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Good data on the labor market did not help the euro



Good data on industrial production in Germany, as well as on the labor market in the euro area, did not provide the expected support to the European currency, which continued to decline in Tuesday's trading against the US dollar. The single currency was affected by discussions related to the increased likelihood of verbal intervention from the European Central Bank.



Let me remind you that yesterday there were rumors that the ECB could opt for an intervention in order to weaken the current high rate of the European currency, thus preventing the fall in economic growth rates and the decline in the trade surplus due to the appreciation of exports.



In the first half of the day, data showed that industrial production in Germany in November 2017 increased by 3.4% compared with October, significantly exceeding the forecasts of economists. Compared to the same period in 2016, production increased by 5.6%. Economists had expected that in November 2017 industrial production in Germany would grow by only 1.9%.



Production in the manufacturing industry of Germany in November increased by 4.3%, and in construction by 1.5%.



As expected, in 2017 the labor market in the euro area continued to strengthen.



According to the report of the statistics agency, the unemployment rate in the euro area in November 2017 decreased and amounted to 8.7% against 8.8% in October. The increase was 107,000 jobs.







Regardless, some experts believe that an overly early winding up of the bond repurchase program by the European Central Bank could negatively affect the main factors that positively affect the euro area economy, which will lead to a slowdown in the decline in the unemployment rate. However, this forecast does not affect the first half of 2018, as, according to the results of the December survey of manufacturing companies, it is expected to increase the rate of hiring of labor.



On Tuesday, it was also announced that France's trade deficit in November increased. This happened due to the reduction of energy exports and transport equipment.



Thus, according to the report of the French government, the foreign trade deficit in November 2017 amounted to 5.7 billion euros against 5.3 billion euros in October. The current account deficit in the balance of payments in November was 3.3 billion euros against 2.6 billion euros in October.



The British pound also continued to decline against the US dollar after the release of data from the British Retail Consortium. Thus, retail sales excluding volatile categories of goods in the 4th quarter of last year decreased by 1.9%, compared to the same period in 2016, the fall was 1.4%.



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[IFX Yvonne]

Technical analysis of EUR/USD for Jan 11, 2018



When the European market opens, some economic data will be released such as Industrial Production m/m and Italian Retail Sales m/m. The US will present a series of economic reports such as Federal Budget Balance, 30-y Bond Auction, Unemployment Claims, Core PPI m/m, and PPI m/m. So amid the reports, EUR/USD will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVELS:
Breakout BUY Level: 1.2020.
Strong Resistance:1.2013.
Original Resistance: 1.2001.
Inner Sell Area: 1.1989.
Target Inner Area: 1.1961.
Inner Buy Area: 1.1933.
Original Support: 1.1921.
Strong Support: 1.1909.
Breakout SELL Level: 1.1902.

Disclaimer: Trading Forex (foreign exchange) on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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Protocols of the ECB helped the euro







The euro did not receive serious support from investors after the release of good data on industrial production in the euro area. However, the publication of the minutes from the December meeting of the European Central Bank forced traders to change their view of risky assets.



In the first half of the day, it became known that Germany's economy in 2017 grew at a slower pace than expected. According to the report of the Federal Bureau of Statistics of Germany, Germany's gross domestic product grew by 2.2% last year. Despite this, economists expected a more serious growth rate in the region of 2.3%. The surplus of the country's budget in 2017 amounted to 1.2% of GDP.



Given the economic indicators demonstrated by Germany in 2017, it is not surprising that this country is the basis of the eurozone and the European Union as a whole. However, given the difficulties now faced by German Chancellor Angela Merkel in her post, it can be assumed that it is political problems that indirectly affect the main financial indicators in early 2018.



As I noted above, the industrial production of the eurozone completes the year with an excellent upward trend. According to the report of the EU statistical agency Eurostat, industrial production in November 2017 increased by 1.0% compared to the previous month and by 3.2% compared to the same period of the previous year. Economists predicted that growth will be at 0.6% compared to the previous month and 2.9% compared to the same period of the previous year.



