Global macro overview for 15/01/2018

Representative of the German central bank Andreas Dombret stated that the inclusion of the Yuan (renminbi) in the Bundesbank reserve assets is dictated by both the same step of the European Central Bank in 2017 and the addition of the Chinese currency to the elite basket of currencies that make up the Special Drawing Rights (SDR).

Dombret did not specify what amount will be deposited in the Yuan, but he stressed that it will not be too big. As in the case of the ECB, which has invested EUR 500 million in the renminbi, the decision is primarily symbolic. The Bundesbank maintains the majority (nearly 70%, over USD 100 billion) of its reserve assets in gold, the value of foreign exchange reserves is less than USD 40 billion. This is a very small amount for an economy of this size. Germany can afford it because they are the center of the Eurozone and, in addition, enjoy great trust from the financial markets.

For several years China has been making efforts to internationalize the Yuan. The Chinese are the global trade dominator - the largest exporter and the second importer - which predestines the Chinese currency to play an important role in the global economy. Beijing encourages partners to deposit some foreign exchange reserves in Yuan and encourages them to pay Chinese currency for Chinese goods. He also prepares futures for oil denominated in Yuan.

Nevertheless, the process is slow and difficult. Most trade with China is still regulated in Dollars, so renminbi is unnecessary for foreign entrepreneurs. Investors also have no confidence in this currency - its exchange is controlled not by market forces but by the People's Bank of China, a central bank dependent on the executive, which regularly sets the reference rate, and Chinese state commercial banks.

Let's now take a look at German DAX index technical picture at the H4 time frame. The market has retraced 78% Fibo of the previous swing down and then reversed towards the level of 13,162. There are still some gaps below the level of 13,000 that needs to be filled, so the outlook remains bearish as long as no new high is made. The key technical resistance remains at the level of 13, 515 and the key technical support at the level of 12,809.

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Global macro overview for 15/01/2018

At the end of 2017, the market participants were placing the bets on ECB's greater hawkishness during all 2018, and the market seems to have less long positions in EUR than it would like to. The easiest way to get rid of them is through the Dollar and even positive surprises in US data have not prevented it. Strong Retail Sales data showed a hard trend at the end of the fourth quarter, and a higher-than-expected core inflation reading at 0.3% m/m opens the way to greater Fed firmness in the field of standardization. However, when the March interest rate increase is estimated at 88 .0% already, it is difficult to defend the Dollar by explaining that he got something "more" from the data. Meanwhile, in the case of other major currencies, either the facilities are more robust or too complex to bear the risk. Positive sentiment on the stock markets supports risky currencies like AUD, CAD, NZD, NOK. The British Pound has breakthroughs on information about Brexit - on Friday the Pound gained news that Spain and the Netherlands want the so-called "Soft Brexit" (later the information was denied). JPY made the rally last week on the wave of speculation about a possible return in the policy of the Bank of Japan. What's left is way less liquid SEK and CHF. In conclusion, USD sales are the most convenient form of buying EUR at this moment.

Let's now take a look at the EUR/USD technical picture at the H4 time frame from the Elliott Wave perspective. The market has hit the level of 1.2296 which is the 100% Fibo Extension and it looks like it will be a top for the wave (iii). This means it is a correction time and the corrective decline might reach even the level of 1.2200 before the next wave up will be made.

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Fundamental Analysis of EUR/USD for January 15, 2018

EUR/USD has been following a steady rally recently that has led the price to reach the 1.2300 resistance area today. Due to the observance of Martin Luther King Day today, USD had little impact on the market whereas EUR has been quite impulsive amid positive economic reports published today. Today, the eurozone Trade Balance report was published with an increase to 22.5B from the previous figure of 19.0B which was expected to be at 22.4B. Such positive result during the US holiday provided the needed momentum to EUR, so that the shared currency has gained strong momentum to take the price much higher today. On the USD side, this week on Thursday Unemployment Claims report is going to be published which is expected to decrease to 251k from the previous figure of 261k and Building Permits report is expected to decrease to 1.29M from the previous figure of 1.30M. As for the current scenario, USD is quite weaker than other currencies in the market whereas EUR has been the most impulsive among others. If the US fails to provide positive economic reports, USD will not be able to recover losses in the coming days. On the other hand, EUR is expected to take the price much higher in the coming days.

