We're off to a quiet market start this week, after a week in which US Dollar was mostly sold on Fed policy decision and out 2019 outlooks. Most likely USD dollar will be in market spotlight this week as well. Throughout the week, all China exchanges will be closed amid New Year celebration according to the eastern calendar. This will probably have some impact on market volatility. On Monday, there are practically no important economic publications in the economic calendar. Markets will keep on playing out the recent Non-Farm data. In the middle of the week US President speech in congress will catch market attention.
On Friday EUR/USD market closed the trading day and trading week above the mark 1.1430-1.1440. We believe that this is a typo of positive sign for Euro. However the risks for EUR/USD correction intensify this week. The closest strategical line of bull defense is located around 1.1395 and the corrective pullback may head directly into this area. We will follow the development on this market as for the beginning of the week as there are equal chances for either scenarios- upward move or adjustments. In the middle term European currency retain the positive outlook (at least for technical analysis) but in the short term we expect a correction and it is better to look for entry points around 1.1405-1.1395.
Trading recommendations – longs around 1.1405-1.1395
It’s a quite interesting situation we have now in the market of GBP/USD. The last week turned out to be corrective for GBP but no strong decline was detected. The market stayed above the first support 1.3050-1.3060. USD dollar weakness supported British pound. Looks like this zone is extremely strong area of support (1.3000-1.3050). The current week might be corrective for USD dollar as USD dollar index displays some growth but generally we retain middle term negative outlook for USD dollar.
Trading recommendations – careful longs in area 1.3000-1.3050
Finally gold market moved to the expected adjustment, players took profits on Friday, and strong data on the American labor market strengthened the correction sentiment, supporting the dollar. At the same time, the discussed correction is developing under the complete control of buyers, this only confirms the current uptrend, the strength of buyers and goals in the region of $ 1,350- $ 1,360. In such conditions, we are looking for entry points to open longs, but to rush in the current situation is dangerous. The market may well test stops centered under the 1300 mark. Local support starts around 1310 and down to further strategic zone 1300.
Trading recommendations- longs in the area of 1310-1306
US dollar index
USD dollar index shows a moderate correctional growth. Over the past three days, the dollar index has shifted from the level of 94.88 to the area of 95.40 points. In this area of the market 95.50 points, the Fibonacci expansion 23.6% is located. This is a strong technical zone, and as long as the market is trading under this mark, there are high chances for a medium-term weakening of the US dollar. However, positive news of trade negotiations in the short term can support the dollar, but in the medium term we maintain negative expectations on the dollar index.