Good morning from Hamburg and welcome to our first Daily FX Report of the week. This weekend China has joined the wave of global easing with its second rate cut in three months, as central banks from Australia to the euro region ramp up their monetary policies amid concerns over growth and low inflation. A private measure of factory output in Asia’s largest economy is due today, Monday, after a government gauge out Sunday indicated the sector contracted a second month. It seems quite clear is that China is slowing down and considering the weight of its market in the global economy, this is something that should worry to all of us. As a consequence of the measure adopted by the PBOC, the yuan slipped to a two year low in early trade.

Anyway, we wish you a successful trading day!


Market Review – Fundamental Perspective

The yen held a two day decline, and the bearish trend is expected to continue after China cut interest rates, encouraging speculation stocks in Asia will climb and damp demand for haven assets. Japan’s currency fell 0.1% to 119.77 yen per dollar in first trading hour today. The U.S. dollar rose 0.1 % from the highest close since, at least 2004, on prospects the Federal Reserve will raise interest rates this year, boosting the currency’s allure. On the other side, the Australian dollar dropped before the Reserve Bank sets monetary policy at a meeting on Tuesday. The Aussie fell 0.2% to 77.90 U.S. cents. New Zealand’s dollar also fell against U.S. dollar 0.3% to 75.43 U.S. cents. Regarding the euro, the shared currency continues with its weakness, declining once again against the U.S. dollar 0.3% to $1.1168. With Mario Draghi poised to start injecting unprecedented amounts of money into the Eurozone economy, the euro will remain under pressure the following months. In this direction, some analyst already predict that the euro might falling 11% by the end of the year, reaching the parity with the U.S. dollar for the first time since 2002. This depreciation would also bring some benefits for the Eurozone, like faster inflation and more competitive exports. The euro has slumped more than 7% against the U.S. dollar this year, touching an 11 year low of 1.1098 on January 26th. The European Central Bank said on January 22nd Quantitative Easing program would start sometime in March and last, at least, until September 2016, being possible to be expanded along the way.


Daily Technical Analysis

EURUSD (Monthly)

From a long term perspective, the EURUSD is immerse in a downtrend channel initiated with the highs of 2007. Since then, the euro has been losing a great part of its value, especially in the last 10 months, moving from 1.39 dollars per euro to the current quote of 1.1170, which means around 20% of decline. At the moment the trend is bearish in all time frames, identifying as the most significant support, the level of 1.0750. Over the current price, the 1.1770 and 1.2118 are important resistances to consider in case of an eventual change of the trend.

EURUSD

Support & Resistance (Monthly)

This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational purposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD remains above 1.0700 amid expectations of Fed refraining from further rate hikes

EUR/USD remains above 1.0700 amid expectations of Fed refraining from further rate hikes

EUR/USD continues to gain ground on Thursday as the prevailing positive sentiment in the market provides support for risk-sensitive currencies like the Euro. This improved risk appetite could be attributed to dovish remarks from Federal Reserve Chairman Jerome Powell on Wednesday.

EUR/USD News

GBP/USD gains traction above 1.2500, Fed keeps rates steady

GBP/USD gains traction above 1.2500, Fed keeps rates steady

GBP/USD gains traction near 1.2535 during the early Thursday. The uptick of the major pair is supported by the sharp decline of the US Dollar after the US Federal Reserve left its interest rate unchanged. 

GBP/USD News

Gold price struggles for a firm intraday direction, hover above $2,300

Gold price struggles for a firm intraday direction, hover above $2,300

Gold price fails to lure buyers amid a fresh leg up in the US bond yields, modest USD uptick. A positive risk tone also contributes to capping the upside for the safe-haven precious metal. Traders, however, might prefer to wait for the US NFP report before placing aggressive bets.

Gold News

Top 3 Price Prediction BTC, ETH, XRP: Altcoins to pump once BTC bottoms out, slow grind up for now

Top 3 Price Prediction BTC, ETH, XRP: Altcoins to pump once BTC bottoms out, slow grind up for now

Bitcoin reclaiming above $59,200 would hint that BTC has already bottomed out, setting the tone for a run north. Ethereum holding above $2,900 keeps a bullish reversal pattern viable despite falling momentum. Ripple coils up for a move north as XRP bulls defend $0.5000.

Read more

Fed meeting: The hawkish pivot that never was, and the massive surge in the Yen

Fed meeting: The hawkish pivot that never was, and the massive surge in the Yen

The Fed’s latest meeting is over, and the tone was more dovish than expected, but that is because the rate hike hype in the US was over-egged, and rate cut hopes had been pared back too far in recent weeks.

Read more

Majors

Cryptocurrencies

Signatures