Top Trade Setups in Forex – Eyes on UoM Consumer Sentiment
|On the forex front, the greenback remained range-bound on Thursday, closing up 0.1% on the day at 97.30. The U.S. official data showed that retail sales increased 0.3% on month in December as anticipated. Initial jobless applications for the week concluded January 11 amounted to 204,000, lower than 218,000 expected, and 214,000 in the prior week.
Later today, December industrial production (-0.2% on month expected), University of Michigan Consumer Sentiment Index (99.3 expected), and January housing starts (annualized rate of 1,38 million anticipated units) and building permits (1.46 million units expected) will be reported.
USD/JPY - Tweezers Top Pattern
The U.S. dollar surged throughout trading versus the Japanese yen on Thursday, as we proceed to burst over the ¥110 level. Nevertheless, it should be recorded that there is a notable amount of resistance in this common region, as indicated by the candlestick pattern shooting star from Tuesday.
The U.S. dollar has gained a little during the trading session but ended up forming a shooting star. This implies that the region just above is moderately resistive, but it's evident that the resolution of this rally cannot be denied.
The fresh optimism over the completion of the long-awaited US-China phase one trade agreement counted on the Japanese yen's safe-haven standing and helped the pair to develop on its current positive momentum.
Friday's drop in Chinese GDP growth data, linked with stronger-than-anticipated Industrial Production and Retail Sales, supported the general risk-on mode and extended to lend some support.
USDJPY - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
109.78 |
109.89 |
109.99 |
|
109.68 |
110.10 |
|
|
109.56 |
110.20 |
USD/JPY - Daily Trade Sentiment
The USD/JPY has closed a tweezers top pattern on the 4 hours chart, which is extending resistance to the USD/JPY currency pair around 110.250. On the lower side, the USD/JPY pair is likely to find support around 109.850. Violation of this support can drive more sales until 109.650.
As you can notice in the graph above, the Stochastic is holding around 80, which is suggesting there's a strong need for a bearish retracement. Let's look for selling below 110.100 today to target 109.850 and 109.650.
USD/CAD - Sideways Trading Continues
The USD/CAD was broadly flat at 1.3038. Meanwhile, the U.S. Senate approved President Donald Trump's United States-Mexico-Canada trade agreement.
The USD/CAD pair fell after posting profits for the last two days amid the reduced demand for the greenback. The U.S. dollar declined against its competing currencies following the release of details regarding the Phase-one trade agreement between China and the U.S. The details unveiled that the U.S. would hold 25% tariffs on $250 Billion worth Chinese industrial assets which were employed in the U.S. manufacturing industries.
This news that most tariffs were resided in position and not excluded by the United States frustrated the traders' forecast and weighed on the U.S. dollar. However, U.S. President Trump's administration was regarded as a winner of the phase-one trade agreement after the release of details.
The U.S. Dollar Index, which estimates the value of the U.S. dollar versus the basket of six currencies, also declined to its lowest point 97.20 and appended in the descending movement of USD/CAD prices.
The weekly crude oil stocks from the United States fell to negative -2.5M from anticipated 0.4M and boosted the prices of WTI crude oil on Wednesday. The increasing WTI crude oil prices gave strength to commodity-linked currency-Loonie.
The improved demand for Canadian Dollar amid the increasing Crude oil rates further pulled down the USD/CAD prices on Friday to 1.3042 level. There was no release of macroeconomic data from Canada, which left the USD/CAD prices at the pity of U.S. dollar & Crude Oil.
USD/CAD- Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.3021 |
1.3050 |
1.3067 |
|
1.3005 |
1.3095 |
|
|
1.2976 |
1.3112 |
USD/CAD- Daily Trade Sentiment
The USD/CAD is consolidating at 1.3036 at the quieter corner of the sideways channel. The formation of candles beneath this level is expected to drive a bearish breakout in the USD/CAD.
The RSI and Stochastics are previously in the selling zone, while the USD/CAD has passed under 50 periods EMA which may send bearish bias in the USD/CAD pair now.
On the weaker front, the USD/CAD can sink further unto 1.3000 and 1.2975 today. Let's watch for bearish trades on the USD/CAD pair.
AUD/USD – Bullish Channel In-Play
The AUD/USD currency pair rose again and reached the level above the 0.6900, mainly due to the release of better-than-expected Industrial Production and Retail Sales data from China. As of writing, the AUD/USD currency pair is currently trading at 0.6901 and consolidates in the narrow range between the 0.6899 - 0.6902.
The currency pair dropped from 21-day SMA resistance during the previous session as the USD records constant increase in the wake of upbeat activity figures, retail sales data. Consequently, the U.S. dollar index canceled losses and climbed to 97.35, rebounding from weekly lows. Moreover, the US Jan Philly Fed index at 17.0 also helped a bid in the U.S. dollar, beating expectations (est. 3.7, prior 2.4) to retest mid-2019 highs.
Looking forward, the markets will now focus on the U.S. data that include the December month housing market and Industrial Production figures along with the Michigan Consumer Sentiment Index for January. Apart from this, some Fed policymakers are also set to speak and may move the markets should they emphasize on the recent recovery in the economy.
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.6884 |
0.6900 |
0.6923 |
|
0.6861 |
0.6939 |
|
|
0.6844 |
0.6963 |
AUD/USD - Daily Trade Sentiment
The AUD/USD tried to break above the 38.2% Fibonacci retracement level of 0.6920, but it reversed in the wake of stronger U.S. related economic events. The pair may find support around the corner of the bullish channel, which marks support at 0.6880.
On the 4 hour chart, the AUD/USD is trading up, and below 50 periods EMA, which is confusing the market sentiment. The AUD/USD support continues to be 0.6885 today.
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