Global macro overview for 05/02/2018

In the beginning of the week, market attention will be focused on central bank meetings. On Tuesday, the decision on the level of money costs will be taken by the Reserve Bank of Australia (RBA), which, according to the market consensus, should maintain the main interest rate at the level of 1.5%. On Wednesday, the decision on interest rates will be taken by Reserve Bank of New Zealand, but you should not expect any surprise here either. On Thursday, we will find out more about the outlook for the British economy, as apart from the Bank of England's decision regarding monetary policy parameters, the bank's quarterly report on inflation will also be published. In connection with the above, the central theme this week will be the monetary policy of central banks, as well as the comments of decision-makers appearing in this area.

Let's now take a look at the GBP/USD technical picture at the H4 time frame. The market has broken below the technical support at the level of 1.4081 and now is heading towards the nearest support at the level of 1.4029 and 1.3975. The downward momentum is strong as confirmed by the RSI indicator. Stochastic indicator is reversing from the overbought zones as well.

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Global macro overview for 05/02/2018

The Eurozone PMI Composite for January was released at the level of 58.8 points in January and the PMI Services came out in at the level of 58.8 points. This strong optimism reflects the strong economic performance that the Eurozone is experiencing, which continues to be broad-based and still expected to continue within next months. Backlogs of work are increasing, job creation is historically very strong and new orders continue to pour in. This situation suggests even better growth outlook in the months ahead with a side note of increasing price pressures. Nevertheless, the Retail Sales data disappointed the market participants as they were released at the level of -1.1%, which was still as anticipated, but much lower than last month figure of 2.0%. This might be important data, as the overall holiday sales period performed rather weak.

Even though markets are currently rattled by higher inflation expectations, the global investors expect Eurozone inflation to remain subdued throughout the year given the continued weak wage growth, the effects of the stronger euro on import prices and the lagged effect of survey indicators on selling prices on inflation.

Let's now take a look at the EUR/JPY technical picture at the H4 time frame. The market had made a top at the level of 117.50 and currently is reversing towards the nearest technical support at the level of 136.60.The market conditions are overbought and the momentum indicator starts to turn down.

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Bitcoin analysis for February 05, 2018

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Bitcoin (BTC) has been trading downwards. As I expected, the price tested the level of $7.555. Several Central Asian countries have taken steps to embrace cryptos one way or another. Kazakhstan, Kyrgyzstan, and Uzbekistan are some of the less conspicuous former Soviet republics, but now they are starting to appear on the crypto radar. With certain inherent advantages and some clever new policies, they try to attract investors and integrate into the global cryptocurrency ecosphere. Technical picture looks bearish.

Trading recommendations:

According to the 4H time - frame, I found strong selling momentum in the background. The broken bearish pennant in the background is doing a good job. My advice is to watch for potential selling opporrtunities. The downward targets are set at the price of $6.813 and major short-term target at the price of $2.640.

Support/Resistance

$8.789 – Intraday resistance (price action)

$7.492– Intraday support

$6.813 – Objective target 1

$2.645 – Objective target 2

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Pound was scared of heights

The British pound was caught by the spirit from the height at which it managed to climb. Having reached the maximum mark since the referendum on the membership of the Albion in the EU, pound sterling fell sharply against the background of strong statistics on the US labor market and disappointing data on business activity in Britain. Unlike the GBP / USD, which gained 4.5% since the beginning of the year, the weighted pound exchange rate was marked by much more modest results. This circumstance suggests that one of the drivers of the growth of the analyzed pair was the weakness of the dollar. As soon as investors began to turn to the last person, pound sterling felt uncomfortable.

In January, employment growth outside the US agricultural sector (+200 thousand) exceeded the average in 2017 (+171 thousand), unemployment continues to feel comfortable near the 17-year lows, and average salaries accelerated to 2.9% y / y, the maximum mark for the last 8.5 years. Such statistics strengthen the risks of overclocking inflation, and in such conditions, the Fed simply must act aggressively. Much will depend on whether the January figures on labor remuneration are market noise or is it a trend? In my opinion, under the influence of fiscal incentives, wages will accelerate, which lays a solid foundation under the federal funds rate increase once a quarter.