Now let us look at the technical chart. The price is currently residing below the 1.2300 resistance area which is also the 100.00 Fibonacci Extension level from where a Bearish Divergence can be observed emerging. As the price remains below 1.2300 with a daily close, the bearish pressure is expected to continue with a target towards 1.2150 and later towards 1.2050 support area in the coming days.

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Intraday technical levels and trading recommendations for EUR/USD for January 15, 2018

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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 1.2200 where recent evidence of bearish rejection was expressed (Note the Monthly candlestick of September).

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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, 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).

Bearish target for the depicted Head and Shoulders pattern extends towards 1.1350. However, to pursue towards the mentioned target level, 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 1.2100 which failed to pause the ongoing bullish momentum

Daily persistence above 1.2100-1.2200 confirms the depicted bullish continuation pattern with projected targets towards 1.2500.

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Bitcoin analysis for January 15, 2018

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The Bitcoin (BTC) has been trading sideways at the price of $13.700. This weekend marks a milestone for bitcoin as 80 percent of the currency has now been mined into circulation, this means there's only 20 percent left to mine. Satoshi Nakamoto's protocol was one of the first to introduce digital scarcity and soon enough the digital asset will become even harder to obtain. The technical picture is neutral to bearish.

Trading recommendations:

According to the 4H time - frame, I found symmetrical triangle in creation. My advice is to watch for potential breakout to confirm direction. The price is still trading inside of the downward channel, so my advice is to watch for potential bearish breakout. The downward targets are set at the price of $12.650 and at the price of $10.650.

Support/Resistance

$13.225 – Intraday support

$13.805– Intraday resistance

$12.650 – Objective target 1

$10.650– Objective target 2

With InstaForex you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

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NZD/USD Intraday technical levels and trading recommendations for January 15, 2018

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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 bullish advance towards next price zones around 0.7150-0.7230 (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 (Key-Zone) which failed to pause the ongoing bearish momentum.

An atypical Head and Shoulders pattern was expressed on the depicted chart which initiated 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 was expressed around the recent low (0.6780). That's why, a bullish pullback was executed towards 0.7240 and 0.7320.

The price zone of 0.7140-0.7250 (prominent Supply-Zone) failed to pause the ongoing bullish momentum.

However, signs of bullish breakout above 0.7250 are being manifested on the chart. If so, a quick bullish movement would be expected towards 0.7320-0.7390.

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USD/JPY analysis for January 15, 2018

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Recently, the USD/JPY has been trading downwards. The price tested the level of 110.52. According to the 30M time – frame, I found the rejection of intraday support cluster at the price of 110.57. I aslo found a hidden bullish divergence on the moving average oscillator, which is a sign that selling looks risky. My advice is to watch for potential buying opportunities. The upward targets are set at the price of 111.10 and at the price of 111.25.

Resistance levels:

R1: 111.52

R2: 112.00

R3: 112.30

Support levels:

S1: 110.73

S2: 110.42

S3: 109.95

Trading recommendations for today: watch for potential buying opportunities.

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EUR/USD analysis for January 15, 2018

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Recently, the EUR/USD has been trading upwards. The price tested the level of 1.2296. According to the 30M time – frame, I found rejection from the pivot resistance 1 at the price of 1.2265, which his sign that buying looks risky. I also found an overbought stochastic, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the price of 1.2150 (pivot level) and at the price of 1.2080 (pivot support 1).

Resistance levels:

R1: 1.2265

R2: 1.2335

R3: 1.2450

Support levels:

S1: 1.2080

S2: 1.1960

S3: 1.1890

Trading recommendations for today: watch for potential selling opportunities.

