23 January Forex daily review

Yesterday was the black Thursday for the US dollar. Why black? Because it fell on all trading sessions. Emerging market currencies were falling also. The US dollar strengthened only to the Australian dollar. We do not think the dollar’s decline will be long because until February 7 Congress needs to raise the U.S. debt ceiling. Though the budget adopted, it can be a tense situation with the debt ceiling (as always). Head of U.S. Treasury Jack Lew sent a letter to Speaker of the lower chamber John Boehner, urging Congress to raise the U.S. debt ceiling before the deadline on February 7.

After yesterday’s dollar weakness today we consider a correction as the main scenario. If the market refuses to go on the main scenarios, then alternative scenarios should be expected GBPUSD pattern for January 23 from the chart. Often after rushes market begins to form sideways or moving in the same direction as the wedge model. Ascending or descending triangle is not always a reversal. Correction after such triangles is sharp, but not long. To return the strength to the bulls, it needs to start returning to previous positions.

On strong PMI data EURUSD broke through 1.3600 mark and to the closure of the day overcame 1.3680. Breaking of 1.3590 as the main scenario was canceled. After the release of European statistics the pair stopped near the 1.3650 and then on mixed statistics from the U.S. the growth continued. In Asia, the euro traded in a narrow range. Asian participants after yesterday’s fluctuations took a wait. Growth stopped near 1.3710 level. The price may go in a serpentine pattern reminiscent of the final triangle. Perhaps yesterday’s high buyers rewrite, but we feel closer to the rollback of 1.3610 line.

On Thursday, amid growing EURGBP cross-rate British pound could not develop the same momentum as the EURUSD. GBPUSD rate rose to 1.6640 and formed a rising wedge. This is bearish pattern and often it ends in correction of its origin. In this case, the area is in the range of 1.6560. That is why we consider the main scenario dropping to 1.6580 mark.

Now a few words about alternative scenarios. Since AO indicator is 0.0030, the pair can go above and forming the upper boundary of the rising channel session trend. This option should not be ruled out because yesterday the gold sharply strengthened by 30 dollars.

AUDUSD exchange rate fell yesterday in the main scenario, but today all the scenarios already canceled. AUDUSD exchange rate went into the zone and pinning already marked 0.8690. The representative of RBA Heather Ridout said that the fair price of the Australian national currency for the economy is at 0.8000. Here it becomes clear one that all kickbacks of AUDUSD traders will use to sell the Australian dollar.

Dollar against the Swiss franc fell to 0.8965 mark. By the way, the franc yesterday became the trigger for the dollar sales because Franc has been bought in all the crosses (including the euro and the pound). Strengthening of the franc is due to the tightening of requirements for Swiss banks. SNB raised the reserve ratio for banks from 1% to 2%.