Intraday technical levels and trading recommendations for EUR/USD for January 8, 2018

analytics5a5365622eaa1.png

Monthly Outlook

In January 2015, the EUR/USD pair moved below the major demand levels near 1.2050-1.2100 (multiple previous bottoms set in July 2012 and June 2010). Hence, a long-term bearish target was projected toward 0.9450.

In March 2015, EUR/USD bears challenged the monthly demand level around 1.0500, which had been previously reached in August 1997.

In the longer term, the level of 0.9450 remains a projected target if any monthly candlestick achieves bearish closure below the depicted monthly demand level of 1.0500.

However, the EUR/USD pair has been trapped within the depicted consolidation range (1.0500-1.1450) until the current bullish breakout was executed above 1.1450.

The current bullish breakout above 1.1450 allowed a quick bullish advance towards 1.2100 where recent evidence of bearish rejection was expressed (Note the Monthly candlestick of September).

analytics5a53657341e01.png

Daily Outlook

As anticipated, the ongoing bullish momentum allowed the EUR/USD pair to pursue further bullish advance towards 1.1415-1.1520 (Previous Daily Supply-Zone).

The daily supply zone failed to pause the ongoing bullish momentum. Instead, the evident bullish breakout was expressed towards the price level of 1.2100 where the depicted Head and Shoulders reversal pattern was expressed.

If the recent bearish breakout persists below 1.1700 (Neckline of the reversal pattern), a quick bearish decline should be expected towards the price zone of 1.1415-1.1520 (Initial targets for the depicted H&S pattern).

The bearish target for the depicted Head and Shoulders pattern extends towards 1.1350. However, to pursue towards the mentioned target level, the significant bearish pressure is needed to be applied against the mentioned zone (1.1415-1.1520).

However, In November, recent price action around the price zone of 1.1520-1.1415 indicated evident bullish recovery.

This hindered further bearish decline which allowed the current bullish pullback to occur towards the price level of 1.2000-1.2100 where price action should be watched for a valid SELL entry (Note the bearish engulfing daily candlestick of the previous Friday).

On the other hand, daily persistence above 1.2100 confirms the depicted bullish continuation pattern with projected targets towards 1.2500.

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

NZD/USD Intraday technical levels and trading recommendations for January 8, 2018

analytics5a535d6aced9b.png

Daily Outlook

A recent bullish breakout above the downtrend line took place on May 22. Since then, the market has been bullish as depicted on the chart.

This resulted in a quick advance towards the next price zones around 0.7150-0.7230 (the key zone) and 0.7310-0.7380 which was temporarily breached to the upside.

Recent bearish pullback was executed towards the price zone of 0.7310-0.7380 (newly-established demand zone) which failed to offer enough bullish support for the NZD/USD pair.

Re-consolidation below the price level of 0.7300 enhanced the bearish side of the market. This brought the NZD/USD pair again towards 0.7230-0.7150 (the key zone) which failed to pause the ongoing bearish momentum.

An atypical Head and Shoulders pattern was expressed on the depicted chart which initiated a bearish reversal.

As expected, the price level of 0.7050 failed to offer enough bullish support for the NZD/USD pair. That's why, further bearish decline was expected towards 0.6800 (Reversal pattern bearish target).

Evident signs of bullish recovery were expressed around the recent low (0.6780). That's why, a bullish pullback is expected towards 0.7050.

Moreover, a further advance should be expected towards 0.7250 if the current bullish momentum is maintained above the key level of 0.7150.

On the other hand, the price zone of 0.7050-0.6980 has turned to be a newly-established demand zone to be watched for BUY entries if any bearish pullback occurs.

Trade Recommendations:

An inverted Head and Shoulders pattern was established on the chart indicating a high probability of bullish momentum.

That's why, the price zone of 0.6800-0.6830 was considered for a short-term BUY entry. Bullish persistence above 0.7150 is mandatory to pursue towards next bullish targets.

S/L should be moved to 0.7130 to secure some profits. Remaining T/P level remains projected toward 0.7240.

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

The pound is betting on Merkel

The progress of negotiations on the creation of a coalition in Germany will become a litmus test for the GBP/USD pair that managed to climb the pedestal among the currencies G10 at the end of 2017. The British pound started the year of the Dog in mixed feelings. On one hand, the replacement of some ministers testifies to Theresa May's confidence in the progress in the negotiations on the divorce with the EU; On the other hand, the minister entered the Cabinet without a portfolio, while there are rumors of the Brexit's secretary David Davis to become an assistant. Both the policy and expectations of the BoE increase in changing the sterling rate in 2018. Therefore, investors should carefully monitor the news.

