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Tuesday, January 16th
The EUR/USD pair was consolidating its positions during Asia in the region of its 3-year highs, marked at 1.2297 spot on Monday, in wake of minor attempts of the US dollar to recover its positions across the market. The latest downside rally of the US dollar could be mainly explained by recent market trend, based on speculations regarding potential convergence between monetary policies of the Fed and major central banks. Adding to this, seems that the market is still digesting potential change of forward guidance, which was mentioned in the ECB minutes last week, that supports the euro across the market lately. Looking ahead, today the economic calendar won’t offer investors anything important, leaving the pair at the mercy of broad market trend during this trading session.
The GBP/USD pair came out of its consolidative pattern to the downside at the beginning of European session, as several bearish factors are exerting pressure on the pair, thus limiting its chances on further gains. The main reason of pair’s decline is attempts of the US dollar to recover its positions, as the greenback remains in oversold conditions. Moreover, market concerns regarding soft Brexit are also weighing on the UK currency lately that is also limiting pair’s further gains. And finally, shrinking risk appetite, especially in anticipation of the UK inflation data, exerts additional pressure on higher-yielding pound on Tuesday. Besides the UK CPI report, the economic calendar won’t bring us anything important, so broad market trend and US dollar price dynamics will remain the key driving factors during the NA session.
The USD/JPY pair has finally broken out of its 6-day streak of losses, having bounced of its 4-month lows, marked at 110.33 a day before. Recent recovery of the pair is mainly explained by technical correction of the US dollar across the market after its massive drawdown. However, it seems that further upside lacks of momentum, as shrinking divergence between the Fed and major central banks, including the BoJ, is still weighing the US dollar. In the day ahead, we will have another data quiet session, as the US economic calendar won’t be able to offer investors anything noteworthy, so the US dollar price dynamics will remain as a sole driving factor for the pair this Tuesday.
Bitcoin still loses points, forcing the BTC/USD pair to retreat below the level of 12,000 this Tuesday. Recent weakness of the cryptocurrency is mainly attributed to ongoing intentions of the Asian authorities to regulate cryptomarket. According to latest headlines, China is going to tighten measures aimed at limiting the mining of cryptocurrencies on its territory. The reason for this decision is explained by the fact that too much electricity is spent on the mining of digital currencies, and the cryptomarket itself contains risks for the financial system. Adding to this, ambiguous news from S.Korea is also putting some pressure on digital assets. According to the latest news, S.Korean authorities will decide on cryptocurrency exchange shut down after sufficient consultation. However, by the recent statement of S.Korea’s FinMin the ban on trading cryptocurrencies is still an option. By the moment of writing, the BTC/USD pair was trading at 11,380.00 level, stepping away from its intraday highs, located at 13,885.00 spot.
Major events of the day:
UK CPI – 11.30 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.2140 R. 1.2358
USDJPY S. 109.82 R. 111.54
GBPUSD S. 1.3681 R. 1.3873
USDCHF S. 0.9556 R. 0.9720
AUDUSD S. 0.7868 R. 0.8026
NZDUSD S. 0.7198 R. 0.7364
USDCAD S. 1.2365 R. 1.2503
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