The publication of the minutes of the meeting of the European Central Bank provided substantial support to the euro, as many investors found in them a hint of a possible curtailment of the asset repurchase program by the Central Bank this fall.



The minutes indicate that the ECB can change its attitude to the credit policy in case the state of the economy continues to improve in 2018. The leaders also agreed that the policy should change gradually so as not to affect the recovery of the euro area economy.



Weak data on the US labor market exerted even more pressure on the US dollar. According to the report of the US Department of Labor, the number of initial applications for unemployment benefits for the week of December 31 to January 6 increased by 11,000 and amounted to 261,000. Economists had expected the number of applications to be 245,000.



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Elliott wave analysis of EUR/JPY for January 15, 2018







Wave summary:

The corrective rally from 133.09 spikes just above our upper target at 135.25 and should now be ready to turn lower again for a decline towards 131.11 before another corrective rally is expected towards 134.10.



Short-term a break below minor support at 134.79 will be a strong indicator that the corrective rally from 133.09 has completed and the expected decline to 131.11 has begun.



R3: 136.64

R2: 136.05

R1: 135.66

Pivot: 134.79

S1: 134.25

S2: 133.65

S3: 133.09



Trading recommendation:

We sold EUR at 134.74. We will place our stop at 136.75, but expect to move it lower soon. Upon a break below 134.79, we will move the stop lower to 135.75.



Analysis are provided byInstaForex.

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Elliott wave analysis of EUR/JPY for January 16, 2018







Wave summary:

We continue to regard the rally from 133.01 as corrective and is looking for a break below minor support at 135.36 and more importantly a break below support at 135.00 as confirmation that this correction has completed and a new decline 131.11 is developing.



At no point should a break above 136.64 be seen under this count.

R3: 137.37

R2: 136.64

R1: 136.32

Pivot: 135.36

S1: 135.00

S2: 134.80

S3: 134.35



Trading recommendation:

We are short EUR from 134.75 with our stop placed at 136.75. Upon a break below 135.00 we will lower our stop to 136.15.



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Technical analysis of USD/JPY for Jan 17, 2018







In Asia, Japan will release the Core Machinery Orders m/m data, and the US will release some Economic Data such as TIC Long-Term Purchases, Beige Book, NAHB Housing Market Index, Industrial Production m/m, and Capacity Utilization Rate. So, there is a probability the USD/JPY will move with a low to medium volatility during this day.



TODAY'S TECHNICAL LEVEL:

Resistance. 3: 110.97.

Resistance. 2: 110.76.

Resistance. 1: 110.54.

Support. 1: 110.27.

Support. 2: 110.06.

Support. 3: 109.84.



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Four drivers of gold growth



Precious metals became the main beneficiary of the weakness of the US dollar. The impressive growth of the world economy allowed palladium to hit record highs near $1,140 per ounce. From the beginning of the year, platinum added almost 8% and is one of the leaders of the commodity market. Gold managed to break through to the September peaks, and it appears that the bulls are determined to continue the rally. However, the EUR/USD movement stalled near the 1.23 mark against the backdrop of the ECB's "dovish" rhetoric, so it's too early to talk about the final defeat of the dollar.



Dynamics of precious metals and gold







Source: Financial Times.



The fact that the "greenback" is not at ease and does not react to the growing likelihood of the US GDP being dispersed under the influence of tax reform, or to strong macroeconomic data for the United States, is of paramount importance for the XAU/USD. However, it would be wrong to only talk about a single driver of growth.



The rapid rally in Brent and WTI increases the risks of accelerating consumer prices in the US and other countries. At the same time, central banks, including the Fed, prefer a slow normalization of monetary policy. These circumstances pose serious obstacles to the real yield of treasury bonds, which is a "bullish" factor for gold.