Unfortunately, macro statistics introduces confusion in the ranks of traders. As a result of the third quarter, labor productivity in the UK increased by 0.9% q / q, which is the best indicator since 2011. This circumstance could potentially accelerate the growth of wages with a gradual slowdown in inflation, which could lead to an increase in real incomes of the population. Nevertheless, the productivity did not grow due to the increase in production volumes, rather because of the reduction of the worked time. This indicates the hidden problems of the labor market. The consumer spending index from VISA declined by 0.37% year-on-year in 2017 and 1% y/y in December. At the same time, the decrease in consumer activity in the area of lending at the highest rate since mid-2015 overshadows the overall picture.

Back in late December, the IMF said that living in such conditions as if Brexit has already become a reality. Such rhetoric gave grounds for rumors that the worst for GDP and the pound is already behind, allowing the latter to strengthen by 10% against the US dollar in the last year. Nevertheless, the mood among 112 management companies, which account for almost 20% of the capitalization of the entire stock market of the country, has worsened. They believe that Brexit's influence on the economy is only beginning to take effect.

Estimation of economic risks by managing British companies

analytics5a534fc479d6c.png

Source: Bloomberg.

There is no consensus on the prospects for the pound among the experts of Reuters. Their consensus forecast suggests that the GBP / USD and EUR / GBP pairs will close 2018 at 1.36 and 0.89. According to Societe Generale, sterling can finish the current year both at $ 1.5 and close to $ 1.2. The first option will take effect if Britain decides to hold a new referendum and retain its membership in the EU. The second is the possibility for a combination of the failure of the negotiations on Brexit, the weak economy and a strong dollar. The probability of the GBP/USD pair growing to 1.5 banks is estimated at 15% with chances of the pair falling to 1.2 - in 5%.

In the week of January 12, the negotiating process between the CDU and the Social Democrats in Germany regarding the creation of a coalition will be of fundamental importance to the pound. Angela Merkel is seen as a person contributing to a soft Brexit, hence, her failure will increase the risk of a GBP/USD pair's decline.

In a technical analysis, the fall in the quotes of the analyzed pair below the support level at 1.3505 will create the prerequisites for the development of correction towards the upper boundary of the previous consolidation range at 1.304-1.332.

GBP / USD pair, daily chart

analytics5a534fcf62006.png

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

Technical analysis of USD/JPY for January 08, 2018

USDJPYM30.png

USD/JPY is expected to trade in an upper range. The pair has managed to trade at levels above 113.00 while remaining in a consolidation phase initiated from a high of 113.32 reached last Friday (January 5). Currently, it is near the 20-period moving average and is seeking support from the 50-period one.

As long as the key support at 112.95 (a previous resistance) is not breached, the pair should revisit 113.40 before advancing further to 113.70.

Alternatively, if the price moves in the opposite direction, a short position is recommended below 112.95 with a target of 112.70.

Chart Explanation: The black line shows the pivot point. The current price above the pivot point indicates a bullish position, while the price below the pivot point is a signal for a short position. The red lines show the support levels and the green line indicates the resistance level. These levels can be used to enter and exit trades.

Strategy: buy, stop loss at 112.95, take profit at 113.40.

Resistance levels: 113.40, 113.70, and 114.00

Support levels: 112.70, 112.50, and 112.15.

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

Technical analysis of USD/CHF for January 08, 2018

USDCHFM30.png

USD/CHF is expected to trade with bullish bias above 0.9735. Although the pair posted a pullback, a support base at 0.9735 has formed and has allowed for a temporary stabilization. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Hence, as long as 0.9735 holds on the downside, a further rebound to 0.9780 and even to 0.9840 seems more likely to occur.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates a bullish position, and the price below the pivot points indicates a short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: buy, stop loss at 0.9735, take profit at 0.9800.

Resistance levels: 0.9800, 0.9840, and 0.9875.

Support levels: 0.9710, 0.9685, and 0.9650.

