The USD seems to steady and nudge up a bit as global growth worries increase after the release of a disappointing NFP figure on Friday. The NFP figure came out at 20k far lower than what was expected (180k), yet a drop in unemployment and an acceleration in average earnings softened the blow for the USD considerably on Friday. Analysts point out that worries regarding global growth seem to keep the other currencies under pressure making the USD relatively stronger. The USD may be sensitive the release of the US retail sales for January later today. Please be advised that Fed Chair Jerome Powell stated that we might see a rebound in retail sales for January and should the actual rate accelerate more than expected, we could see the USD strengthening. EUR/USD rose on Friday, breaking the 1.1215 (S1) resistance line (now turned to support) and stabilized above it during today’s Asian session. We could see the pair maintaining a sideways motion, yet some bearish tendencies could be present should the release of the US retail sales growth rate outperform expectations. Should the pair find fresh buying orders along its path, we could see it breaking the 1.1260 (R1) resistance line and aim for the 1.1300 (R2) resistance hurdle. Should on the other hand the pair come under the selling interest of the market, we could see it breaking the 1.1215 (S1) support line and aim for the 1.1165 (S2) support barrier.
GBP weakens as Brexit impasse continues to loom.
The pound weakened against the USD yesterday and opened with a negative gap during today’s Asian session as Brexit worries grew. The pound started to weaken on Friday as Theresa May was calling for a last push to break the Brexit deadlock, yet her EU counterparts did not give in. Sterling came under renewed pressure today, as UK foreign minister Jeremy Hunt said on Sunday that Brexit could be reversed if the UK parliament rejects Theresa May’s Brexit deal. Analysts point out that speculators are taking short positions for the pound in expectation of the Brexit outcome, which could keep GBP under pressure. Cable tumbled on Friday breaking the 1.3070 (R2) support line (now turned to resistance) and opened with a negative gap during today’s Asian session, breaking also the 1.2990 (R1) support line (now turned to resistance). We could see the pair remaining under pressure today, yet it should be noted that the pair’s RSI indicator in the 4 hour chart is below the reading of 30, implying a rather overcrowded short position for the pair. Should the bears continue to dictate the pair’s direction we could see cable aiming if not breaking the 1.2900 (S1) support line. On the flip side, should the bulls take over, we could see the pair breaking the 1.2990 (R1) resistance line and aim for the 1.3070 resistance level.
Today’s other economic highlights
In today’s European session we get Germany’s industrial output growth rate for January. In the American session we get the US retail sales growth rates also for January, while in tomorrow’s Asian session, we get Australia’s NAB Business Survey for January.
As for the week ahead:
On Tuesday, from the UK we get the GDP and Manufacturing Output for January, while the parliament votes on Brexit and from the US the CPI rate for February. On Wednesday, from Japan we get the corporate goods prices for February and the machinery orders for January, from the Eurozone the industrial production for January, from the US the Durable goods order for January and the PPI rate for February and the UK parliament may have another vote on Brexit. On Thursday, we get China’s industrial output for January and the UK Parliament may have another vote on Brexit. On Friday, we get form Japan BoJ’s interest rate decision, Eurozone’s final HICP rate for February and from the US the industrial production for February and the preliminary Michigan Consumer Sentiment for March.
GBP/USD
Support: 1.2900 (S1), 1.2830 (S2), 1.2755 (S3)
Resistance: 1.2990 (R1), 1.2830 (R2), 1.2755 (R3)
EUR/USD H4
Support: 1.1215 (S1), 1.1165 (S2), 1.1125 (S3)
Resistance: 1.1260 (R1), 1.1300 (R2), 1.1340 (R3)
