The biggest event on the agenda today is the signing of the Phase One trade agreement between the United States and China in Washington. President Donald Trump recently called the deal a ‘Beautiful Monster’. The full text of the agreement should be made public today after the signing. Majority of tariffs are to remain for at least 10 months, after which time the United States would re-evaluate the progress and consider further tariff reduction, this will take place after the November United States elections. The United States House of Representatives is to vote today on sending articles of impeachment to the Senate, where republicans remain a majority waiting to acquit President Donald Trump. Although Trump is unlikely to be removed from office and markets have generally neglected the impeachment proceedings, during the trial that is likely to take place next week we’ll watch the Presidents reactions and statements.
EUR/USD on a Daily TF is trading slightly higher around 1.11449. Eurozone Industrial Production was released today slightly below forecast at 0.2% MoM for Nov. the forecast was 0.3% and Germany reported on the slowest economy expansion in 6 years, but the German economy started to uplift during the last few months of 2019 and several ECB members stated yesterday that the Eurozone economy will stabilize in 2020 and that monetary policy is likely to remain unchanged for the time being.
Technically: The pair reached our next resistance target at the 50% Fibo level. Parabolic SAR continues pointing to the downside, MACD bearish histogram slightly decreased. We are also observing a death cross on the Ichimoku Cloud. The move is due in part to hawkish ECB but also on USD weakness after Iranian President Rouhani issued an angry speech on Wednesday, according to Reuters translation Rouhani said ‘Today, the American soldier is in danger, tomorrow the European soldier could be in danger’ but did not elaborate.
Resistance: R1 1.11750, R2 61.8% Fibo 1.12086.
Support: S1 48EMA 1.11088, S2 1.11, S3 1.10650.
GBP/USD on a Daily TF remains under pressure after releasing weak inflation and producer price index for December. CPI YoY in Dec. was released at 1.3% below 1.5% forecast, MoM for Dec. was released at a flat 0.0% below 0.2% forecast. PPI was released at 0.1% below 0.3% forecast MoM for Dec. Following the release, BoE member Michael Saunders suggested that a rate cut may be appropriate to achieve the 2% inflation target. Currently the price remains in the same range as at the beginning of the week around 1.30145.
Technically: Parabolic Sar is above the price after yesterday’s reversal. The b earish MACD histogram is increasing.
Resistance: R1 1.305-1.306 area, R2 50% Fibo 1.31675.
Support: S1 1.29500, S2 38.2% Fibo 1.28821, S3 1.28.
USD/JPY on a Daily TF is trading slightly below our previous resistance around 109.900. BOJ Governor Kuroda stated today that consumer inflation would rise to 2% while the BoJ keeps rates at a low level. Kuroda is optimistic but cautious, as he reiterated several times that ‘We will adjust policy as necessary to maintain momentum towards our price stability target while examining risks’ adding ‘We will not hesitate to take additional easing steps if risks heighten to an extent that the momentum towards the price target is undermined.’
Technically: 13 and 48 EMA are pointing up, a bullish MACD histogram is increasing, & Parabolic Sar is pointing up.
Resistance: R1 110.214, R2 110.698, R3 111.069.
Support: S1 109.624, S2 61.8% Fibo 109.362, S3 109.021.