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

Technical analysis of GBP/JPY for January 08, 2018

GBPJPYM30.png

GBP/JPY is expected to trade with a bullish outlook. The pair is rebounding and challenging the 20-period moving average. The relative strength index is turning up. A downside potential should be limited by the key support at 152.90.

To conclude, as long as this key level is not broken, a further upside to 153.65 and even to 153.85 seems more likely to occur.

Alternatively, if the price moves in the direction opposite to the forecast, a short position is recommended below 152.90 with the target at 152.50

Strategy: buy, stop loss at 152.90, take profit at 153.65

Chart Explanation: the black line shows the pivot point. The price above the pivot point indicates long positions; and when it is below the pivot points, it indicates short positions. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 153.65, 153.85, and 155.

Support levels: 152.50, 152.10, and 151.65

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

Bitcoin analysis for 08/01/2018

Bitcoin payments are increasingly being used in various sectors of the tourism industry. Recently, traveling tourists use Bitcoin payments to both pay their flight and accommodation bills. Moreover, for some time now, we can see the flourishing of medical tourism. According to the calculations of economist Marc Pilkington, its global value has exceeded 100 billion dollars. In connection with the flourishing of this field of tourism, it has also opened up to cryptocurrency payments. Many tourists decide to pay Bitcoins for such treatments as a cancer treatment, dental, orthopedic and cosmetic treatments. The American magazine Fortune forecasts an even greater increase in the acceptance of payments by cryptocurrencies in this field as the industry expands.

Let's now take a look at Bitcoin technical picture at the H4 time frame. The market rallied towards the technical resistance between the levels of $16,626 - $16, 260 and managed to violate it a little. Nevertheless, the rally did not last long at the price returned back below the resistance again to test the weekly pivot at the level of $15,523. The corrective cycle continues to develop, possibly in more complex and time-consuming correction.

analytics5a5336e9375ee.jpg

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

Trading plan for 08/01/2018

The beginning of the week on the Asian stock exchange is relatively successful. The MSCI regional index is effectively returning to its 10-year highs, which should be seen as the aftermath of the phenomenal entry in 2018 by the New York indexes. Relatively positive moods in Shanghai as Shanghai Composite Index rises 0.2%. The reshuffles on the industrial metal market do not have a positive impact on the valuation of the Australian dollar (-0.3%) pushing AUD / USD towards 0.7840. In the case of EUR / USD, we should talk about starting a new attempt to place the price below the psychological level of 1.2000, which currently results in 0.2% drop of the common currency.

On Monday 8th of January, the event calendar is light in important data releases, but the market participants will keep an eye on CPI data from Switzerland, Halifax House Price Index data from the UK and Sentix Investor Confidence data from the Eurozone.

EUR/USD analysis for 08/01/2018:

The start of the week is slow, as is usually the case after the publication of the US labor market report. Nevertheless, there are some important data releases during this week. In the US, the Friday's CPI reading will be crucial, but where there is little chance of a clear acceleration. The minutes of the ECB meeting should confirm the bank's dovish attitude on Thursday. In addition, the market participants will get data on industrial output from Euroland and the UK on Tuesday and Wednesday, and retail sales from the US (Friday) and Australia (Thursday).

Let's now take a look at the EUR/USD technical picture at the H4 time frame at the beginning of the week. The market has broken below the technical support at the round number of 1.2000 and currently is heading towards the level of 1.1961 - 1.1940, which should provide another support for the price. The falling momentum supports the short-term bearish outlook.

analytics5a5333e5db596.jpg

Market Snapshot: DAX invalidates H&S pattern

After three tests of the Head & Shoulders pattern neckline, the idea was abandoned. In the meantime, the price of DAX headed higher towards the resistance at the level of 13, 336 and broke it this very morning. The next technical resistance for the price is seen at the level of 13, 515 ( November's highs).

analytics5a5333ef0ebc2.jpg

Market Snapshot: DXY testing the local resistance

The price of US Dollar Index has tested the local resistance at the level of 92.28, so if the momentum continues to be strong, the next technical resistance is seen at the level of 92.49. Bounce from the oversold market conditions and bullish divergence support the temporary bullish outlook.

analytics5a5333f6b9f0a.jpg

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

Technical analysis of NZD/USD for January 08, 2018

NZDUSDM30.png

NZD/USD is expected to trade with Bullish bias. Despite the recent pullback from 0.7145 the pair still stays above its rising 50-period moving average. The relative strength index is above its neutrality level at 50. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Therefore, above 0.7145, look for a further advance with targets at 0.7190 and 0.7220 in extension.

