Upside hopes for the GBP?
The British monthly GDP is announced on Friday at 09:00 MT time.
USD drops ahead of Fed meeting
Fundamentals
- The US dollar keeps dipping further, while riskier assets are rising as investors await the FOMC meeting at 21:00 MT time. Most analysts expect that the central bank will increase its bond-buying program, which will push the USD down. On the flip side, the Fed may keep the status quo as the vaccine distribution has already started.
- The GBP surged without any progress in the Brexit deal. The EU-UK sides keep negotiating, that’s why there are still hopes that the agreement can be done soon.
- Gold has broken through $1 850 and keeps edging higher as the Fed is expected to ease policy, which in turn will lead to the weaker US dollar.
- The day will be full of economic releases! The most important releases are the EU PMI at 11:00 MT time, the UK PMI half an hour later, then US core retail sales at 15:30 MT time, and the US PMI at 16:45, and finally the last FOMC meeting this year at 21:00 MT time.
- How to trade PMI and retail sales? Compare actual numbers and forecasts. If actual numbers are better than forecasts, a currency will rise. If worse – a currency will drop.
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Technical tips
EUR/USD
EUR/USD approaches the key resistance of 1.2170. It’s unlikely to cross it by the first attempt as it has failed to cross it several times. That’s why we can expect the price to pull back rather than break out. If it manages to break this level through, the way up to the next round number of 1.2200 will be clear. Support levels are at the 50-period moving average of 1.2130 and at the low of December 11 at 1.2110.
GBP/USD
The pound is rising due to the weak USD. If it manages to break the key psychological mark of 1.3500, the doors towards the high of December 4 at 1.3545 will be open. On the flip side, if GBP/USD dips below the support of 1.3400, the way down to the next one of 1.3300 will be clear.
Gold
XAU/USD gets closer to the 50-day moving average of $1 870. The price will struggle to cross it, so we can await a retracement. If it breaks this level finally, gold may jump to the next resistance of $1 890. Support levels are at yesterday’s low of $1 825 and the 200-day moving average of $1 810.
USD/CAD
USD/CAD is moving in a descending channel. If it crosses the support at yesterday’s low of 1.2700, the way down to the next round number of 1.2650 will be clear. Resistance levels are at the 50-period moving average of 1.2775 and 1.2820.
Similar
Strong USD on Tuesday
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
Will the USD grow with the US labor market?
The US unemployment claims are out on Thursday at 15:30 MT time.
Latest news
ECB report is in focus
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Markets await Biden to unveil "trillions dollars"
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
USD came under selling pressure
The US dollar’s weakness offered a boost to emerging-market currencies and oil.
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