USD’s rise continues fed by optimism

USD continued to rise over a number of its counterparts yesterday and US stockmarkets also tended to end the day in the green territory. It’s interesting how the USD has transformed to a risk on currency as optimism for the US economy’s rebound is ongoing also fed by the wide market expectations for an additional fiscal stimulus by the US Government. Today the US employment report for January is to be released in the American session and the NFP figure is expected to rise into the positives while the unemployment rate and the average earnings growth rate are to remain unchanged. If the actual rates and figures meet their respective forecasts and given that the ADP figure for January jumped, while the weekly initial jobless claims figure dropped yesterday, we may see the USD getting some support as all indicators seem to point towards a sound recovery of the US employment market. Should optimism continue to characterize the markets we may see the USD continuing to gain ground and vice versa.
EUR/USD continued to weaken yesterday breaking the 1.2000 (R1) support line now turned to resistance, aiming for the 1.1950 (S1) support line. We maintain a bearish outlook as long as the pair continues to be guided by the downward trendline incepted since the 29th of January. It should be noted though that the RSI indicator below our 4-hour charts is below the reading of 30, confirming the dominance of the bears, however may also imply that the pair is oversold and a correction higher is possible. Should the bears maintain control over the pair, we may see it breaking the 1.1950 (S1) support line and aim for the 1.1895 (S2) support level. Should the bulls take over we may see the pair breaking the prementioned downward trendline and aim if not break the 1.2000 (R1) resistance line.

GBP strengthens as BoE signals some optimism

The GBP strengthened against the USD, EUR, JPY and CHF yesterday as BoE’s interest rate decision signaled some optimism practically moving further away the scenario of the bank employing negative rates. The bank maintained its interest rates and QE program unchanged as was expected and the optimism of the bank was evident as despite stating that the current policy being appropriate, the GDP is to recover quickly reaching prepandemic levels in the current year. At the same time, the ongoing vaccination process and the low number of new cases tends to increase hopes for a quicker return to some sort of normality. Today BoE Governor Bailey could still generate some interest with his statements, while GBP traders may also be eyeing the Halifax House prices release.
GBP/USD regained some of the losses made in the past two days and stabilised just below the 1.3700 (R1) resistance line. Currently we maintain a bias for a sideways motion of the pair given that the pound successfully resisted to USD’s strengthening and cable’s subsequent stabilisation during the American and today’s Asian session. Should buyers maintain the initiative today, we may see GBP/USD breaking the 1.3700 (R1) resistance line and aim for the 1.3835 (R2) level. Should a selling interest be displayed by the market on the other hand, we may see cable breaking the 1.3585 (S1) support line on its journey southwards.

Other economic highlights today and early Tuesday:

Today in the European session, we note Germany’s industrial orders growth rate for December and UK’s Halifax house prices for January. In the American session we highlight the US employment report for January, as well as the US international trade balance figure for December, while from Canada we get the employment data for January, the trade balance figure for December and the Ivey PMI for January. Oil traders on the other hand may be interested in the weekly Baker Hughes US oil rig count. Also bear in mind that BoE Governor Bailey and ECB’s De Guindos and Schnabel are scheduled to speak, Yet the most interesting speech may be Biden’s commentary on the US economy. On Monday during the Asian session we note Japan’s current account balance for December.

EUR/USD 4時間チャート