Dynamics of inflation and average wages in the US

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Source: Wall Street Journal.

It's another matter that the markets have not looked at the States at all recently. Investors perceive the negative as an excuse to sell the dollar, and the positive as a signal to accelerate not only the US, but the global economy. That, in turn, is seen as an argument in favor of the normalization of monetary policy by central banks-competitors of the Fed and, again, leads to the sale of the US dollar. In this regard, the increase in the probability of raising the BoE repo rate at the May meeting to 60% from 39% a month ago became a serious driver of the GBP / USD rally. This happened after Mark Carney said about the economy of the Foggy Albion passed by the day and expressed optimism about the prospects for growth of real incomes of the population.

Now, the Bank of England will have to prove its "hawkish" spirit. It turns out that the pound can continue the northern campaign. Although personally, I doubt that before the conclusion of the trade deal with the EU. The regulator will decide to indicate its desire to tighten monetary and credit policy. Moreover, data on business activity for January disappointed. The construction sector was especially upset, which not only did not go below the critical mark of 50, but also marked the worst growth in employment in the last 18 months. Thus, the BoE meeting on February 8 allows the pound sterling to claim the role of the most interesting currency of the week.

Technically, it will be important for the "bears" to update the correctional low near the psychologically important level of 1.4. If their attack succeeds, the AB = CD pattern will be activated, and the correction risks in the 1.3755-1.3805 direction will increase.

GBP / USD, daily chart

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GBP/USD analysis for Febuary 05, 2018

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Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.4082. Anyway, according to the 15M time – frame, I found a hidden bullish divergence on the moving average oscillator in the background, which is a sign that selling looks risky. I also found a breakout of intrraday resistance cluster at the price of 1.4126, which is another sign of strength. My advice is to watch for potential buying opportunities. Upward targets are set at the price of 1.4162 (Fibonacci expansion 161.8%) and at the price of 1.4173

Resistance levels:

R1: 1.4229

R2: 1.4340

R3: 1.4406

Support levels:

S1: 1.4053

S2: 1.3989

S3: 1.3875

Trading recommendations for today: watch for potential buying opportunities.

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EUR/USD analysis for February 05, 2018

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Recently, the EUR/USD pair has been trading downwards. The price tested the level of 1.2409. Anyway, according to the 30M time – frame, I found a breakout of intraday pennant, which is a sign that selling looks risky. I also found a hidden bullish divergence on the stochastic oscillator in the background, which is another sign of strength. My advice is to watch for potential buying opportunities. The upward target is set at the price of 1.2520.

Resistance levels:

R1: 1.2511

R2: 1.2569

R3: 1.2620

Support levels:

S1: 1.2402

S2: 1.2350

S3: 1.2293

Trading recommendations for today: watch for potential buying opportunities.

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Bitcoin analysis for 05/02/2018

In three of the largest US banking groups, customers will not be able to pay for credit cards with Bitcoin. This prohibition applies to JPMorgan Chase, the Bank of America and Citigroup. The reason is the investment risk, because with such fluctuations in Bitcoin rates, banks are beginning to approach investing in crypto assets as gambling. First, credit institutions began to withdraw from running accounts to business entities dealing in the trade of virtual "currencies", and now restrictions begin to affect individual customers. In the United States, bans begin to appear in the case of crediting bitcoin investments.

Of the three banks that decided to take such a step, JPMorgan Chase's position is the least surprising. The president of the largest American bank, Jamie Dimon, called bitcoin a scam. What's more, he announced that he would release "without a second of hesitation" any trader who would invest money into a virtual "currency". The current position of the bank sent to the CNBC editorial office reads: "At the moment, we do not settle the purchase of cryptocurrencies using credit cards due to their high volatility and risk."

