FORECAST: USD

The recovery of the US dollar earlier this year paused, with other major currencies appreciating against the USD. Economic growth remains weak in developed economies, although inflationary pressures have increased in Europe and the USA.

In the US, January retail sales pointed to a strong recovery in consumer spending. Headline reading jumped 5.3%, while retail sales stood at 5.9%. The projection for both disclosures is 1.1%. The FOMC minutes reiterated a dovish message from the Fed, which signaled that there are no plans to lower QE anytime soon. Services and manufacturing remain in expansionist territory, with January PMIs reaching 58.5 and 58.9, respectively.

EURUSD: FORECAST

Euro falls below 1.21 at the end of the week

EURUSD fell sharply on Friday and recorded a missed week. There are seven events on the calendar this week, including PMIs and Eurozone information. Here is a perspective on the highlights and an updated technical analysis for EURUSD.

EURUSD daily chart with support and resistance lines.

EURUSD Technical Analysis

Technical lines from top to bottom:

We started with resistance at 1.2331 (mentioned last week).

1.2251 has remained in resistance since the first week of January.

1.2170 is an important monthly resistance line.

1.2037 is the first level of support. It’s a weak line.

1.1957 has been in support since the first week of February.

1.1850 is the final support line for now.

.I remain neutral in EURUSD

PS: The US dollar showed strong gains last week, but this could be the end of a tightening of the dollar. At the same time, the US economy continues to show stronger numbers than in the euro zone.

GBPUSD: FORECAST

GBPUSD had its first week of losses in almost two months, with the US dollar recovering. The next week will have five launches, including PMIs. Here is an overview of the highlights and an updated technical analysis for GBPUSD.

UK employment figures were stronger than expected. Unemployment fell by 20,000, the first drop in three months. Salary growth continues to accelerate and reached 4.7% in December, compared to 4.1%. The unemployment rate remained unchanged at 5.1%. At a parliamentary hearing, BoE lawmakers said they did not expect inflation to exceed the bank’s 2% inflation target

GBPUSD daily chart with support and resistance lines.

Technical lines from top to bottom:

We started with resistance at 1.4290.

1,4163 has been held since April 2018.

1.4084 is next.

1.3917 is an immediate support level.

1.3808 is protecting the round number of 1.3800.

1.3687 (mentioned last week) is the final support level for now.

I remain optimistic on GBPUSD

PS: The launch of the vaccine in the UK has been a success story and the government has implemented a timetable to lift health restrictions, which will improve economic conditions. In the United States, the Biden stimulus package, which is on its way to the Senate, is likely to weigh on the dollar when it is approved.

USDJPY: FORECAST

USDJPY showed little movement for the second consecutive week, with the pair closing the week slightly above the 104 level. Next week, we will take a look at consumer data, with the disclosure of the average cash earnings and household expenses, as well as the GDP.

Fundamental engine of USDJPY

Japan’s figures were mixed last week. Industrial production registered a strong increase of 3.8%, above expectations. Retail sales rebounded with a sharp 6.4% gain, ending an unpleasant series of seven successive declines. However, capital expenditures fell 10.6%, after an earlier drop of 11.3%.

USDJPY Daily Chart

Technical lines from top to bottom:

107.02 (mentioned last week) is an important monthly resistance line.

105.84 is next.

104.94 switched to a resistance role in mid-November, with the yen registering a sharp rise.

104.11 is an immediate support line.

103.28 is next.

102.13 has provided support since March.

101.52 has been taking place since March.

99.98 is the final support line for now.

I’m Pessimistic in USDJPY

PS: The dollar is retreating against many of the major currencies, but has not lost much against the yen, as investors’ risk appetite has been strong, at the expense of the safe haven dollar and yen.

AUDUSD: FORECAST

AUDUSD rose for the fourth consecutive week and rose above the 0.74 level. The next week has five events. Here is a perspective for the highlights and an updated technical analysis for AUDUSD.

The RBA conducted the course at its policy meeting, as policymakers kept interest rates at the ultra low level of 0.10%. GDP grew by 3.3% in the third quarter, exceeding the consensus of 2.5%. Retail sales recorded a solid gain of 1.4%, well above the estimate of 0.5%.

AUDUSD daily chart with support and resistance lines.

AUDUSD Technical Analysis

Technical lines from top to bottom:

We started with resistance at the round number of 0.7700.

0.7595 is next.

0.7421 is an immediate resistance line.

0.7332 is next.

0.7242 (mentioned last week) strengthened in support.

0.7105 is next.

0.7008 is protecting the symbolic level of 0.7000. It is the final level of support for now.

I’m optimistic about AUD / USD

PS: The US dollar shows no signs of recovery, although profit making remains a possibility. Investor sentiment towards cyclical currencies like the Aussie remains positive.

USDCAD: FORECAST

The Canadian dollar recorded sharp losses at the end of the week and the USDCAD rose close to 1 percent for the week. There are four events next week, including GDP. Here is an overview of the highlights and an updated technical analysis for USDCAD.

Canada’s data calendar was clear last week. Corporate earnings registered a second consecutive gain, 7.9%. On the information side, the Raw Material Price Index rose 5.7%, above expectations and its biggest gain since January.

USDCAD daily chart with resistance and support lines.

Technical lines from top to bottom:

We started at 1.3041, an important monthly resistance line.

1.2911 was last tested for resistance in mid-December.

1.2804 is next.

1.2710 is an immediate support level.

1.2620 is protecting the round number of 1.2600.

1.2459 (mentioned last week) has been in support since February 2018.

1.2329 is the final support level for now.

I am neutral in USDCAD

PS: The US dollar showed some broad strength last week and the US figures are pointing to a strengthening of the economy. However, it is questionable whether that momentum will continue, since the approval of the Biden stimulus was approved in the House and now goes to the Senate. Once the deal is approved, the US dollar may be under downward pressure.

If you want to follow my trades Click Here.

Make sure that FX trading suits your risk profile.


CODEX TEAM