US Brief: top Trade Setups in Forex – FOMC Meeting Minutes in Highlights

The Federal Reserve (FED) will publish its monetary policy meeting minutes. The European Central Bank will report the eurozone’s M3 money supply in November (+5.7% on-year expected).

In the U.K., the Nationwide Building Society will publish its house price index for December (flat on month expected). The Bank of England will report the number of mortgage approvals in November (64,500 expected) and the M4 money supply.

The U.S. Commerce Department will report construction spending in November (+0.4% on month expected). The Institute for Supply Management will release its manufacturing index for December (49.0 expected).

USD/JPY – Double Bottom Supports 

The USD/JPY slipped 0.1% to 108.54. The risk sentiment after the RRR cut from the Chinese Central Bank emerged in the market and helped to recover some of its losses on Thursday. 

However, the pair continued to decline and ended its day in a bearish trend on the back of weak macroeconomic data from the United States and in the absence of any data from Japan amid Bank Holiday.

As for the trade developments, the phase-one deal will be signed in Washington on January 15 and has improved the global economic outlook. However, the details of the trade deal are yet to be published, and traders are waiting for it.

On the other hand, the escalated tensions between the U.S. & Middle East has been increased after the U.S. military attacks in Iraq & Syria. The protestors in Iraq stormed the U.S. embassy in Baghdad, and Trump has given threats against this reaction. The increased tensions between U.S. & Iraq have also been weighing on USD/JPY pair.

USD/JPY – Daily Technical Levels

Support

Pivot Point

Resistance

108.23

108.55

108.89

107.9

109.2

107.24

109.86

USD/JPY – Daily Trade Sentiment

The USD/JPY moved lower as the demand for safe-haven assets such as Gold and Japanese yen increased. The pair is now likely to gain support around the double bottom support area of 107.900. Recently, the USD/JPY pair has tested this level, and it’s also supporting it around 107.900.

The 50 EMA is far away around 109.200, which is signaling strong bearish bias among investors. But the thing is, the pair is already holding in the oversold zone, which means we need to keep an eye on the RSI and MACD to capture a quick buying retracement in the pair. Let’s stay bullish above 108.150 to achieve a quick buy trade. 

USD/CAD – Triangle Breakout Still In-Play

The USD/CAD was closed at 1.29790 after placing a high of 1.30079 and a low of 1.29686. Overall the movement of USD/CAD remained bearish that day.

At 7:30 GMT, the Manufacturing PMI for the month of December from Canada was dropped to 50.4 from the expectations of 51.9 and in comparison with 51.4 of November’s.

The disappointing PMI data from Canada weighed on the Canadian Dollar, and the pair USD/CAD was rebounded after that. The fall of Crude oil prices on Thursday also added to the downfall of the commodity-linked loonie. The WTI crude oil dropped 1% on Thursday to the level of $61 per barrel and helped the pair USD/CAD to rise and place a high of 1.30079. 

The U.S. dollar found a decisive recovery after falling for six consecutive days on Thursday. The U.S. Dollar Index rose 0.45% on Thursday to the level of 96.87. However, this did not help the pair USD/CAD to remain in an upward direction because of the weak macroeconomic data release from the United States.

The U.S. Jobless Claims for the last week of December remained flat at 222K, and the Manufacturing PMI from the U.S. fell short of expectations. The Manufacturing PMI from the United States at 7:45 GMT came in as 52.4 against the forecasted 52.5 and weighed on the U.S. dollar.

The weak macroeconomic data from the United States also limited the recovery of the U.S. dollar on Thursday, and hence, the pair USD/CAD started to drop and ended its trading day with the bearish candle.

USD/CAD- Daily Technical Levels

Support

Pivot Point

Resistance

1.2966

1.2987

1.3005

1.2948

1.3027

1.2908

1.3066

USD/CAD – Daily Trade Sentiment

The USD/CAD extends trading in a sideways in a broad trading range of 1.3015 – 1.2950. The commodity pair entered oversold region earlier but, and now it’s seeking to jump off as the leading indicators are already out of the oversold range.  

The USD/CAD pair has completed 23.6% retracement at 1.3015 marks, and the pair is still holding below the same level. The 50 EMA is suggesting a bearish bias for the pair, and it’s likely to extend resistance near 1.3050. Let’s looks for selling under 1.3015 to aim for1.2955 today. 

AUD/USD – Bullish Channel in Highlights

The AUD/USD AUD/USD was closed at 0.69895 after placing a high of 0.70080 and a low of 0.69783. Overall the trend for the pair AUD/USD remained bearish throughout the day.

The pair AUD/USD lost its nine days streak of a bullish trend on Thursday and started to fell at the start of the New Year. On Thursday, the Caixin Manufacturing PMI from China showed a decline to 51.5 from expected 51.7 in the month of December. The softer than anticipated expansion in the manufacturing sector’s activity in China raised concerns and put pressure on Aussie.

The People’s Bank of China has already announced to cut its Reserve Requirement Ratio on Wednesday for 2020 to provide support to the economy. However, the weaker than expected manufacturing sector growth raised concerns and dragged the AUD/USD pair from its highest level since July.

The phase-one trade deal between U.S. & China will be signed in Washington on January 15, but the details of the trade deal are awaited by traders to get published.

U.S. President Donald Trump has also said that he would personally head to Beijing for the discussion of phase-two of a trade deal after the signing ceremony of a phase-one agreement. Any progress in US-Sino trade relations profoundly affects the movement of Aussie as Australia is the biggest supplier of raw material to the Chinese factories.

The drop in China’s manufacturing sector in the month of December means less demand for raw-material from Australia and, ultimately, fewer exports from Australia, which is not suitable for Australian Dollar. That is why Aussie remained under pressure on Thursday.

Besudes, the U.S. dollar started its New Year on a healthy foot when the U.S. Dollar Index rose 0.45% on Thursday to the level of 96.87. The Jobless claims for the last week of December from the United States also came in line with the expectations of 222K and helped the U.S. dollar to gain traction in the market.

The strong U.S. dollar and weak Aussie on the back of thinner than expected China’s Manufacturing PMI on Thursday dragged the pair AUD/USD and broke its nine days bullish streak. The pair came back from 0.700 level to 0.690 level.

AUD/USD – Technical Levels 

Support

Pivot Point

Resistance

0.6979

0.6993

0.7007

0.6965

0.7021

0.6937

0.7049

AUD/USD – Daily Trade Sentiment

The AUD/USD is trading bearish around 0.6945 level in on the back of a stronger U.S. dollar and weaker Aussie. The AUD/USD has closed massive bearish candles above the support level of 0.6930, the level which worked as resistance for Aussie in the past.

The technical indicators like RSI and MACD are massively in the oversold zone, suggesting odds of bullish correction in the AUD/USD pair. The plan should be to stay bullish above 0.6935 to target 0.6985 today. 


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