US Brief: top Trade Setups in Forex - US Iran Uncertainty Plays!

The U.S. stocks pared some losses made last Friday. The Dow Jones Industrial Average rebounded 68 points (+0.2%) to 28703, the S&P 500 rose 11 points (+0.4%) to 3246, and the Nasdaq Composite was up 50 points (+0.6%) to 9071.

The Markit U.S. Services Purchasing Managers Index (PMI) posted 52.8 (final reading) for December (52.2 expected).

Later today, official data on November factory orders (-0.8% on month expected), durable goods orders (-2.0% on month expected) and December Institute for Supply Management's (ISM) non-manufacturing index (54.5 expected) will be released. And traders expect U.S. trade deficit to shrink to 43.6 billion dollars in November.

 

USD/JPY - Fibonacci Retracement In-Play

The USD/JPY was closed at 108.365 after placing a high of 108.504 and a low of 107.769. Overall the movement of USD/JPY remained strongly bullish throughout the day.

At 5:38 GMT, the Final Manufacturing PMI from Japan for the month of December showed a contraction in the manufacturing sector when it came in as 48.4 in comparison to November's 48.8. The weaker Manufacturing PMI from Japan weighed on Japanese Yen and gave a boost to the USD/JPY prices on Monday.

On the other hand, the Final Services PMI from the United States for the month of December showed an expansion in Services Sector when it came in as 52.8against the expectations of 52.2 and supported the U.S. dollar. The stronger than expected expansion in the services sector of the United States at the end of the year 2019 raised U.S. dollar demand in financial markets and supported the upward trend of USD/JPY on Monday.

Despite the escalated geopolitical tensions between the U.S. & Middle-East, USD/JPY continues to move in an upward direction on Monday. After the targeted killing on Iranian general QassemSulaeimani by the U.S. military, the tensions in Iran raised. 

 

USD/JPY - Daily Technical Levels

Support	Pivot Point	Resistance
107.88	108.07	108.31
107.64		108.5
107.21		108.93

 

USD/JPY - Daily Trade Sentiment

On the 4 hour timeframe, the USD/JPY has completed 38.2% Fibonacci retracement while breaking out of the bearish channel. The pair is now facing resistance near 108.500 level, and below this, it can keep the pair bearish. On the lower side, the pair can drop until 108.200 level and 107.800. 

The Stochastics has entered the overbought zone, indicating chances of a bearish trend around int the USD/JPY pair. 'However, in case, the USD/JPY manages to violate 108.500 level, we may see the pair soaring towards 108.900. 

 

USD/CAD - Sideways Trading Continues 

The USD/CAD was closed at 1.29636 after placing a high of 1.29900 and a low of 1.29600. Overall the movement of the USD/CAD pair remained bearish throughout the day.

The pair USD/CAD came under renewed bearish pressure after the U.S. attack on Iranian general. The rising tensions between the U.S. & Iran gave a boost to the Crude oil prices, which gave strength to commodity-linked Loonie. 

On the weekend, U.S. President Donald Trump gave threats to hit 52 targets after Iran said that severe retaliation was awaiting QassimSuleimani's murder. These statements were viewed as an escalation of the crisis and raised the uncertainty in the market. 

The highlighted tension between Iran & the U.S. could cause a shortage of Crude oil supplies, which has raised the prices of WTI crude in financial markets. The Crude oil was trading at $64.70 on Monday and show a 1.15% rise in its prices.

On the other hand, the U.S. dollar index was down by 0.33% on Monday at the level of 96.58 on the back of increased U.S. & Iran tensions. The weak U.S. dollar & strong Canadian dollar due to rising crude oil prices dragged down the USD/CAD pair to the level of 1.296000.

However, on the macroeconomic data front, the Raw Material Price Index from Canada for the month of November was released at 6:30 GMT, where it remained flat with the expectations of 1.5%. However, the Industrial Product Price Index for the month of November was declined to 0.1% from the expectations of 0.4% and weighed on the Canadian dollar.

At 7:45 GMT, the Final Services PMI from the United States was expanded to 52.8 against the expectations of 52.4 and supported the U.S. dollar.

 

USD/CAD - Daily Technical Levels

Support	Pivot Point	Resistance
1.2973	1.2991	1.3021
1.2943		1.304
1.2894		1.3088

 

USD/CAD - Daily Trade Sentiment

The USD/CAD is also trading over the double bottom zone, which is holding the pair nearby 1.2955. Odds of an upward retracement rest pretty high, however, the bearish breakout of 1.2955 level can direct selling until 1.2905. Alternatively, the pair can trade bullish above 1.2990 today. 

The 50 periods EMA is suggesting chances of bearish bias below 1.3035 area. Let's look for selling trades below 1.3035 and bullish above 1.2950 for now.

 

AUD/USD – Bullish Channel in Highlights

The AUD/USD dropped for the 3rd consecutive day on Monday to the level of 0.69251 on the back of escalated geopolitical tensions and weak Chinese data.

At 6:45 GMT, the Caixin Services PMI from China showed a contraction in the services sector of China when it came in as 52.5 against the expectations of 53.2. The decline in the services sector growth of China weighed on Aussie and dragged the pair AUD/USD on Monday.

At 2:30 GMT, the Manufacturing Index from the Australian Industry Group (AIG) for the month of December came in as 48.3 in comparison to November's 48.1. 

However, from the American side, the Final Services PMI for the month of December was released at 19:45 GMT, which showed an expansion in the services sector to 52.8 from the expected 52.4. The stronger than expected PMI from the U.S. added in the downward trend of AUD/USD.

However, the most significant risk event for the financial market these days remained the ongoing conflict between the United States and Iran. 

The risk currency like Aussie suffered a lot when the U.S. killed the Iranian General Soleimani in the airstrike. In response to what, Iran has said that it would retaliate with military action.

For now, Iran has been reluctant to take any aggressive measures against the U.S. in revenge for its general murder. However, it has ordered the U.S. troop withdrawal from its soil, which U.S. President has denied and asked payback of airbase cost in return.

Iran has also announced to abandon the 2015 Nuclear Agreement with six major world powers. In response to what the U.S. President has threatened to attack 52 Iranian Historical values. Iran has already announced an 80 Million Dollar bounty for U.S. President Donald Trump.

Meanwhile, U.S. Congress has started to keep Trump from escalating tensions with Iran and has presented War Power Resolution in Congress, which will limit Trump's military actions against Iran.

 

AUD/USD - Technical Levels

Support	Pivot Point	Resistance
0.6906	0.6913	0.692
0.6898		0.6928
0.6883		0.6943

 

AUD/USD - Daily Trade Sentiment

The AUD/USD has dipped below 0.6930 due to a violation of the bullish channel. The pair has also fallen below 50 EMA around 0.6930, which is likely to encourage further selling in the Aussie dollar today. 

On the lower side, the AUD/USD may find support around 0.6830, which is extended by the double bottom level. Below 0.6830, the AUD/USD has the room to drop until 0.6840. 

 

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