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The most important intraday support is at the level of $,7531 and any violation of this support will lead to the further sell-off extension towards the next target projection at the level of $6,741.Please notice that the bullish divergence between the price and the momentum oscillator is growing up.

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Trading plan for 05/02/2018

The US Dollar stabilized after Friday's increases caused by the better-than-expected US labor market report.The stock market has bigger problems because higher wages mean a revival in inflationary pressure and more active Fed in interest rate hikes. The SP500 fell on Friday by 2.54% and gave a signal for sales in Asia. Japanese Nikkei 225 lost 2.55% and Hang Seng fell by 1.1%. Crude oil is losing 1.0%, Gold without major changes.

On Monday 5th of February, the event calendar is dominated by PMI Services and Composite releases from across the Eurozone, UK, China, Japan and the US. Moreover, the US release ISM Non-Manufacturing PMI data in the afternoon as well.

EUR/USD analysis for 05/02/2018:

The NFP report from the US labor market brought positive surprises on the employment and wages side with revisions upwards in December. Employment in the non-agricultural sector increased by 200,000 versus 166,000 a month earlier. The market expected 180,000. Wages increased by 0.3% m/m, by 0.1% point harder than expected. December data improved to 0.4% from 0.3%. The unemployment rate remained stable at 4.1%. The initial reaction for data was bearish but then stabilized and currently, the price has returned to the consolidation zone.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The price is trading under the golden trend line in around the level of 1.2472 with the neutral momentum (hovering around its fifty level). The nearest technical resistance is seen at the level of 1.2522 and the nearest technical support is seen at the level of 1.2408. Maybe there will be more volatility after the news will get released. The overall trend remains up.

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Market Snapshot: SPY deepens the drop

The price of SPY (SP500 ETF) has felt out of the golden channel and retraced over 50% of the recent swing up. The move down looks very sudden and aggressive and so far there are no signs of a trend reversal. The nearest support is seen at the level of 275.27, the 61% Fibo is seen at the level of 274.59 and the nearest technical resistance remains at the level of 278.06.

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Market Snapshot: DAX follows the SPY

The price of German DAX Index has been following the other world indices and today it opened gape down at the level of 12,676. The black trend line acted as a dynamic support for the price, otherwise, it would possibly fell even more. Currently the price is trying to close the gap and hit the level of the Friday low at 12,782.

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Technical analysis of EUR/USD for February 05, 2018

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Overview:

  • The weekly pivot is seen at the level of 1.2469. The EUR/USD pair rose from the level of 1.2414 towards 1.2469. Now, the current price is set at 1.2443. On the H1 chart, the resistance is seen at the levels of 1.2500 and 1.2538. Besides, the weekly support 1 is seen at the level of 0.9831. Today, the EUR/USD pair is continuing to move in a bullish trend from the new support level of 1.2414, to form a bullish channel. Amid the previous events, we expect the pair to move between 1.2414 and 1.2538. Therefore, buy above the level of 1.2440 (the current price) with the first target at 1.2500 in order to test the daily resistance 1 and further to 1.2538 (double top). Nevertheless, if the pair fails to pass through the level of 1.2414, the market will indicate a bearish opportunity below the level of 1.2414. The market will decline further to 1.2338 in order to return to the double bottom. Additionally, a breakout of that target will move the pair further downwards to 1.2338. However, the market is still in an uptrend. We still prefer the bullish scenario.
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Trading plan 05/02/2018

Trading plan 05.02.2018

The general picture: A week without important news.

The main news in the beginning of the year came out: the Fed and the ECB held meetings and the monetary policy was determined until March.

There was a report from the U.S. on employment indicating the U.S. economy is doing well.

The question: what will the market for the next month? Either it will continue to lower the dollar or it will stop and wait for the increase in the rates for the dollar.

I suppose that the market will try to organize a new movement against the dollar.

British pound:

I am waiting for the pound to rise.

