Weekly Technical Analysis For January 27th to 31st, 2020
The European Central Bank left key rates unchanged in the January meeting. Euro has dropped to the lowest this year versus the US Dollar after Christine Lagarde's press conference.
ECB launched a review of its monetary policy strategy, which is the first review since 2003. It is expected to be concluded by the end of 2020. The ECB also predicted euro-zone GDP growth will slow slightly to 1.1% this year from 1.2% in 2019 then pick up in 2021.
On the other hand, the coronavirus fear has increased. China put cities on lockdown and other Lunar New Year events have been canceled. The virus has also spread to the U.S., Thailand, South Korea, Japan, Australia, France, and Canada. The fear is on getting worse than better, and actions by China could impact economic growth.
In the upcoming week, the Federal Reserve will deliver its first interest rate decision for the year on Wednesday. There is no interest rate change expected from the Fed. Federal Reserve Chair Powell made clear before that there would be no further cuts to U.S. interest rates barring a major deterioration in the economy. Powell will hold a press conference following the meeting, with awaiting his insights on the policy outlook.
Besides the Rate Decision, keep your eye on US GDP Growth on Thursday. The US four-quarter gross domestic product is expected to see a growth of 2.1%, the same as the previous estimate.
The Fed’s preferred measure of inflation, the core PCE index, which calculates spending minus volatile food and energy costs, arrives along with personal spending and income numbers from the Commerce Department on Friday. The December core PCE is expected to remain unchanged at 1.6% year on year basis.
Moreover, we will focus on the Eurozone Consumer Price Index on Friday. On the year-on-year basis, the Eurozone CPI is expected to stay at 1.4% A better than expected realization may support the single currency.
EUR/USD: The EUR/USD pair moved down below the daily resistance level of 1.1052. As long as the price stays below 1.1052 on a daily basis, the downward movement may continue and we will follow 1.1007 and 1.0965 as support levels. On the other hand, if the pair rises above 1.1052, the next resistance level will be at 1.1114.
Support : 1.1007 - 1.0965 - 1.0930
Resistance : 1.1052 - 1.1114 - 1.1165
GBP/USD: Looking ahead, the Bank of England’s monetary policy committee will announce the results of its latest meeting on Thursday. The BoE is expected to leave interest rates unchanged again. The meeting will be Mark Carney's last as central bank governor.
There are expectations for clearer guidance towards lowering them in view of the global economic slowdown and the sustained deterioration in domestic conditions due to the Brexit.
We are closely watching the 1.3046 main support level in the GBP/USD pair. If the pair stays above 1.3046 on a daily basis, the key resistance levels can be seen at 1.3136 and 1.3231. On the other hand, if the pair falls below 1.3046, the next support level is holding at 1.2947.
Support: 1.3046 - 1.2947 - 1.2838
Resistance: 1.3136 - 1.3231 - 1.3313
USD/CHF: The USD/CHF pair is now trading above the main support level of 0.9701. As long as the price stays above 0.9701 on a daily basis. we will see watch 0.9757 as a resistance level. On the downside, If the pair falls back below 0.9701, we will follow the next support level at 0.9656.
Support : 0.9701 - 0.9656 - 0.9598
Resistance: 0.9757 - 0.9831 - 0.9877
USD/JPY: The USD/JPY pair is currently trading below the 109.09 major resistance level. As long as the pair stays below 109.09 on a daily basis, we will watch the support levels at 108.79 and 108.52. On the other hand, if the price goes beyond 109.09, the next resistance level will be placed at 109.35.
Support: 108.79 - 108.52 - 108.14
Resistance: 109.09 - 109.39 - 109.72
Gold: US embassy in Baghdad hit with a rocket. The US has so far not officially accused Iran - but made reference to Iranian threats in the region in their statement.
The Gold Price surged in the Asian Trading Session. Now, we will closely watch the main support level of 1575. If the price stays above 1575 on a daily basis, we will see the 1604 major resistance level. On the downside, if the price drops below 1575, the next support level will be at 1555
Support: 1575 - 1555 - 1540
Resistance: 1604 - 1642