A happy new year to all of you! We hope you had a perfect start into 2018 and wish you all the best for a successful year with many profitable trades.
What happened during our absence from the market? The U.S. dollar was broadly lower against its major counterparts driving both major currency pairs EUR/USD and GBP/USD higher. When market participation is thin there are often formations of extended trends even if major market drivers are lacking. Thus, the euro and British pound followed a clear uptrend since mid-December while heading towards new highs. The euro broke above 1.20 and rose to a high of 1.2081 while the pound took the hurdle at 1.3550 and then tested the 1.36-barrier. Yesterday, however, the inevitable happened and the U.S. dollar attempted a technical rebound while ending the trading day higher against the euro and pound. Is this the end of the current uptrend in both major currency pairs? Let’s have a look at the current chart picture in our technical analysis below.
The minutes from the December FOMC meeting did little to alter current rate hike expectations. Having only hiked in December, the Federal Reserve is not expected to raise interest rates at their next FOMC meeting. The market is currently pricing in a 60 percent chance of a March rate hike.
Tomorrow’s Nonfarm payrolls report is the highlight of the first week of January. However, market participants may return only after this holiday-shortened week, which is why we do not expect exaggerated swings from the U.S. jobs data.
Today we have the ADP payrolls due for release at 13:15 UTC, a report that could serve as a small foretaste of tomorrow’s jobs report.
EUR/USD
The euro trended upwards since mid-December and true to the motto “the trend is your friend” we expect further gains in this pair unless the euro breaks below its uptrend channel. We currently see the euro trading within the resistance zone between 1.21 and 1.20. If the euro climbs above 1.2085 it may extend its gains towards 1.2130.
GBP/USD
The pound sterling experienced its first pullback against the greenback yesterday after several days of steady price increase. Here too, we stick to the motto “the trend is your friend” and expect further gains unless the pound breaks below 1.3450. With the cable remaining above 1.3450 we will focus on a higher price target at 1.3650.
Here are our daily signal alerts:
EUR/USD
Long at 1.2040 SL 25 TP 20, 40
Short at 1.1995 SL 25 TP 15, 40
GBP/USD
Long at 1.3535 SL 25 TP 30, 50
Short at 1.3480 SL 25 TP 20, 40
We wish you good trades and many pips!
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