The black line shows the pivot point. Currently, the price is above the pivot point, which is a signal for long positions. If it remains below the pivot point, it will indicate short positions. The red lines are showing the support levels, while the green line is indicating the resistance levels. These levels can be used to enter and exit trades.

Resistance levels: 0.7190, 0.7220, and 0.7250.

Support levels: 0.7125, 0.7110, and 0.6965.

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

Technical analysis of USDX for January 8, 2018

The Dollar index tested again on Friday the double bottom low around 91.76 and is now bouncing hard higher above last week's highs. I'm bullish for the short-term for at least a bounce towards 92.60. However, we could set up a bigger bounce, one that I have been waiting since mid-December.

analytics5a5326430400a.png

The Dollar index has short-term resistance at the 38% Fibonacci retracement and the 4 Kumo (cloud) AT 92.60. I expect at least a short-term bounce towards that price level to test resistance. Breaking above that level on the first try would be a very bullish sign.

analytics5a53268460193.png

On a weekly basis, the start of the week looks bullish as we already have broken above last week's highs. However important weekly resistance is found at 93.20. Breaking above that level will imply more upside should come towards 96-97. Support is at 91.70 and if broken look for a new low below 91.The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of gold for January 8, 2018

The Gold price is about to start a correction lower at least towards $1,290. Trend in the very short-term is turning bearish as price has showed topping and reversal signs. The bearish divergence we mentioned last week is starting to push price lower.

analytics5a5324fc5b7f5.png

Blue lines - bearish divergence signs

The Gold price has short-term support at $1,313 and next and most important short-term support at $1,306. Breaking below $1,306 will confirm the top is in. My target is to see the price at least reach the 38% Fibonacci retracement around $1,290. However, there are many chances we could see much lower.

analytics5a53254f6620d.png

Short-term resistance is at $1,323. Price is at overbought price levels in the daily chart and my minimum expectation would be to push the price back towards cloud support around $1,280-70. I'm heavily bearish Gold at current levels.

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

Technical analysis of GBP/USD for January 08, 2018

GBPUSDH1.png

Overview:

  • The GBP/USD pair set above strong support at the level of 1.3505, which coincides with the 61.8% Fibonacci retracement level. This support has been rejected for four times confirming uptrend veracity. Hence, major support is seen at the level of 1.3505 because the trend is still showing strength above it. Accordingly, the pair is still in the uptrend from the area of 1.3505 and 1.3472. The GBP/USD pair is trading in a bullish trend from the last support line of 1.3505 towards the first resistance level at 1.3579 in order to test it. This is confirmed by the RSI indicator signaling that we are still in the bullish trending market. Now, the pair is likely to begin an ascending movement to the point of 1.3579 and further to the level of 1.3612. The level of 1.3600 will act as second resistance and the double top is already set at the point of 1.3612. At the same time, if a breakout happens at the support levels of 1.3505 or 1.3472, then this scenario may be invalidated. But in overall, we still prefer the bullish scenario.
The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of EUR/USD for January 8, 2018

EURUSDH1.png

Overview:

  • The EUR/USD pair has dropped sharply from the level of 1.2088 towards 1.2000. Now, the price is set at 1.2012 to act as a daily pivot point. It should be noted that volatility is very high for that the EUR/USD pair is still moving between 1.2030 and 1.1952 in coming hours. Furthermore, the price has been set below the strong resistance at the levels of 1.2030 and 1.2088, which coincides with the 78.6% and 100% Fibonacci retracement level respectively. Additionally, the price is on a bearish channel now. Amid the previous events, the pair is still in a downtrend. From this point, the EUR/USD pair is continuing in a bearish trend from the new resistance of 1.2030. Thereupon, the price spot of 1.2030/1.1056 remains a significant resistance zone. Therefore, a possibility that the EUR/USD pair will have downside momentum is rather convincing and the structure of a fall does not look corrective. In order to indicate a bearish opportunity below 1.2030/1.1056, sell below 1.2030 or 1.1056 with the first targets at 1.1984 and 1.1952. However, the stop loss should be located above the level of 1.2120.
The material has been provided by InstaForex Company - www.instaforex.com

Elliott wave analysis of EUR/NZD for January 8, 2018

analytics5a52f18bf25d8.png

Wave summary:

As we feared the lack of upside acceleration, was a sign of exhaustion. The break below minor support at 1.6805 confirmed that the correction from 1.7479 still has room to the downside to cover, whit the next target being 1.6571. A decline to here, could complete the correction in wave (ii), but a deeper correction closer to 1.6311 is in no way out of the question here, so we need to let this correction run its course.