Buy the pound on a strong decline from the level of 1.3930.

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Technical analysis of GBP/USD for February 05, 2018

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Overview:

  • The GBP/USD pair was dialectical as it was trading in a narrow sideways channel, the market showed signs of instability.
  • Amid the previous events, the price is still moving between the levels of 1.4217 and 1.4044. Resistance and support are seen at the levels of 1.4217 (also, the double top is already set at the point of 1.4347) and 1.4044 respectively.
  • Therefore, it is recommended to be cautious while placing orders in this area. So, we need to wait until the sideways channel has completed. The current price is seen at 1.4115 which represents a key level today. The level of 1.4217 will act as the first resistance today.
  • Hence, if the pair fails to pass through the level of 1.4217, the market will indicate a bearish opportunity below the strong resistance level of 1.4217. Sell deals are recommended below the level of 1.4217 with the first target at 1.4044.
  • If the trend breaks the support level of 1.4044, the pair is likely to move downwards continuing the development of a bearish trend to the level 1.3970.
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NZD/USD Intraday technical levels and trading recommendations for February 5, 2018

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Daily Outlook

In July 2017, an atypical Head and Shoulders pattern was expressed on the depicted chart which indicated upcoming 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). An inverted Head and Shoulders pattern was expressed around these price levels.

The price zone of 0.7140-0.7250 (prominent Supply-Zone) failed to pause the ongoing bullish momentum. Instead, a bullish breakout above 0.7250 was expressed on January 11.

That's why, the current bullish movement extended towards the price levels of 0.7320 and 0.7390.

A quick bullish movement was expected towards the depicted supply zone (0.7320-0.7390) where evident bearish rejection and a valid SELL entry is still expected.

Trade Recommendations:

Conservative traders should be looking for a valid SELL entry anywhere around the depicted supply zone (0.7320-0.7390).

S/L should be located above 0.7450. T/P levels should be located around 0.7230, 0.7150 and 0.7090.

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Intraday technical levels and trading recommendations for EUR/USD for February 5, 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 and recently above 1.2075.

Another bullish breakout above 1.2250 is being expressed on the chart. This hinders the bearish momentum allowing bullish advancement to occur towards 1.2750.

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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.

Bearish target for the depicted Head and Shoulders pattern extends towards 1.1350. However, the market failed to apply significant bearish pressure against the mentioned zone (1.1415-1.1520).

Instead, In November, evident bullish recovery was manifested around the price zone of 1.1520-1.1415.

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 as well.

Daily persistence above 1.2470-1.2500 confirms a recent bullish flag continuation pattern with projected targets towards 1.2750.

Otherwise, bearish pullback may occur towards 1.2070 if a bearish breakout below 1.2160 is achieved on a daily basis (low probability).

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Ichimoku cloud indicator analysis of USDX for February 5, 2018

The Dollar index remains in a bearish trend as it continues to trade below the 4-hour Kumo. Price continues to challenge the 4-hour Kumo (cloud) resistance but so far buyers are not strong enough to provide a reversal signal yet.

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Black rectangle - resistance

Red lines - bearish channel

The Dollar index is trading below the 4-hour Kumo (cloud) resistance. Short-term resistance and trend change level remains at 89.60. A break above it will mean price is above the horizontal resistance and above the Cloud. Support is at 89.10-88.95 where we find the 4-hour kijun- and tenkan-sen respectively.

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On a daily basis, the Dollar index remains in a bearish trend. Price remains below the daily tenkan-sen. A daily close above it (89.28) will be a bullish sign. If broken upwards, target is at 90.56. Cloud resistance on a daily basis is at 92.82.

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Ichimoku cloud indicator analysis of gold for February 5, 2018

Gold price got rejected last week at the upper cloud boundary in the 4-hour chart. Price is vulnerable to a push lower towards $1,310-$1,300 over the coming days. An important top has been made in Gold and the pullback has started.

