- EUR/USD is sideways in Asia consolidating last weeks rally on the 1.13 handle.
- EUR/USD is currently trading at 1.1413, with a high of 1.1419 and a low of 1.1399.
EUR/USD made a strong recovery on Friday in a risk on the environment with headlines that an agreement has been reached to temporarily end the US government shutdown. Despite that, the USD underperformed against the G10s.
For the week ahead, the scheule is going tobe busy. We have the Fed, nonfarm payrolls, EZ CPI, Chinese manufacturing and the UK Parliamentary vote.
With eyes on the Fed, the FOMC is expected to replace "some further gradual" hikes with flexible, data-dependent language, but still see risks as "roughly balanced." "Chair Powell could hint that the runoff policy could conclude sooner, but not give any concrete details or dates. We expect limited reaction after markets moved sharply Friday on rumours of a "roadmap" for the balance sheet," analysts at TD Securities.
As for US jobs, there are expectations of a mean-revert to 150k following a larger-than-expected jump in December. "The unemployment rate should tick up to 4.0% largely reflecting furloughed government workers during the shutdown. For ISM manufacturing, regional surveys suggest further weakness in the manufacturing sector in January. We expect an additional moderation in the index to 53.3" the analysts at TD Securities expect.
The Brexit saga
MPs are lining up to vote on a series of amendments to May's "Plan B". Markets will look for where the majority goes in the voting of various amendments to the plan where extending Article 50 would likely be bullish for both the euro and pound, as would a second referendum. At the heart of the deadlock is the backstop to the Irish border which and customs union but for the event, it is the Cooper amendment which is most key which could be legislated formally on 5 Feb, thereby extending A50 to end-2019 if no deal is signed off by end-Feb - Bullish for markets.
EUR/USD levels
- Support levels: 1.1380 1.1340 1.1300
- Resistance levels: 1.1420 1.1455 1.1490
Valeria Bednarik, Chief Analyst at FXStreet explained, that from a technical point of view, the daily chart shows that the recovery stalled around the 50% retracement of the December/January rally, also around a flat 20 DMA:
"The 100 DMA converges with the 38.2% retracement of the same advance at around 1.1455, acting as a strong resistance in the case the advance continues, while technical indicators remain in negative ground, having lost their downward strength but falling short of confirming a steeper advance ahead. In the shorter term, and according to the 4 hours chart, the bullish case is a firmer, as technical indicators re-entered bullish territory while the pair surpassed its 20 and 200 SMA, stalling around the 100 SMA, which stands directionless around the mentioned Fibonacci resistance in the 1.1420 price zone."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 0.7000 after Powell delivered Premium
Fed Chair Powell temporarily boosted optimism pushing EUR/USD to 1.0766 saying that stronger-than-expected data will see the Fed raising rates accordingly. US Dollar bulls fight back and the pair trades below 1.0745.
GBP/USD trades around 1.2000 in Powell’s aftermath
GBP/USD flirted with 1.2100 within FOMC Chairman Jerome Powell's speech, but quickly trimmed gains and hovers around the 1.2000 figure. The US Federal Reserve further cooled expectations of a rate cut by year-end.
Gold: Holding above $1,860, but upside still seen limited Premium
Spot gold saw little action throughout the first half of the day, consolidating its latest losses just above the $1,860.00 threshold. The US Dollar mainly advanced against its European rivals, as certain caution reigned ahead of a speech from US Federal Reserve (Fed) Chairman Jerome Powell, resulting in XAU/USD holding within familiar levels.
Top 3 Price Prediction: Bitcoin, Ethereum, Ripple: When all signs point north
The Crypto market continues to show bullish signals. Still, a trade-per-trade stance is being implemented as markets are highly elevated since January's 40% rally.
US trade deficit widened to close a volatile year for trade
The U.S. trade deficit widened in December to finish what was a volatile year for international trade flows. While 2022 marked the largest deficit on record, the U.S. trade balance narrowed over the course of the year. Trade flows will remain under pressure in 2023 amid slow global growth and a normalization in U.S. demand.