Short-term the pressure remains lower, as long as minor resistance at 1.7079 stays intact.

R3: 1.6945

R2: 1.6892

R1: 1.6811

Pivot: 1.6745

S1: 1.6646

S2: 1.6524

S3: 1.6311

Trading recommendation:

We sold EUR at 1.6795 and will place our stop at 1.7085

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

Elliott wave analysis of EUR/JPY for January 8, 2018

analytics5a52ee9f31d8c.png

Wave summary:

We remain positive on EUR/JPY as long as support at 134.73 stays intact. Above this pivot-point EUR/JPY should be able to climb higher towards the ideal target near 137.37 to complete wave (D) and set the stage for the final decline within the huge triangle consolidation, that has been building since July 2008. The ideal target for wave (E) is seen at 123.43.

For now, continue to look higher towards 137.37 as long as minor support at 136.36 and more importantly as long as the pivot-point at 134.73 protects the downside.

R3: 136.93

R2: 136.71

R1: 136.55

Pivot: 135.87

S1: 135.50

S2: 134.73

S3: 134.58

Trading recommendation:

We are long EUR from 134.10 with stop+reverse placed at 134.75 and take profit + reverse at 136.75.

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

Technical analysis of EUR/USD for Jan 08, 2018

EURUSD.jpg

When the European market opens, some Economic Data will be released such as Retail Sales m/m, Sentix Investor Confidence, and German Factory Orders m/m. The US will release the Economic Data too, such as Consumer Credit m/m, so, amid the reports, EUR/USD will move in a ... volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.2102.

Strong Resistance:1.2095.

Original Resistance: 1.2083.

Inner Sell Area: 1.2071.

Target Inner Area: 1.2043.

Inner Buy Area: 1.2015.

Original Support: 1.2003.

Strong Support: 1.1991.

Breakout SELL Level: 1.1984.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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

Technical analysis of USD/JPY for Jan 08, 2018

USDJPY.jpg

In Asia, today Japan will not release any Economic Data, but the US will release the Consumer Credit m/m data. So, there is a probability the USD/JPY will move with a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Resistance. 3: 113.75.

Resistance. 2: 113.52.

Resistance. 1: 113.30.

Support. 1: 113.03.

Support. 2: 112.80.

Support. 3: 112.58.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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

Daily analysis of major pairs for January 8, 2018

EUR/USD: The EUR/USD went essentially sideways last week – in the context of an uptrend. A breakout is expected this week, which is supposed to be in favor of bulls, for the outlook on EUR pairs is bullish for this month. Therefore, the price may be able to gain about 150 pips, as it goes further northwards.

1.png

USD/CHF: This currency trading instrument experienced an equilibrium phase last week, as it consolidated in the context of a downtrend. The outlook for the market remains bearish; and so, when a breakout occurs, it would most likely be in favor of bears (going downwards by about 100 pips). The market cannot rally significantly as long as the EUR/USD is strong.

2.png

GBP/USD: This pair went upwards to test the distribution territory at 1.3600. There was a pullback after that, but that was not serious enough to override the current bullish outlook. Price may be able to go upwards to test the distribution territories at 1.3600, 1.3650 and 1.3700. However, that does not eliminate the possibility of a significant pullback, which may happen anytime this month.

3.png

USD/JPY: Last week, the market stopped further bearish effort as it went upwards by 110 pips, thereby generating a short-term "buy" signal. Price managed to close above the demand level at 113.00 on Friday, thus making further northwards movement a possibility. This means the supply levels at 113.50 and 114.00 could be reached this week.

4.png

EUR/JPY: The EUR/JPY went upwards to test the supply zone at 136.50. Since December 15, 2017, the price has gained over 400 pips; plus it would be somewhat difficult for a lasting bearish movement to occur in the market, as long EUR has some stamina. Bulls may be able to push price towards the supply zones of 136.50, 137.00 and 137.50.

