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7 January Forex daily review

Sergiy Zlyvko
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On Tuesday, the U.S. dollar closed up against the Swiss franc and the Australian dollar and has not changed against the single currency and the British pound. Traders pay attention to the U.S. trade balance report, but before an important event (FOMC protocols) their actions in the U.S. session were restrained. In November, the trade deficit in the U.S. fell to 34.25 billion ($40 billion forecast) and October data revised downward.

FOMC minutes, which are scheduled for 19.00 GMT will be a key event today. In this regard, the main currency pairs to 19.00 GMT expect consolidation in the price range of 40-50 points. If my expectations are fulfilled, at 19.00 GMT on the foreign exchange market a surge in volatility and sharp price swings up to 100 points can be observed, after which the market will go back in a correctional phase before the announcement of decisions by the Bank of England and the ECB.

We recommend following the dynamics of EURGBP cross-rate. It spent three days in the formation of correctional model with a range of 50 points. Now the price is in the middle of the range. From current level 0.8305, the pair is able to deviate in any direction by 25 points.

EURUSD has chosen the alternative scenario. First, it went to 1.3655 mark then refreshed intraday low. According to the latest quotations, EURUSD is trading at 1.3610. AO indicator is in the neutral zone. Stochastic reached sales area. This indicates that at the European session EURUSD can upgrade Asian minimum and then go up. In any case, we expect on the European session sideways near the 1.3610 level. At 19.00 GMT FOMC protocols will be published. As quieter the market will be at 19.00 GMT, so the movement is stronger after the publication. We do not count for prolonged oscillations. We think the effect from the protocols will be held no more than one hour.

1.6440 mark on Tuesday made a strong resistance for GBPUSD. Bulls twice tried to pass this level and both times the price back to 1.6370. Currently the pair is trading at 1.6425. We would say the pound in Asia somehow recovers quickly. We inclined to think that until 19.00 GMT the level of 1.6435 resists.

Australian dollar closed with a decrease against the U.S. dollar. Bears have not reached 0.8860, the drop stood at 0.8990. The support level of 0.8915 pinned AUD and now the pair is trading at 0.8910. This morning weak business activity index for the construction sector has been published, so we may expect from AUDUSD to decrease to 0.8860 mark.

Despite mixed performance among major pairs, thanks to the crosses USDCHF rate reached on the main scenario 0.9100 level. Now on the market with a maximum 0.9100 is a correction and the pair is trading at 0.9095. We think before 19.00 GMT it keeps sellers from active actions.

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