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Technical analysis of GBP/USD for January 15, 2018

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Overview:

  • On the four-hour chart, the GBP/USD pair bullish trend is formed from the support levels of 1.3755 and 1.3705. Currently, the price is in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. As the price is still above the moving average (100), immediate support is seen at 1.3755. Consequently, the first support is set at the level of 1.3755. So, the market is likely to show signs of a bullish trend around the spot of 1.3755/1.3770. In other words, buy orders are recommended above the area of 1.3755/1.3770 with the first target at the level of 1.3866. Furthermore, if the trend is able to break through the first resistance level of 1.3866, we should see the pair climbing towards the next target of 1.3925 to test it. It would also be wise to consider where to place a stop loss; this should be set below the second support of 1.3705.
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Bitcoin analysis for 15/01/2018

The US wants to control the private Bitcoin wallets of its citizens.The US Treasury Secretary, Steven Mnuchin, last Friday made a number of statements regarding the international use of digital currencies at the Washington DC Economic Club meeting. The secretary expressed concern that Bitcoin's wallets could potentially become a modern equivalent of an anonymous Swiss bank account. He intends to cooperate with the G20 nations, offering American tracking skills to prevent such abuses. He said: "If you have a Bitcoin wallet, then the company (the owner of the wallet) has the same obligation as the bank to know who the owner is. We can follow these activities. We will work closely with G20."

However, cryptocurrency experts are not so impressed by the idea of more regulations. For example, Sergey Sevriugin, general manager and founder of the risk sharing platform REGA, said for Cointelegraph: "I think that the regulation already exists in relation to cryptocurrencies. Regulation by the community, and not by the central authorities, is the best type of regulation that can ever exist. Centralized regulation will kill the idea of cryptocurrency; without any control from the community, this type of regulation will lead to several problems, including corruption. We all remember that the last crisis, including the collapse of the mortgage system in 2008, was under full control and regulation. To enter cryptocurrencies under full control, the authorities must first control the Internet."

Mnuchin also referred to the potential that countries can use digital currencies to cope with existing financial sanctions. He expressed the conviction that the risk of such actions is low, saying that he "does not worry at all" that such countries as Russia and Venezuela will be able to function this way.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The market is hovering around the lower triangle trend line at the level of $13, 500, just above the local support at the level of $12, 439. The Triangle pattern scenario is still valid, but when the level of $12,020 is tested and violated, then the ABC correction is more probable to occur. Iw would mean more drop towards the level of $111,152 and below.

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Technical analysis of EUR/USD for January 15, 2018

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Overview:

  • The EUR/USD pair broke resistance which turned into strong support at the level of 1.2204 last week. Moreover, it should be noted that the weekly support is seen at 1.2058. The level of 1.2058 coincides with a golden ratio (61.8% of Fibonacci), which is expected to act as major support today. The Relative Strength Index (RSI) is considered overbought because it is above 70. The RSI is still signaling that the trend is upward as it is strong above the moving average (100). This suggests the pair will probably go up in coming hours. Accordingly, the market is likely to show signs of a bullish trend. Therefore, buy orders are recommended above 1.2250 with the first target at the level of 1.2340. From this point, the pair is likely to begin an ascending movement to the point of 1.2340 and further to the level of 1.2400 in coming days. The level of 1.2400 will act as strong resistance. On the other hand, if a breakout happens at the support level of 1.2058, then this scenario may become invalidated.
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Trading plan for 15/01/2018

The US dollar is losing ground, not convincing anyone with strong economic data. EUR/USD remains strong above 1.22. The stock market is dominated by the greenback. Gold broke over 1,340 USD / oz. In addition, it is expected to be a quiet start to the week as the US celebrates Martin Luther King's Day.

On Monday 15th of January, the event calendar is light with important news releases. The only news worth to mention is the Trade Balance data from the Eurozone, the NZIER Business Confidence from New Zealand and the speech of MPC Member Silvana Tenreyro.

