Trading plan for 13/02/2018

The global stock market shows some signs of calm, which helps to trigger a correction risky currencies, but it hurts the US Dollar. JPY, CHF and EUR are strong, AUD, CAD and NZD perform less well. EUR/USD approached 1.2320, USD/JPY dives to 108.15.The stock market behavior is still the main clue for sentiment and after a good session on Wall Street on Monday, Asia started trading positively, although the indices began to return profits every hour. Shanghai Composite maintains growth by 1.0%, but Nikkei225, returning after a one-day break, scored a more aggressive withdrawal and eventually lost 0.65%.

On Tuesday 13th of February, the main event of the day is Consumer Price Index data releases from the UK, but the market participants should pay attention to Producer and Import Prices data from Switzerland and NFIB Small Business Optimism data from the US.

GBP/USD analysis for 13/02/2018:

The market is already pricing in around 70% probability of a Bank of England rate hike in May. This means, todays data need to provide a significant upside surprise in the CPI figures to lift UK interest rates higher. The market participants expect a decrease in CPI of -0.6% from 0.4% last month and a drop from 3.0% to 2.9% on a yearly basis. If the data will disappoint, then the odds for another interest rate hike will decrease significantly and the optimism over a soft Brexit might evaporate.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. After a bounce from the level of 1.3760, the price returned to the consolidation zone and now is trying to break out above the technical resistance at the level of 1.3874. The key technical resistance is still seen at the level of 1.4080 and due to the growing bullish divergence, there is a possibility for the market to test this level, especially if the data will beat the consensus significantly.

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Market Snapshot: SPY retraces 61% of the latest leg down

The price of SPY (SP500 ETF) has retraced to the level of 266.60, which is just above the 61% Fibo of the latest leg down. The upward momentum remains above its fifty level, so there is still a chance for another move higher. The technical resistance at the level of 272.23 is still the most important level to the upside.

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Market Snapshot: DXY fails to break out higher

After touching the lower channel line around the level of 90.54, the price of US Dollar Index has reversed lower form the overbought market territory. The next technical support is seen at the level of 89.62 and this level must hold if the bulls want to push the price higher anytime soon.

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The material has been provided by InstaForex Company - www.instaforex.com