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Next week Forex forecast

Sergiy Zlyvko
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On the coming week the publication of key macroeconomic statistics that can have a significant impact on the dollar is not scheduled. In the absence of important stimuli, market participants will gradually prepare for the meeting of the U.S. Federal Reserve. It will be held on January 28-29 and resulted in expected QE3 reduction by another 10 billion dollars. Dollar has all chances to feel confident.

However, single European currency traders will also expect data on the index of business optimism from the Center for Economic Research ZEW (January 21, 10.00 GMT). Macroeconomic statistics from the Eurozone lately is positive and therefore there could be positive surprises that could support the euro. On the same day the results of the meeting of the German Constitutional Court on the legality of government involvement in the Outright Monetary Transactions will be announced. With all the great significance of this event, we do not expect any surprises. At the time on an announcement of the intention to implement the program in the summer the year before euro strengthened its positions, but as it is the weakening of monetary policy by the ECB and it can have a negative impact on the stock the second reserve currency in the world. From the point of view of technical analysis nearest important support and resistance levels are 1.3550 or 1.3700 marks respectively. Overcoming the lower limit on a moderately negative news background will make the goal of the movement area to 1.3450, and the upper level at 1.3815.

Monetary Policy Committee of the Bank of England next week will hold the next meeting (January 22, 09.30 GMT). Regulator reigns extreme clarity in monetary policy. Start the process of rate hikes tied to unemployment, inflation returns to target range and economic activity increases. In such circumstances, it did not require to make any adjustments. The probability of any surprises and actions is minimal. However, high level of volatility traditionally accompanies the event.

We see sterling as one of the strongest currencies in the market and believe until impractical to seek opportunities for short sales. In case of continued growth to annual maxima in the region of 1.66 will be a goal in the coming week.

Australian dollar and the Japanese yen in the absence of important events have the potential to continue to move in the long-run trends. AUDUSD could test the strength of support 0.8500 and USDJPY touched 105.45 resistance.

Monday January 20 will be a boring day. Important macroeconomic statistics of the leading economies of the world for this day is not planned. During the Asian session, industrial production (02.00 GMT) and GDP (02.00 GMT) data from China will be published. They may make the short-term trend on the market in the first half of the day and the second is expected to decrease in activity due to the U.S. holiday in honor of Martin Luther King.

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