBP buyers, its possible that the price will come back to re-test the local trend line down.
Resistance: R1 1.32124, R2 1.33327, R3 1.34529.
Support: S1 13EMA 1.30726, S2 1.29877-1.29500, S3 1.27685.
USD/JPY on a Daily TF is having a third straight bearish day. The price broke below 13 EMA which is pointing slightly down. MACD line and signal line are coming close together and Parabolic SAR is in the vicinity of 48EMA.
The bearish momentum is being driven by the scare of China’s coronavirus. The death toll has risen to 17 and several Chinese cities are on lockdown for travel. Another important thing to note is that on a Weekly TF, the price broke above 200EMA and came back to re-test it this week. Also, on the Weekly TF, the 13EMA just crossed the 48EMA up. It is possible to have a deeper correction before the price resumes its advance up.
Resistance: R1 109.745, R2 110.214, R3 110.681.
Support: S1 109.300, S2 48EMA 109.197, S3 200EMA and 23.6% Fibo 108.912.