The Cable is in a clear downtrend and, in the early hours of today, prices gravitate around the local support of 1.3360. Due to the shrinking activity, a corrective wave with a target of around 1.3500 can be expected. The first daily resistance for the pair is 1.3427. The current expectations are for new declines and a breach of 1.3360 would pave the road towards 1.3200. A change in sentiment can only be expected if prices stay above 1.3550.
The Cable is currently found in a consolidation phase between 1.3400 and 1.3500. At the time of writing, the pair is headed towards a test of the lower border of the range. In case it is violated, then the pair is expected to test the support level at 1.3350. In the positive direction, the upper border of the range is acting as a resistance for the Cable. Today, increased activity can be expected around the release of the manufacturing PMI and services PMI data for the U.K. (09:30 GMT).
NZDUSD fixing long positions is a catalyst for a price correction
NZDUSD fixing long positions is a catalyst for a price correction. After reaching the main selling target in the area of 0.6540, NZD/USD is reversing into a correction with the target of 0.6700 against the background of the weakening of the US dollar, which is falling from the high of 97.430 in the USD Index, reached last Friday, to the levels of 96.500-96.300 today. The negative trend is due to weak macroeconomic statistics published in the US on January 28.
Michigan Consumer Expectations Index in January turned out to be lower than preliminary estimates, amounting to 64.1 points against the projected 65.8 points. Michigan Consumer Sentiment Index for January also disappointed investors and amounted to 67.2 points against the forecast at 68.7 points. The release of negative statistics probably pushed US dollar buyers to fix long positions, which caused a correction in the markets. Traders should keep in mind that in March the US Fed may adjust the interest rate from 0.25% to 0.50%, which, in turn, can push the USD Index to new highs around 98.600-98.400.
Due to the difference in the monetary policy of the Reserve Bank of New Zealand and the US Federal Reserve, NZD/USD is likely to fall again with the target of 0.6400 after the correction.
Support and resistance
The long-term trend in NZD/USD is downward. Now a correction is being developed with the target of 0.6700, after reaching which it is worth considering new sales of the asset with the target at 0.6540, and in the case of breaking it down, the movement will continue to 0.6400. Traders should pay attention to the readings of the RSI indicator, which has generated a Divergence signal, which is a reversal pattern that suggests the development of a correction to a downtrend.
The mid-term trend is downward. Last week, traders broke through the target zone 3 (0.6648–0.6629). The next sell target is target zone 4 (0.6458–0.6439).
Daily technical analysis. The sentiment remained unchanged and, during the early hours of today`s trading, the currency pair continued to trade close to the support zone at 1.1359. If the bears gain enough momentum and manage to breach the mentioned zone, then a test of the next target at 1.1236 would be the most probable scenario and would strengthen the negative expectations for the future path of the EUR/USD.
However, if the bearish pressure fades and the bulls prevail, then they will most likely test the resistance zone at 1.1359. А successful violation of the aforementioned level could easily lead to a rally towards the levels from November 2021 – more specifically, the zone at around 1.1440. Event-wise, today volatility can be expected to pick up after the announcement of the ADP non-farm employment change for the U.S. (13:15 GMT) and the release of the FOMC meeting minutes (20:00 GMT).
GBPUSD the US dollar went down. The GBP/USD pair moves within an uptrend around 1.3588 amid a statement by British Prime Minister Boris Johnson about a possible reduction in the quarantine period from seven to five days.
According to the official, the UK showed success in the fight against the Omicron strain, but the hospitalization rate is still unacceptably growing. The government announced that people could come out of quarantine three days earlier if they test negative for coronavirus twice. The reluctance of the authorities to introduce a new lockdown and tighten the existing quarantine measures instills optimism in investors. Macroeconomic statistics for December were also positive. Following the manufacturing sector, Construction PMI was also better than expected, reaching 54.3 points against the expected 54.0 points. British Retail Consortium (BRC) retail sales rose by 0.6% YoY with an expected 0.3% growth.
USD Index began to decline slightly after staying above 96.000 for the holiday weekend and is now at 95.800. Investors react to the recent poor labor market data, assessing the prospects for a change in the course of the US Federal Reserve’s monetary policy in early spring. This week, consumer prices data will be released, and inflation will intensify. According to analysts’ forecasts, it may exceed 7% YoY, which has not happened for more than forty years.
Support and resistance
The asset moves within the global downtrend channel, preparing to overcome the resistance line. Technical indicators keep a global buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram forms upward bars in the buy zone.
XAUUSD investor interest in gold rises again. The precious metal is correcting upward but is still below the psychological level of 1800.00, trading around $1793 an ounce. The news of detecting a new strain of coronavirus in South Africa has made serious adjustments to the dynamics of prices in world markets. Air carrier stocks plummeted on the back of statements from the EU, UK, and India about tightening border controls and restricting flights to South Africa.
The number of new speculative positions in gold increased for seven weeks in a row, and from 168.4K reached the January levels of 259.8K. The weekly report on changes in investor positions by the Commodity Futures Trading Commission (CFTC) will publish tonight, but the week will be the eighth consecutive week of growth.
When oil is sharply declining, and the USD Index is unstable, gold remains the only protective asset with sufficient capacity, and this week will show how much investors are ready to trust it. Of course, there are still expectations regarding the tightening of monetary policy from the US Federal Reserve, but in the current conditions of uncertainty, the regulator may take a break, which will also benefit the instrument’s quotes.
Support and resistance
The price has returned to a sideways channel on the global chart, below $1800 per ounce. After last week’s decline, technical indicators are uncertain: the fast alligator EMAs move close to the signal line, and the AO oscillator histogram forms downward bars near the transition level.
The bulls failed to gain enough momentum and the upward move was limited at the 1.1668 resistance zone. At the time of writing, the currency pair is just above the support level of 1.1623, and this time, the bears could gain enough strength for a successful breach of that level. An unsuccessful breach, on the other hand, could form a short-term range between 1.1632 – 1.1668. Today, the data on the preliminary manufacturing PMI for the euro area (08:00 GMT) could affect the volatility of the market.
