27 January Forex daily review
Dollar index spent the day in a sideways trend. Now the price is on the line of support. It can easily be broken, because after the fall of the index, it is a correction. To cancel it, the index needs to climb to at least 81 level. On Tuesday high volatility is expected to spar with the pound. At 9.30 GMT report on UK GDP for the IV quarter of 2013 is going to be published. Quarterly index projected to decline by 0.1% to 0.7% and the annual growth rate to 2.7% from 1.9%.
British pound on expectations can strengthen its position in many currencies. After all data coming out of Britain in recent times is good and Carney sent the GBPUSD pair to 1.6500, which performance is scheduled for tomorrow at 12.15 GMT. Then at 19.00 GMT Fed will announce its decision on interest rates and QE3 program.
In Asia, the pound recovers its position against the dollar and euro. Market is forthcoming for European news that in case of disappointing GDP data there was falling gap. EURUSD on hourly time frame formed a descending triangle, so growth is possible to test 1.3700, followed by 1.3630.
For traders the day will be complicated, because the weekly time-frames on the basis of the previous week for unidirectional pairs EURUSD and GBPUSD formed multidirectional signals: euro – buy, pound – sell. Tensions remain in the stock markets, which is caused by fears of a possible extension of QE3 folding.
Price is near the 80.50 line. The market is balanced and ready to deviate from the line. The only question is, where? I think GDP report of Britain will answer for this question.
Single currency fell to 1.3650 mark. We would like to lower, but the fall stopped at 1.3655. What do we have? Prior to the double top the pair does not have touched, but descending triangle is clearly evident. If it has been seen by a lot of traders, that is, the chances of implementation were. We expect rise to 1.3695, followed by a fall to 1.3630. If the fall will be stronger than forecast, then the goal is 1.3600. With a new growth of the euro and support from EURGBP cross-rate, the EURUSD will quickly return to Friday’s high.
AUDUSD rate, including Asia, recovered to 0.8790. Price almost reached 0.8660 level. By the main scenario we are waiting for 0.8725 mark touch. Buying against RBA is risky, so it is better to stay short in AUD until the price will reach 0.85.
USDCHF was excellent in the main scenario. The pair with from 0.8940 rolled to 0.8985 and now is trading at 0.8960. We’ll risk a basic scenario for the growth to 0.9020 mark, but well aware that success will depend on today’s report on Britain’s GDP. If USDCHF rate refuses to move up, the pair will remain sideways before the meeting of the FOMC.
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