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US and UK GDP, Japan CPI – EUR/USD, GBP/USD, USD/JPY Before the Holidays

Dec 20 2019, 09:25 PM (+06) |

EUR/USD on a Daily TF continues to trade bearish. On Tuesday the pair tried to break above the 200 EMA but failed. On Wednesday the pair dropped by 0.35% despite an upbeat German Ifo Business Climate which came in above forecast at 96.3.

European Central Bank President, Christine Lagarde, left the low interest rates unchanged with more accommodation on the table.

There was a bullish spike back towards the 50% Fibo level on Thursday as the United States released worse than expected Initial Jobless Claims (234K) and Existing Home Sales (5.35M) but the price couldn’t hold.

The pair is now trading around 1.11215. Markets are heading for the holidays and next week's economic calendar is light aside from New Home Sales and Core Durable Goods Orders from the United States on Monday and Tuesday.

New Home Sales are expected to pick up in 2020. According to Bloomberg, U.S. homebuilder sentiment in December is at the highest level since 1999.

The low unemployment rate and interest rate as well as easing in trade tensions may boost home sales.

On Friday, the U.S. will release Q3 GDP at 1:30 GMT, the forecast is the same as the previous preliminary fact at 2.1%.

The MACD bullish histogram is decreasing, the Parabolic SAR is close to the price, and we may see a reversal soon.

Resistance: R1 50% Fibo 1.11456, R2 200EMA 1.11611, R3 1.11747.

Support: S1 48 EMA 1.10789, S2 1.10524, S3 1.10393. 

GBP/USD on a Daily TF is showing a slight recovery after dropping 2.57% from Monday's close. Prime Minister Johnson started working vigorously on Brexit after being re-elected as Prime Minister of the United Kingdom with an extensive majority in parliament.

 Unfortunately, the week started with renewed No Deal Brexit tensions and the British Pound has been extending its losses all week except for today.

Todays optimism is driven by better than expected GDP QoQ for Q3 0.4%, YoY Q3 1.1% and a slightly better than expected trade balance.

The outlook for GBP is bearish, yesterday, on December 19th 2019 the Bank of England left the interest rate unchanged at 0.75%, while 2 members voted for a rate cut. Easing in monetary policy is being watched for in the beginning of 2020.

Resistance: R1 50% Fibo 1.31675, R2 61.8% Fibo 1.34529.

Support: S1 48 EMA 1.29300, S2 200 EMA 1.27522, S3 1.26055

USD/JPY on a Daily TF made a bullish step up to 109.707 resistance this week as trade tensions between the United States and China alleviated.

There haven’t been any updates on the phase one deal, as China translates and reviews it. The additional tariffs did not go into effect which was enough to increase risk-on sentiment. 

Worse than expected, U.S. data has brought the price back down below 61.8% Fibo, the price is currently trading around 109.352.

In the beginning of December, Japan released Services PMI that returned back above the critical level and was released at 50.3. Better than expected GDP followed QoQ Q3 0.4%.

Today, the Japan National Core CPI came out as forecasted at 0.5%, showing a second month of increase.

Also yesterday, the Bank of Japan left the interest rate unchanged at -0.10% and the accompanying statement was on the optimistic side, as the BoJ expects the Japanese economy to follow an uptrend in 2020.

Resistance: R1 109.707, R2 110.244.

Support: S1 108.922, S2 200 and 48 EMA 108.811 – 108.797.

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