All eyes are turning to the Federal Reserve and the US dollar. How to trade XAU/USD, EUR/USD, and GBP/USD?
Main currency pairs: closing the week
Friday rolls in, closing the first market week of the year 2020. Below, we briefly go through the opportunities this day offers for some key currency pairs in view of important events of the previous and coming days.
USD: all set for the NFP
Of course, markets wait for the Non-Farm Payrolls (out at 15:30 MT time). The overall situation for the US dollar looks positive for various reasons. First, the fears of the conflict escalation with Iran have subsided, losing the focus of the audience and letting the risk appetite get back from safe-havens. Second, the US-China deal is on the way, with the Chinese officials planned to visit Washington DC next week and finally sign the deal on January 15. Third, the recent economic indicators released by the US authorities give a good impression, not to mention surprisingly strong data on the previous NFP.
Hence, let’s see if USD manages to break some of the local barriers after the obstacles get removed from its way up. Against the JPY, 109.70 has been the resistance level capping the bullish moods since May 2019. Last, two months show that the currency pair has been testing this line again and again. Will today be the breakthrough?
Against the EUR, the price is testing the support of the 200-period Moving Average. Also, that is where the bottom line of the December uptrend is located – EUR/USD went into consolidation there at 1.1106. Will this trend be broken as well, leading to the reversal upwards? Let’s see what the NFP brings.
EUR/GBP: dotting the “I’s” for Brexit
The future is finally decided. Boris Johnson’s EU Withdrawal Agreement has been approved in the House of Commons and passed to the House of Lords. 31Jan confirming the end of the relationship is now merely a formality. Now, all eyes will be on the course of negotiations between the UK and the EU. The European Commission President Ursula von der Leyen said it will be almost impossible to have all the points negotiated until the end of 2020, so the fears of a bad Brexit are amassing. On the other side, the Eurozone’s own economic indicators are not that good, although there are signing of the European economy picking up the pace. That’s why we see EUR/GBP struggling to decide where to go, right in the crossing area of the Moving Averages at the level of 0.8500. Which direction it will choose? So far, the table is tilted towards the EUR more.
AUD: lands on fire, currency rising
Against all odds, the AUD is rising. While the bushfires keep damaging the Australian economy and the rumors of the RBA going dovish in February are voiced out among the observers, the AUD/NZD grows to 1.038 to test the 50-period Moving Average. If that resistance is broken and the currency manages to climb above 1.0400 to challenge the 100-MA, it will move into the upper part of the downtrend prevailing during the last month and possibly challenging it later on.
The main bank of Russian will likely turn hawkish today. Time to sell USD/RUB?
Great Britain will publish its trade balance for April on June 11, at 09:00 MT time.
Bitcoin has broken above $41,000 for the first time since late May. Follow US Retail Sales at 15:30 MT time!
The United States will release retail sales and producer inflation (PPI index) numbers at 15:30 MT time on June 15.
Gold has plunged amid the stronger US dollar as investors await the Fed’s meeting this week.