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20 January Forex daily review

Sergiy Zlyvko
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Currencies behaved restraint on low trading volumes and lack of economic catalysts. Published reports from China in the morning set the tone for the whole day. As a result, EURUSD came to an end Monday to around 1.3560 and GBPUSD – to 1.6430.

This week, the number of economic releases is limited, but the season of publication of corporate reports for Q4 can compensate the lack of events. In addition, on Tuesday the IMF will publish forecasts for the growth rate of the largest economies in the world and we think we’ll get some interesting surprises.

On Monday, the major currency pairs fully met the expectations. Dollar after Friday’s growth adjusted all the day. In the U.S., yesterday was a day off so the exchanges did not work and the activity of the participants in the FX evening was low. EURUSD, GBPUSD and USDCHF to the U.S. session were trading in narrow ranges and the current time. The market is balanced and ready for dollar sales.

What to expect from today? On the evening important economic data is not planned. At 10.00 GMT economic expectations index ZEW investor in January will be published. According to the forecasted expected growth rate, to 10.00 GMT the EURUSD could get a temporary boost from positive sentiment.

If the actual ZEW value coincide with predicted or surpass it, the EURUSD can rise to the trend line (time frame H1) to 1.3585. With a weak indicator, bulls could not reach 1.3585 mark. Today it is necessary to monitor the crosses with the euro and the pound, because at 14.30 GMT IMF Economic Outlook will be published with new forecasts. And on Monday there have been rumors that the IMF plans to raise growth forecast for UK GDP in 2014 from 1.9% to 2.4%. British pound is trading sideways and waiting any news driver to deviate. If the driver for the growth will be – the pound will fly up, if the driver to reduce – goes down. Dollar growth is not yet completed. If the IMF forecast revision upward from the Eurozone and the UK, then we have to expect short-term growth of euro and pound. And so long as the price is trading below the trend line, we will consider euro selling. We consider a consolidation after a long decline of the pound. Price level of 1.6455 stands as a resistance today.

AUDUSD exchange rate recovered to 0.8830 level. The pair rose following NZDUSD, so we do not consider the minimum updated today. Before the fall it is not bad to pass 0.8790. Current exchange rate is 0.8815. The market is ready to boost the dollar, so the main scenario of AUD is to fall forward to 0.8765 mark.

On Monday, the USDCHF rate fell back to 0.9090, but it did not brake 0.9085. Current exchange rate is 0.9125. In principle, it is expected. The goal is 0.9150 level, which formed after the divergence of the purchase and will already be risky. Level of 0.9080 supports the pair.

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