Analysis of EUR/USD for 15/01/2018:

The good and solid data from the US economy did not help the greenback to bounce and it is loosing ground across the board. The biggest winners in this situation are the major forex pairs such as EUR/USD, GBP/USD, and USD/CAD. Any news that is scheduled for release today do not have enough market impact to change this scenario.

Let's now take a look at the EUR/USD technical picture on the H4 time frame. The price has broken higher above the technical resistance at the level of 1.2090, broke through a 61% Fibo Extension and now is heading towards a 100% Fibo Extension at the level of 1.2294. The momentum is still strong during this move up, but the market conditions will soon begin to be overbought at this time frame. The nearest technical support is seen at the level of 1.2218.

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Market Snapshot: Crude Oil still on highs

Crude oil prices have bounced again from the technical support at the level of 63.10 and are heading higher towards the recent highs at the level of 64.78 in overbought trading conditions. This might be a start of the bearish divergence as the momentum indicator is not growing up with the price. The nearest technical support for the price is seen at the level of 63.10 and 62.67.

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Market Snapshot: US Dollar Index is sinking

The US dollar index has broken below the technical support at the level of 91.76, fell out of the black channel zone and now is moving straight down towards the next technical support at the level of 89.62 (weekly technical support). Please notice the market conditions are oversold on this time frame.

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Trading plan 01/15/2018

Trading plan 01/15/2018

The picture: The dollar retreated on all fronts.

The trading session closes last week with an openly bullish on the euro. If talking about the goal, the monthly trade is seen to be at 1.2500 - 1.2660 this month and expect strong bull candles for the month and week.

There could be a correction on Monday, particularly in the U.S., and Tuesday.

The main news of the week, the Fed's Beige Book report, will be released on Wednesday, January 17. The market will wait for a new signal.

Buy euros from the rollback, although this could be quite strong and put the stop, not greater than 45 points with purchase from 1.2110.

GBP / USD pair

The pound also rose sharply and went to catch up with the euro growth against the dollar.

We buy from a rollback at 1.3560.

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Breaking forecast 01/15/2018

Breaking forecast 01/15/2018

EURUSD: The way up.

The closing of last week clearly indicates the continued growth of EURUSD - in terms of technical analysis.

Break above the level of 1.2090, closed the day much higher, an exit from the two-month consolidation.

The only argument against growth is reaching the line of DeMark (TD - line) at 1.2240 - If the upward movement is false, and this is the end of the growth trend - it is from this point you can sell, stop not more than 45 points.

Today, the market is "narrow" -output in the United States - it is likely to retreat.

Buy euro from 1.2110, stop at 1.2065, take profit at 1.2240.

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Technical analysis of USDX for January 15, 2018

The Dollar index as expected made new lows below 91. The price trend has remained bearish showing no sign of strength or upside reversal. The price got rejected at all major resistance levels giving more strength to the downside momentum. There are some warning signs for Dollar bears but no reversal sign.

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Blue lines - bearish channel

The Dollar index is trading near the lower blue channel boundary. Oscillators are diverging and oversold. The decline from 94.30 area might soon be complete. Support is at 90.50 and resistance at 91.75. Previous support is now resistance. Only a break above that area will make me consider that the downside is over.

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On a weekly basis, the trend remains clearly bearish. price is making lower lows and lower highs. Oscillators are diverging but on a weekly basis, this is just a heads up warning and far from a reversal signal. Only on a move above 92.60 could we say on a weekly basis that the price is showing reversal signs.

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Elliott wave analysis of EUR/NZD for January 15, 2018

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Wave summary:

We have seen a nice impulsive rally of the 1.6518 low and more upside pressure is expected towards 1.7025 on the way higher to 1.7479 and 1.7777.

Short-term support is seen at 1.6764 and if broken, we should see a dip lower to 1.6661 before the next turn higher towards 1.7025.