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Black rectangle - resistance

Green rectangle - support

Gold price has broken below the green rectangle support area and is trading just below it. Price is trading below the Ichimoku cloud. Trend is bearish for the short term. Resistance is at $1,338 and next at $1,345. Support is at $1,320 and $1,310.

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Magenta line - long-term resistance

Gold was unable to break above the long-term resistance trend line and got rejected. Price broke below the tenkan-sen (red line indicator) and is testing the kijun-sen support (yellow line indicator). A daily closebelow $1,327 will open the way for a move lower towards cloud support at $1,290-$1,300.

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Daily analysis of major pairs for February 5, 2018

EUR/USD: This pair consolidated last week, although bulls were able to pull their weight, thus saving the bullish bias that is extant in the market. A rise in volatility is expected this week, which could propel the market towards the resistance lines at 1.2500 and 1.2550. Pullbacks in the market may be contained around the support lines at 1.2350 and 1.2300.

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USD/CHF: This currency trading instrument consolidated throughout last week, in the context of a downtrend. Bears have been able to maintain the bearishness in the market so far; and thus, when a breakout occurs, it would most probably be in favor of bears. The support levels at 0.9300, 0.9250 and 0.9200 could be reached this week.

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GBP/USD: The Cable moved downwards on Monday and Tuesday, went upwards on Wednesday and Thursday, and then pulled back on Friday. The pullback may end up proffering an opportunity to buy long at agreeable prices, as price goes towards the distribution territories at 1.4200, 1.4250 and 1.4300.

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USD/JPY: The USD/JPY is bearish in the long-term, but bullish in the short-term. Since the demand level at 108.50 was tested last week, the price has rallied by 180 pips, closing above the demand level at 110.00 on Friday. The outlook on JPY pairs is bullish for this week, and thus, the USD/JPY is expected to rally further. The next targets are the supply levels at 110.50, 111.00 and 111.50.

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EUR/JPY: The EUR/JPY cross made some faint bearish effort on January 29 and 30, as it briefly went below the demand zone at 134.50. However, the situation changed as a strong rally began on January 30. The price gained 300 pips, bringing about a bullish signal, and ending the recent consolidation in the market. The possibility of the price going further upwards is very high this week. The next targets are the supply zones at 137.50, 138.00 and 138.50.

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Technical analysis of EUR/USD for Feb 06, 2018

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When the European market opens, some Economic Data will be released such as Retail Sales m/m, Sentix Investor Confidence, Final Services PMI, German Final Services PMI, French Final Services PMI, Italian Services PMI, and Spanish Services PMI. The US will release the Economic Data too, such as Loan Officer Survey, Mortgage Delinquencies, ISM Non-Manufacturing PMI, and Final Services PMI, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.2517.

Strong Resistance:1.2510.

Original Resistance: 1.2498.

Inner Sell Area: 1.2486.

Target Inner Area: 1.2457.

Inner Buy Area: 1.2428.

Original Support: 1.2416.

Strong Support: 1.2404.

Breakout SELL Level: 1.2397.

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 Feb 06, 2018

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In Asia, Japan today will not release any Economic Data, but the US will release some Economic Data such as Loan Officer Survey, Mortgage Delinquencies, ISM Non-Manufacturing PMI, and Final Services PMI. 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: 110.50.

Resistance. 2: 110.28.

Resistance. 1: 110.07.

Support. 1: 109.80.

Support. 2: 109.59.

Support. 3: 109.37.

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 February 05, 2018

The USD NFP gave a boost to the US Dollar Index across the board and it helped to reach the 200 SMA at the H1 chart. The level of 89.36 should be pierced in order to allow gains toward the 90.63 level and such move could strengthen the bullish scenario for the short-term. To the downside, the closest support lies at 87.88.

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H1 chart's resistance levels: 90.63 / 91.75

H1 chart's support levels: 89.36 / 87.88

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 89.36, take profit is at 87.88 and stop loss is at 90.81.