5.png

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

CAD/CHF forming a major reversal signal, time to sell

The price has formed a bearish bat formation and also sees strong resistance at 0.7879 (Fibonacci retracement, horizontal swing high resistance, bearish divergence) and we expect to see a strong reaction off this level to push the price down to at least 0.7732 support (Fibonacci retracement, horizontal swing low support).

Stochastic (34,5,3) is seeing major resistance at 97% and also bearish divergence vs price signaling that a reversal is impending.

Sell below 0.7879. Stop loss is at 0.7965. Take profit is at 0.7732.

analytics5a52d26217394.png

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

NZD/USD approaching major resistance, prepare to sell

The price is testing major resistance at 0.7188 (Fibonacci retracement, horizontal overlap resistance, bearish divergence) and a strong reaction could occur at this level to push the price down to at least 0.7041 support (Fibonacci retracement, horizontal pullback support). However, we are also in a bullish ascending channel and only a break of this channel would confirm further downside move.

Stochastic (34,5,3) is seeing major resistance at 94% and also displays bearish divergence vs price signaling that a reversal is impending.

Sell below 0.7188. Stop loss is at 0.7280. Take profit is at 0.7041.

analytics5a52d2326705d.png

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

Daily analysis of USDX for January 08, 2018

The US Dollar continues to trade in a bearish tone below the 200 SMA, despite slight attempts to recover above the support level of 91.68. Such area should hold in order to allow more gains in the index towards the 200 SMA. That moving average will help to add pressure in the USDX and eventually it can plummet to test the support zone of 91.13.

USDXH1.png

H1 chart's resistance levels: 92.10 / 92.57

H1 chart's support levels: 91.68 / 91.13

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 91.68, take profit is at 91.13 and stop loss is at 92.24.

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

Daily analysis of GBP/USD for January 08, 2018

GBP/USD hadn't a major reaction to the US NFP outcome on Friday, as it remains trading in a tight range across the board. Currently, the pair is being supported by the 1.3526 level, which should give enough momentum in order to strengthen the bullish bias and it will help to push it to test the resistance zone of 1.3700. MACD indicator remains in favor of the bulls.

GBPUSDH1.png

H1 chart's resistance levels: 1.3589 / 1.3700

H1 chart's support levels: 1.3526 / 1.3451

Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.3589, take profit is at 1.3700 and stop loss is at 1.3480.

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

The dollar remains under pressure

The US dollar ended the week with a decline once more after failing to find a driver to return to the path of growth. The decline happens against the background of improved macroeconomic parameters within the US, which somewhat discourages the bulls. who cannot regain the initiative in any way.

The December employment report, published on Friday, was worse than forecast. The number of new jobs in the non-agricultural sector increased by 148 thousand with a forecast of 190 thousand. The unemployment rate remained unchanged for the third consecutive month and is at 4.1%. The average hourly wage rose by 2.5% which is slightly higher than 2.4% a month earlier.

In total for 2017, 2.06 million new jobs were created. This is less than in 2016 but significantly more than forecasted. In order to ensure that unemployment does not exceed the current levels, it is enough to create 100 thousand jobs a month. This means that the labor market as a whole continues to grow

analytics5a507141515b0.jpg

The dollar looks weak in recent weeks as investors' appetite for risk is growing amid positive expectations for the global economy. Significantly stronger data than forecasted from China is supported by a global trend towards an increase in activity and contributes to a rise in raw material prices while business activity growth also leads to an increase in demand for the dollar. These are actively used to increase lending to projects in local currencies.

The dollar may remain under pressure for a fairly long time or at least as long as the investment recovery continues in emerging markets and in the commodity sector. The capital does not see the need to remain inside the US, even despite the adoption of the law on tax reform. It diverges around the world in search of higher returns.

There are growing concerns about the Fed's ability to raise rates. Despite the fact that the official explanation for the need to raise rates is to contain inflation, current levels of consumer activity are not high enough to take this argument seriously. Inflation remains below the 2% target and the new tax reform will contribute to the growth of the budget deficit. So, raising rates will lead to an increase in the cost of debt servicing at all levels amid unconvincing economic growth. This may ultimately lead to a recession rather than growth.