R3: 1.6966

R2: 1.6890

R1: 1.6820

Pivot: 1.6764

S1: 1.6707

S2: 1.6661

S3: 1.6600

Trading recommendation:

We are long EUR from 1.6670. We will move our stop higher to 1.6525.

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Elliott wave analysis of EUR/JPY for January 15, 2018

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Wave summary:

The corrective rally from 133.09 spikes just above our upper target at 135.25 and should now be ready to turn lower again for a decline towards 131.11 before another corrective rally is expected towards 134.10.

Short-term a break below minor support at 134.79 will be a strong indicator that the corrective rally from 133.09 has completed and the expected decline to 131.11 has begun.

R3: 136.64

R2: 136.05

R1: 135.66

Pivot: 134.79

S1: 134.25

S2: 133.65

S3: 133.09

Trading recommendation:

We sold EUR at 134.74. We will place our stop at 136.75, but expect to move it lower soon. Upon a break below 134.79, we will move the stop lower to 135.75.

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USD/CHF profit target reached perfectly, prepare for a bounce

The price has dropped absolutely perfectly and reached our profit target. We look to buy above 0.9673 support (100% Fibonacci extension, 61.8% Fibonacci extension, horizontal swing low support) for an intermediate corrective bounce to at least 0.9735 resistance (Fibonacci retracement, horizontal breakout level).

Stochastic (34,5,3) is seeing major support above 4.4% where a corresponding bounce is expected.

Buy above 0.9673. Stop loss is at 0.9634. Take profit is at 0.9735.

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AUD/JPY forming a nice reversal pattern, remain bearish

The price is forming a nice reversal below 87.89 resistance (Fibonacci retracement, Elliott wave structure, triangle formation) and we expect to see a nice break out from here to push the price down towards 86.69 support (Fibonacci retracement, horizontal overlap support).

RSI (34) is right on pullback resistance where we expect a corresponding drop.

Sell below 87.89. Stop loss is at 88.47. Take profit is at 86.69.

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Technical analysis of EUR/USD for Jan 15, 2018

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When the European market opens, some Economic Data will be released, such as Trade Balance. The US today will not release any Economic Data, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.2249.

Strong Resistance:1.2242.

Original Resistance: 1.2230.

Inner Sell Area: 1.2218.

Target Inner Area: 1.2191.

Inner Buy Area: 1.2163.

Original Support: 1.2151.

Strong Support: 1.2139.

Breakout SELL Level: 1.2132.

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.

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Technical analysis of USD/JPY for Jan 15, 2018

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In Asia, Japan will release the M2 Money Stock y/y data, and today the US will not release any Economic 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: 111.31.

Resistance. 2: 111.10.

Resistance. 1: 110.88.

Support. 1: 110.61.

Support. 2: 110.40.

Support. 3: 110.18.

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.

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Daily analysis of USDX for January 15, 2018

The index managed to find dynamic resistance in the 200 SMA at the H1 chart and a leg lower towards the support zone of 90.59 is expected to happen in coming hours. The greenback was under heavy selling pressure during Friday's session and it could remain in favor of the bears during the week. If it does a break below the 90.59 level, then the next target would be the 89.36 zone.

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H1 chart's resistance levels: 91.75 / 92.57

H1 chart's support levels: 90.59 / 89.36

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 90.59, take profit is at 89.36 and stop loss is at 91.81.

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Daily analysis of GBP/USD for January 15, 2018

GBP/USD was strongly bullish during Friday's session as the greenback weakened across the board. The pair is now consolidating gains above the 1.3700 handle and it seems we could expect a rally towards the 1.3846 level. However, due to the nature of the bullish move, it's likely to see some corrective moves toward the 1.3612 level.

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H1 chart's resistance levels: 1.3846 / 1.3979

H1 chart's support levels: 1.3612 / 1.3526

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 1.3846589, take profit is at 1.3979 and stop loss is at 1.3714.

