Last Week, the Euro has made its largest weekly loss for nearly three months last Friday after consolidating previously at what were new year highs for the single currency. Only now the EURUSD pair may need a rally from either the Pound or Chinese Yuan to sustain a significant recovery.
There is not a lot on the US economic calendar next week that could surprise the market. The Philly Fed manufacturing gauge (Thursday), flash PMIs (Friday) and a barrage of housing data should provide an important update on the health of the US economy, though no one are expected to impact the market.
In Its place, the focus for traders will be on Wednesday’s inauguration proceedings for the new POTUS Joe Biden. The danger of violent marches appears ahead of what is normally a tradition for the financial markets. With President Trump’s supporters still falling to accept that the election result was fair and after the historic marching of Capitol Hill by rioters on January 6, renewed unrest could move markets, triggering some risk aversion, as it could be predicting of more insurgence to come.
This week is rich with impactful economic announcements from the main currencies. Monday’s Forex market is expected to have low volatility due to US banks being closed in observance of Martin Luther King Day.
The Chinese will report their fourth quarter GDP measure and flash PMIs along with inflation and retail sales numbers will be the talk of the town in most markets. Still, traders will once again be focus on the happenings on Capitol Hill in Washington amidst fears of possible violent attacks at Joe Biden’s inauguration and a potential vote in the Senate on Trump’s impeachment case.
EUR/USD
Risk aversion looks to have entered through weekend with the S&P500 delaying to move higher despite President-elect Biden’s stimulus plan. The US Dollar broke higher with EURUSD sliding below 1.2150 – but it is not clear whether it was due to its relative growth or safe haven appeal.
Next week the top event risk looking ahead includes: China 4Q GDP; the Presidential inauguration; ECB and BOJ rate decisions; earnings and January PMIs.
FORECAST: LONG
Resistance: 1.2100, 1.2150, 1.2200
Support: 1.2050, 1.2000, 1.1950
AUD/USD
The Aussie reached a near three-year high on Thursday. On Friday, the US Dollar gained despite dismal US Retail Sales, Jobless Claims. The Australia employment expected to continue recovery in December and commodity currencies retain strength as global recovery expected.
FORECAST: LONG
Resistance: 0.7750, 0.7800, 0.7850
Support: 0.7700, 0.7650, 0.7600
USD/CAD
From a big picture point of view, the current bounce back is a major disappointment for USD to CAD bears as the pair failed to settle below 1.2625 for the second time in January. We remain short.
FORECAST: SHORT
Resistance: 1.2800, 1.2850, 1.2900
Support: 1.2700, 1.2650, 1.2600
GBP/USD
Fitch Affirms the UK at ‘AA-‘ with the Outlook Negative as the UK’s ratings balance a high income, diversified and advanced economy against high and rising public sector indebtedness. The Negative Outlook reflects the impact of the coronavirus pandemic on the UK economy and the resulting material deterioration in the public finances, with Fitch estimating the fiscal deficit to have widened materially to 16.2% in 2020 and government debt set to increase to 120% of GDP over the next few years.
FORECAST: SHORT
Resistance: 1.3600, 1.3650, 1.3700
Support: 1.3500, 1.3450, 1.3400
GOLD (XAU/USD)
Gold was fluctuating at a very tight range on Friday. The XAU/USD pair can push higher if it manages to break above 200-SMA on H4 chart. The key support for gold is located at $1,817.
FORECAST: SHORT
Resistance: 1850, 1900, 1950
Support: 1825, 1800, 1750
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