17.02.2016
Fundamental analysis
The dollar started the new trading week on a positive note. The US currency purchase supported the positive sentiment for the world stock exchange. Even China's return to the market after long holidays did not spoil that sentiment. The imports and exports volume from China decreased by 18.8% and 11.2%, respectively in January.
The banking sector shares outperformed the market in Europe. Investors' "risk appetite" was growing which is a negative factor for the euro as a funding currency. Germany has published the ZEW Survey - Economic Sentiment for February. The index showed 1.0 (the previous value was 10.2; the forecast was 3.2). The pair euro/dollar fell.
The UK published the inflation report for January. A strong labor market pointed out that CPI growth (in annual terms) could be a little better than the consensus forecast (0.4%). The unemployment rate for November decreased by 5.1%, while wages increased by 1.02%. However the CPI came in at the forecasted median 0,3%. By the end of the trades the pair pound/dollar sharply fell.
The Japanese negative macroeconomic statistics keeps showing correction. GDP decreased by 0.4% in the fourth quarter. The volume of industrial production has been reducing for the second year in a row and the negative trend accelerated from 1.91% to 2.49% in 2015. The sharp yen's strengthening, that we saw in the beginning of the year, carries additional risks to the Japanese economy. The pair dollar/yen is consolidating after a decrease.
Technical analysis
Euro
General overview
The news that Bundesbank lowered its inflation growth forecast for 2016 pressured the euro. The Bundesbank lowered the forecast to + 0.25% from 1.1% amid the cheap oil. Mario Draghi made it clear in his performance that the regulator was ready to revise its policy at the next meeting. He stressed that the monetary policy would remain accommodative for an extended period. Draghi’s soft statements only increased the pressure on the euro.
The first support lies at 1.1050 and then at 1.0925. The first resistance stands at 1.1150, the next one is at 1.1260
The price is in the Ichimoku Cloud and it is above the Chinkou Span. The Tenkan-sen shows a downward movement and the Kijun-sen shows a horizontal movement forming a “Dead Cross”.
The MACD indicator is in a negative territory. The price is decreasing.
Trading recommendations
We suppose the pair will go to 1.1050 first. Having overcome the first target the price might go downwards to 1.0925.
Pound
General overview
The United Kingdom published the inflation report for January: Consumer price index came in at 0.8% m/m and 0.3% y/y. Producer Price Index was published as well. The index showed -0.7% m/m and -1.0% y/y.
The oil market kept showing decrease which played into the bears’ hand.
The price is finding the first support at 1.4240, the next one is at 1.4160. The price is finding the first resistance at 1.4320, the next one is at 1.4400.
There is a confirmed and a strong sell signal. The price is under the Ichimoku Cloud and it is under the Chinkou Span. The Tenkan-sen and the Kijun-sen show a downward movement forming a “Dead Cross”. The downward movement will be until the price is under the Cloud.
The MACD indicator is in a negative territory. The price is decreasing.
Trading recommendations
We expect the 1.4240 line break that will open the way for the sellers to 1.4160.
Yen
General overview
The strong yen reduced the products competitiveness in foreign markets. The products competitiveness is what the Japanese industry needs most of all now. We believe we can still get a new batch of verbal intervention until the end of the month, which will make bears close short positions. The short positions closure shall contribute to the quotations growth.
The first support resides at 113.80, the next is at 113.00. The first resistance stands at 114.60, the next one is at 115.40.
There is a confirmed and a strong sell signal. The price is under the Ichimoku Cloud and it is under the Chinkou Span. The Tenkan-sen and the Kijun-sen show a horizontal movement forming a “Golden Cross”. The downward movement will be until the price is under the Cloud.
The MACD indicator is in a neutral territory. The price is consolidating.
Trading recommendations
The buyers need to break above 114.60 for a steady growth. The way to the mark 115.40 will be opened after this breakthrough.
*Analytical review is presented by the leading analyst of the broker Fort Financial Services, Alexander Kofman
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