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Daily analysis of GBP/USD for January 15, 2018

GBP/USD was strongly bullish during Friday's session as the greenback weakened across the board. The pair is now consolidating gains above the 1.3700 handle and it seems we could expect a rally towards the 1.3846 level. However, due to the nature of the bullish move, it's likely to see some corrective moves toward the 1.3612 level.

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H1 chart's resistance levels: 1.3846 / 1.3979

H1 chart's support levels: 1.3612 / 1.3526

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 1.3846589, take profit is at 1.3979 and stop loss is at 1.3714.

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Daily analysis of GBP/USD for January 15, 2018

GBP/USD was strongly bullish during Friday's session as the greenback weakened across the board. The pair is now consolidating gains above the 1.3700 handle and it seems we could expect a rally towards the 1.3846 level. However, due to the nature of the bullish move, it's likely to see some corrective moves toward the 1.3612 level.

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H1 chart's resistance levels: 1.3846 / 1.3979

H1 chart's support levels: 1.3612 / 1.3526

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 1.3846589, take profit is at 1.3979 and stop loss is at 1.3714.

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Daily analysis of GBP/USD for January 15, 2018

GBP/USD was strongly bullish during Friday's session as the greenback weakened across the board. The pair is now consolidating gains above the 1.3700 handle and it seems we could expect a rally towards the 1.3846 level. However, due to the nature of the bullish move, it's likely to see some corrective moves toward the 1.3612 level.

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H1 chart's resistance levels: 1.3846 / 1.3979

H1 chart's support levels: 1.3612 / 1.3526

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 1.3846589, take profit is at 1.3979 and stop loss is at 1.3714.

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Euro rally may intensify

Eurozone

Published on Thursday, the minutes of the ECB meeting became a form of trigger not only for the euro, but for most European currencies. Quite unexpectedly for the market, the ECB turned a hawkish rhetoric, announcing that the economy is close to the trajectory of sustainable growth, and inflation has a good chance of approaching the target after the temporary factors cease to operate.

The market immediately changed its expectations regarding the completion of the asset purchasing program and the first rate hike, bringing this a step closer to June 2019. The market reacted with the rapid growth of the euro, pound and Swiss franc, judging that the deep integration of European economies will force the central banks of other countries to move towards the direction of tightening.

The positive mood was supported by the news that the leaders of the three German parties came to a decision on the creation of a coalition government, which provides a good chance of putting an end to the political crisis.

The key day of the coming week is Wednesday, when the report on inflation in the eurozone in December will be published. Despite the fact that overall inflation is gloomy, forecasts are moderately optimistic, the euro may get another important growth factor by the end of the day.

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Forecasts for the euro are revised upward. Since November, the euro is in the growing channel after it confidently passed the resistance of 1.2092 with the nearest target of 1.24. The probability of a recoilless growth is not high, but the chances of a decline below 1.20 dropped noticeably.

United Kingdom

The growth of the pound is supported by a number of reasons for economic and political factors. This is, firstly, the weakness of the dollar, and secondly, the hawkish position of the ECB, which has already provoked an increase in the yields of 10-year Swiss bonds above zero, that is, it is a strong growth factor for all European currencies, and, thirdly, a contribution to rumors about the likelihood of the development of negotiations on Brexit. This time, insider information leaked into the markets that the finance ministers of France and Holland agreed on a soft version of Brexit, which could mean a softening of the position of the entire EU as a whole.

On Tuesday, an inflation report will be published, positive forecasts, the expected increase in inflation will lead to the pound's rise, as it will increase the probability of another hike in the rate of the Central Bank of England. A number of strong resistances are in the range 1.3850/3950, the pound's growth may be limited by this zone.

Oil

Oil continues to grow steadily, Brent's price has come close to the psychological level of $70/bbl. There are several reasons for the growth in the raw material market, starting with the unexpected weakness of the dollar and ending with China's confident purchase of record levels of raw materials in the foreign market.

