Last week's currency trading review

The Dollar struggled against a Euro led market with most pairs gaining on the major. Economic data is strong from the US lately but this not always translating to USD strength with stock markets the key director. Weekly Jobless Claims dropped to 404k vs. 441k previously. December Existing Home Sales are forecast 5.28m vs. 4.7m previously. The Euro pushed higher above 1.35000 for fresh multi-month highs on improving sentiment and confidence in the ECB. EUR/JPY and EUR/GBP continued to rally making the single currency the strongest in the market for the second week running. January German Zew Economic Sentiment jumped to 15.4 vs. 4.3 previously. The EUR/USD gained +1.71% closing at 1.3620, after opening the week at 1.3387.

The Japanese Yen remained range-bound against the Dollar but lost ground elsewhere on stock market rallies and investor demand for high yielding currencies. Strong US data has helped the USD/JPY on dips but the general USD weakness throughout normal trading is making the pair feel heavy. The USD/JPY fell -0.36% closing at 82.55, after opening at 82.85. The GBP spent most of the week at 1.6000 with very hot CPI data putting BOE interest rate expectations back on the radar. Persistently high inflation could lead to the Bank of England having to raise rates early. December CPI at 3.7% vs. 3.3% y/y previously. The GBP/USD gained +0.81% closing at 1.5997 after opening at 1.5867. The AUD was very mixed coming under heavy selling pressure due to weakness in crosses, especially in the EUR/AUD which continued to unwind from months of selling. Sentiment towards the commodity currency has turned neutral in recent weeks as traders reevaluate how much the RBA would have to raise rates this year post QLD floods. The AUD/USD gained 0.11% closing at 0.9896 after opening at 0.9885.

The Forex Trading Week Preview

In the States; On Tuesday, Jan Consumer Confidence forecast at 54.2 vs. 52.5 previously. On Wednesday, FOMC Meeting forecast to remain at 0.25%. Also released, December New Home Sales are forecast at 3.5% vs. 5.5%. On Thursday, Weekly Jobless Claims forecast at 409k vs. 404k previously. On Friday, Q4 GDP forecast at 3.5% vs. 2.6% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Thursday, January German CPI is forecast at 2.0%y.y. Also released, January Consumer Confidence previously at -11.4. In the UK, On Tuesday, Q4 GDP is forecast at 0.5% vs. 0.7% previously q/q. On Tuesday, BOE Minutes released. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, BOJ Target Rate forecast at 0.1%. On Friday, December Core CPI forecast at -0.8% vs. -0.9%.  In Australia; On Tuesday, Q4 CPI is forecast at 0.8% vs. 0.7% previously. On Thursday, RBNZ forecast to remain at 3.0%. We will provide our previews and reviews of these data releases in the daily summary.



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3449

1.3541

1.3645

1.3741

1.3786

USD/JPY

81.61

81.89

82.60

83.15

84.11

GBP/USD

1.5719

1.5878

1.5980

1.6038

1.6184

AUD/USD

0.9753

0.9804

0.9975

1.0009

1.0077

XAU/USD

1325.00

1329

1338

1353

1371

OIL/USD

85.00

87.00

87.60

89.00

90.00





Euro - 1.3645

Initial support at 1.3541 (Jan 24 low) followed by 1.3449 (Jan 21 low). Initial resistance is now located at 1.3741 (61.8% retrace of 1.4282-1.2867) followed by 1.3786 (Nov 22 high)



Yen - 82.60

Initial support is located at 81.89 (Jan 5 low) followed by 81.61 (Jan 4 low). Initial resistance is now at 83.15 (Jan 13 high) followed by 84.11 (Dec 20 high).

Pound - 1.5980

Initial support at 1.5878 (Jan 18 Low) followed by 1.5719 (Jan 13 low). Initial resistance is now at 1.6038 (Jan 19 high) followed by 1.6184 (Dec 12 High).

Australian Dollar - 0.9975

Initial support at 0.9804 (Jan 12 low) followed by the 0.9753 (Dec 8 low). Initial resistance is now at 1.0009 (Jan 20 High) followed by 1.0077 (Jan 19 high).

Gold - 1338

Initial support at 1329 (Nov 16 low) followed by 1325 (Nov 3 low). Initial resistance is now at 1353 (Jan 24 high) followed by 1371 (Jan 20 high).



Oil - 87.60

Initial support at 87.00 (Intraday Support) followed by 85.00 (Intraday Support). Initial resistance is now at 88.00 (Intraday Resistance) followed by 90.00 (Intraday Resistance).





Written by Anthony Darvall