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Daily analysis of GBP/USD for February 05, 2018

The pair is struggling to consolidate the price action above the resistance level of 1.4280 and it seems that the 200 SMA could act, once again, as a dynamic support. If that happens, GBP/USD could resume the overall bullish bias and can skyrocket towards the 1.4393 level. MACD indicator remains in the negative territory, calling for a leg lower.

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H1 chart's resistance levels: 1.4280 / 1.4393

H1 chart's support levels: 1.4060 / 1.3937

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 1.4280, take profit is at 1.4393 and stop loss is at 1.4168.

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USD/JPY testing major resistance, prepare to sell

The price is now testing major resistance at 110.42 (Fibonacci retracement, horizontal overlap resistance, fake channel reintegration) and we expect a strong reaction from here to push the price down towards 107.62 support (Fibonacci extension, horizontal swing low support, channel exit potential).

RSI (55) sees a descending resistance line hold price down really well and we expect further bearish momentum.

Sell below 110.42. Stop loss at 111.32. Take profit at 107.62.

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NZD/USD testing major support, watch to sell on the break

The price is now testing major support at 0.7283 (Fibonacci retracement, horizontal swing low support) and only a break of this level would trigger a bearish move to 0.7188 support (Fibonacci retracement, horizontal pullback support).

It is worth noting that we can see price break out of our bearish channel triggering a bearish exit. Confirmation of the drop requires the price to close below 0.7283.

RSI (34) sees a bearish exit from our long-term ascending support-turned-resistance line and also a break below our 51% support signaling a big drop from here.

Sell below 07283. Stop loss at 0.7349. Take profit at 0.7188.

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The US labor market report has brought down stock markets

The pace of employment growth in January exceeded analysts' expectations. As published from the report of the Ministry of Labor in January, 200 thousand jobs were created. In addition, data for the month of December were revised upwards from 148 thousand to 160 thousand while the unemployment rate remained unchanged at 4.1%.

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However, what's even more important is the growth in the average wage. Its growth in January was 0.3%, increasing year-on-year to 2.9%. This is the highest since June 2009.

For a long time, the Fed noted at its meetings that it expects inflation to increase. They are focusing on the "Philips rule", according to which the labor market recovery leads first to an increase in wages and then to an increase in inflation. This moment may have come. In any case, the markets have reacted in this vein. The S & P 500 index fell 2.1% to 2,762.13 points while the Dow Jones fell 665.75 points, this is the biggest drop in 9 years.

Why is there such a strong reaction? Obviously, the markets were frightened by the scenario in which the Fed, proceeding from high inflation growth rates, will raise rates this year not 3 times, but 4, which will lead to a rise in the cost of loans and, as a consequence, to a decrease in profits relative to the levels forecasted before.

How likely is this scenario? Judging by the reaction of the markets, it is quite possible, but if we proceed from the dynamics of the futures on the rate on CME, the reaction to the employment report may be excessive. The players do not yet see the serious danger of four rate increases. The market still believes in two increases in March and June and one more in September or December.

It has long been known that the Fed is not so much following market trends as trying to manage them. This is confirmed by a clear adherence to the earlier planned rate increase plan, which has been steadily growing for two years despite a number of serious shocks. It will most likely be the same this time with the plans for the rate intended to be left unchanged. The aggressive mood of the market will be paid off by comments of Fed officials on Monday. Immediately after the publication of the report, the head of the Federal Reserve Bank, Dallas Kaplan, said that the Fed is planning three increases this year and that the US economy, having received a "short-term push" from tax cuts, will slow down in 2019 and 2020.

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It is important to note that the excessive reaction of the markets to the employment report has strengthened along with a number of other indicators. GDP dynamics by the end of the year is on a solid growth trajectory. The GDPNow model from the Atlanta Federal Reserve Bank predicts a fantastic 5.4% growth for the first quarter, Markit and ISM indexes of business activity in January exceeded expectations, and the consumer confidence index from the University of Michigan rose again more than expected.