There is one more factor that looks different than what is being presented in the media. It is about increasing production in the US against the background of increased investment in the sector. Indeed, in the last 2 quarters there has been a small increase (about half of the peak in 2014), but more indicative is the stagnation in the labor market in the sector. Despite the growth in production, there is no evidence of an increase in employment, which means a lack of serious investment in the current quarter and lack of prospects for continued production growth.

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Therefore, oil has a chance to sustain its growth and try to gain a foothold above $70/bbl.The material has been provided by InstaForex Company - www.instaforex.com

The dollar against the rest of the world

Despite the fairly confident reports on retail sales and consumer inflation, the dollar has not yet found the strength to return to the growth trajectory.

Retail sales increased by 0.4% in December, the growth was fixed for the fourth month in a row. This is somewhat lower than forecasted, but in this case the negative is compensated by the revision of the indicators for October and December in the direction of increase. In addition to retail, sales of online stores increased significantly, in December the growth was 2.5%.

At the same time, the growth of core inflation accelerated. In December, it increased by 1.8% against the forecast of 1.7%, and in comparison with November's expansion of 0.3%, which is the maximum monthly increase for 11 months.

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It should also be noted that the index of economic optimism from IBD/TIPP, reflecting the mood of consumers regarding the prospects for the US economy, increased in January to 55.1p , which significantly exceeds both the forecast of 52.3p and the December level of 51.9%, and is a 10-month high. In other words, consumers of the country favorably welcomed the start of the tax reform and are counting on improving the economic situation as a whole.

The inflation growth which was higher than anticipated improved expectations of an interest rate hike. According to the CME futures market, the probability of another increase as early as March is currently 72.6%, and for the first time the probability of a second rate hike in June exceeded 50%. Obviously, the markets are waiting for more aggressive steps by the Fed on the background of rising inflation expectations - the main deterrent of recent months.

In general, the positive dynamics in a number of key indicators, such as export and import prices, production prices, retail and consumer inflation allowed the Atlanta Fed to improve its GDP forecast for 4Q. 2017 from 2.7% to 3.3%.

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It would seem that strong data should contribute to the growth of the dollar, but the spot is dominated by the reaction to the exact opposite. Obviously, there are some serious concerns even against the backdrop of the growth of key indicators, but which ones?

All week long, the Fed leadership in its public statements voiced concerns about the future prospects of the US economy. But if in the speeches of Rosengren, Kashkari, Evans and Bullard, the emphasis was on inflation expectations and the need to somehow revise the inflation targeting policy, the head of the Federal Reserve Bank of New York Robert Dudley finally found the courage to point out the main reason for the market's concern - fears of fiscal instability.

Speaking at a conference on financial markets, Dudley said that in the long run, the risks to the US budget are increasing. In particular, Dudley noted that the cost of servicing the US public debt for the past 10 years has incidentally grown , from 237 to 265 billion dollars a year, and this is due to a record decrease in interest rates. However, a tightening policy with a simultaneous increase in rates will lead to the fact that the cost of servicing the US public debt by the year 2027 amounted to 800 billion dollars, or 3% of GDP, and the retirement of the baby boomer generation will lead to an increase in social security and health care costs to 6% and 5% of GDP, respectively.

In fact, Dudley just announced the calculations of the budget management of the US Congress (CBO), but his speech hid more serious concerns. CBO derives its calculations on the assumption that the tax legislation will remain unchanged, that is, there is still no reaction to reducing the amount of collected taxes and, accordingly, there are no figures for settlements either. In other words, the fears voiced by Dudley are just a prelude to the apparent budgetary failure that awaits the US after the introduction of the tax reform.

In attempts to increase revenues to the US budget, they increase pressure on the main trading partners, forcing them to seek countermeasures. This applies to Europe, China, and the nearest NAFTA neighbors. The outcome of this confrontation is not clear, but it is evident that the administration has no opportunity to win on all fronts, and the markets proceed from the fact that the US government will face serious difficulties in the near future, despite good economic performance.

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