The dynamics of yields of inflation-protected 5-year bonds shows that investors as a whole are inclined to believe that inflation will resume its growth. This confidence is in favor of the Fed and may ultimately support the dollar.

analytics5a507152e01e0.jpg

Next week will be quite saturated with macroeconomic publications. Business life will enter the usual rhythm. On Monday, the Fed will report on the dynamics of consumer loans in November. The publication is important in terms of assessing the activity of consumers and forecasting about the growth of inflation. On Tuesday, NFIB will submit a report on the level of confidence in small businesses for the month of December. For more than a year, this indicator has been at record high levels, supporting positive economic expectations.

On Wednesday, the US Department of Labor will publish a report on the dynamics of prices for imports and exports. On Thursday, a report will be released on producer price indices while on Friday the main report of the week will be released - the data on consumer inflation and retail sales. The main focus will be on the inflation core which reflects consumer demand without taking into account food and energy prices. While the forecast of experts is optimistic, it is expected to grow to 1.8% against 1.7% in November. The release of the data will support the dollar no worse than expectations.

Also next week, several members of the FOMC are expected to speak, which may change expectations for the next rate increase at the March meeting. At the current stage, all attention will be directed to the first results of the tax reform, which can adjust the Fed's plans for the rate.

The dollar positions look neutral at this stage. Against commodity currencies, it will remain under pressure but against the yen and the European currencies, the decline may come to an end in the near future.

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

Markets under the influence of positive expectations

Eurozone

The growth of business activity in the euro area continues to accelerate. According to IHS Markit, the composite index reached 58.1 points in December, which is higher than the November reading of 57.5 points, and is the highest since February 2011.

analytics5a507dff4241e.jpg

PMI in the service sector grew from 56.2 points up to 56.6 points, with the growth of new orders the highest for more than 10 years. The situation in the manufacturing sector is similar, with new orders reaching the highest level since April 2000, and a significant share of orders is formed under the pressure of growing domestic demand.

A record growth in business activity indicates that there is no need to wait for a decline in GDP growth in the euro area.

As for consumer activity and price level, there is also a positive trend on this aspect. While the unemployment rate remains relatively high, inflation can not begin its growth, but a number of accompanying indicators are getting better and better. The volume of retail sales in Germany in November was the highest since June 2017, significantly exceeding forecasts, producer prices are steadily growing, in November the annual growth reached 2.8%, the highest level in three years, and published on Friday preliminary data on consumer inflation in December were better than forecasts.

For investors, the economic picture for the euro area looks much more convincing than the US, and the direction of the ECB's actions is more understandable. Despite the fact that the systematic increase in the rate of the Fed leads to an increase in the yield spread in favor of US securities, the reliability of the allocation of capital in Europe looks more solid. The situation is not conducive to the beginning of the repatriation of American capital and provides support to the euro.

On January 4, the EURUSD pair formed the second high at a level slightly below 1.21 and the bulls attempted to overcome this resistance and withdraw higher. At the same time, the ECB is clearly not interested in developing the upward movement, so we should comments to temper expectations should be anticipated, which can turn the situation in favor of the dollar.

United Kingdom

The pound continued its growth last week, coming close to the highs of the year reached in September 2017, but the bulls found no arguments for a decisive attack.

The pound's growth was supported by Markit's report on business activity in the services sector In December, PMI's growth was 54.2 points against 53.8 points a month earlier, but this was not enough for a more confident bull position. Growth in consumer lending in November was below forecasts, and the absence of significant publications in the coming week will create difficulties for the formation of a driver for the continuation of growth.

Attempt to gain a foothold above 1.36 looks more likely at the moment, but strong growth should not be expected - the trade is likely to go into the lateral range.

Oil

Despite the fact that the demonstrations in Iran are stopped by the government, oil continues to hold near the three-year highs, directly indicating that the reason for the current growth is not in Iran.

The main driver of growth is the improvement of expectations for the growth of the world economy in 2018. The demand for energy resources is stable, the market balancing will occur at levels higher than it was assumed until recently, stoking risk appetite.

China intends to launch futures trading in oil, denominated in yuan, on January 18. The start of this event is unnerving for traditional players, as it may in the long term change the mechanism of market pricing. This week, reports from China will be published on consumer inflation, trade balance and the volume of foreign direct investment, and there is reason to believe that the data will be better than expected, which as a result will lead to positive growth in the raw materials market. At the moment, the expectations of reporting from China outweigh the reports of the US Department of Energy in terms of the impact on the market. Brent was aiming at $70/bpd and the probability of reaching this level in the coming days is quite high.

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