It is not expected for important macroeconomic data to be published this week. So, the markets will seek new levels of equilibrium. Attention will be directed to the rhetoric of the leadership of the Fed. There are quite a number of speeches planned. Since Trump has not yet appointed anyone to the post of vice chairman of the Fed, the most interesting event will be the speech of the head of the Federal Reserve Bank of New York, Dudley, who is currently considered the most influential member of the Cabinet.

The dollar, most likely, will try to develop success at the opening of trading on Monday. However, it is unlikely that the movement will be accented. Investors were not ready for strong movements on Friday. In particular, the CFTC report indicates that large players continued to get rid of long positions, preferring to buy franc and yen. Trades will most likely go into the lateral range in anticipation of the Fed's comments plus technical factors that require the completion of the correction of the dollar after a long period of decline will come to the forefront.

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

Euro remains the favorite

Eurozone

The euro finally has a driver to stop growth - inflation expectations in the eurozone are falling behind the US, which allows the bears to seize the initiative, as expectations on the aggressive policy of the ECB may somewhat weaken.

The euro has been growing steadily for several weeks, as it received strong support from a number of macroeconomic indicators that were too strong for the ECB to ignore, but a weak inflation report in January brought down the bullish sentiment.

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At the moment, the market has a steady view that the period between the end of the asset repurchase program and the first rate increase will not be too short, and the first rate increase of 10 basis points will take place no earlier than Q1 2019. This year there will be many events, among which are the first results of the tax reform in the US and at least three interest rate increases by the Fed, which can significantly change the balance of power.

Bulls supports the belief that the US Federal Reserve and the US Treasury will consistently seek to weaken the dollar, because otherwise serious problems will arise with a budget reduction. This is the strongest argument in favor of the growth of the euro. At the same time, for the European economy in such a scenario is extremely negative, when the ECB in fact does not have time to do anything, and a number of eurozone countries will have overseas profitability.

The euro remains in the upward trend. The momentum has not yet been fully developed, however, the movement with a high probability will slow down and the formation of the top will begin, the trade will go in the range of 1.2335/2537.

United Kingdom

On Thursday, February 8, a key meeting of the Bank of England will be held, which will be accompanied by the publication of updated macroeconomic forecasts. Markets assess the likelihood of a rate hike as low, but the results of the meeting may have a serious impact on the prospects for a rate hike in May.

The latest macroeconomic publications were bearish for the pound, as the production PMI in January showed a slowdown instead of the expected growth, while activity in the construction sector fell to 50.2p, being in stagnation for 4 years in a row.

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Nevertheless, the pound continues its growth, not paying attention to such trifles. Obviously, the main reason is that the Brexit situation continues to develop in a positive way, there are no unpleasant news, negotiations are going on as usual and by May, when the next meeting of the Bank of England is held, there is a high probability of concluding a transitional agreement.

The relationship is like this- the higher the probability of successful negotiations, the higher the chances of a rate increase, the more bullish sentiment on the pound. The Bank of England, apparently, on Wednesday will give its commentary on the course of negotiations and their prospects. While the pound remains in the growing channel, the likelihood of another attempt to test the high of 1.4344 remains high, but until Thursday, trading will most likely be in the lateral range.

Oil

Oil could not stay away, reacting to the synchronous decline with the stock markets, but managed to hold above the low of the week. Attempts to rebound followed immediately, which may indicate the unbelief of the markets at a higher rate of rate increase than previously thought.

The extramural battle between the United States and Russia continues for the title of the largest oil producer. Throughout the week, the markets have commented on record growth in production in the US, the shale industry is experiencing a rebirth and is ready to increase the volume. However, all these bearish factors do not yet have a significant impact on quotes.

OPEC+ continues to adhere to the chosen strategy, which brings more revenues with lower costs and another contract can be extended for six months. OPEC+ does not seek a record growth, the level of +/- $ 70 per barrel suits everyone, including the US, and therefore the probability of a collapse of quotations remains low.

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