Let's not forget about political and geopolitical risks. On January 19, the US government could be temporarily shut down. More than four years ago, this resulted in a serious slowdown in the US GDP. Yes, the Republicans prepared a draft of its interim financing until February 16, but it looks raw and leads to an emergence of new enemies, which creates problems in the Senate voting. In Germany, negotiations between the bloc of Angela Merkel and the Social Democrats are unlikely to be as easy as initially intended. The Berlin wing of the SPD protested against the coalition, and until the party's congress on January 21-22, uncertainty will loom in the markets. Once again, US Secretary of State Rex Tillerson reiterated the threat of North Korea and urged China and Russia to implement sanctions more actively.



Thus, a weak dollar, growing risks of accelerating inflation and a fall in the real yield of US Treasury bonds, political uncertainty in the United States and Germany, as well as the possibility of an escalation of the conflict over North Korea lay a powerful foundation for the continuation of the XAU/USD rally. Positions of "bears" look hopeless, however history shows that the trends often unfolded at a time when the crowd firmly believed in their continuation.



In my opinion, the "bulls" for EUR/USD brought the pair too far. Its long-term prospects appears positive, but it is not yet time to win back the factor of normalization of the monetary policy of the ECB, and the presence of political risks in Germany and Italy raises doubts about the validity of current levels. If the euro goes into a correction, the growth of the USD index will help lower the price of gold.



Technically, reaching a target of 88.6% for the "Shark" pattern enhances the risks of pullback in the direction of 23.6%, 38.2% and 50% of the CD wave. Gold, daily chart







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Technical analysis of EUR/USD for Jan 19, 2018







When the European market opens, some Economic Data will be released such as Current Account and German PPI m/m. The US will release the Economic Data too, such as Prelim UoM Inflation Expectations and Prelim UoM Consumer Sentiment, so, amid the reports, EUR/USD will move in a low to medium volatility during this day.



TODAY'S TECHNICAL LEVEL:

Breakout BUY Level: 1.2420.

Strong Resistance:1.2404.

Original Resistance: 1.2377.

Inner Sell Area: 1.2350.

Target Inner Area: 1.2286.

Inner Buy Area: 1.2222.

Original Support: 1.2195.

Strong Support: 1.2168.

Breakout SELL Level: 1.2152.



Analysis are provided byInstaForex.

[IFX Yvonne]

CAD/JPY testing major support, prepare for a bounce!

The price is testing major support at 88.52 (Horizontal swing low support, bullish price action, bullish harmonic formation) and we expect to see a nice bounce above this level to push the price up to at least 88.87 (Fibonacci retracement, horizontal pullback support) before 89.02 (Fibonacci retracement, horizontal overlap resistance).

Stochastic (55,5,3) is seeing major support above 1% where we expect a corresponding bounce from.

Buy above 88.52. Stop loss at 88.24. Take profit at 88.87 and 89.02.

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The trading plan for the US session is EUR/USD and GBP/USD



EUR/USD

To open long positions for EURUSD, it is required:

Buyers are trying to get ahold of the level of 1.2252, and while the trade is higher, a chance remains for continued growth of the euro with an update of 1.2294 and the main purpose of a test at 1.2342, where I recommend locking in profits. In the event of a decline below the level of 1.2252 in the afternoon, consider new purchases of the euro after a test at the level of 1.2215, or immediately towards a rebound from 1.2169.

To open short positions for EURUSD, it is required:

A return to the level of 1.2252 would be a good signal to increase short positions on the euro for the purpose of a breakdown and consolidation below the support of 1.2215, which opens a direct road to the area of 1.2169, where I recommend locking in profits. In case the euro further grows, it is possible to look for short positions after the formation of a false breakout at 1.2294 or on a rebound from 1.2342.







GBP/USD

To open long positions for GBP/USD, it is required: Buyers are trying to work out a scenario in the morning in order to consolidate above 1.3886, and while the trade is at this level, you can count on continuing an upward trend with an exit towards a resistance of 1.3940. The main target remains in the area of 1.4018. In the event of a return below the level of 1.3886, I recommend that you pay attention to long positions on the pound only after a test at 1.3839.

To open short positions for GBP/USD, it is required:

The return at 1.3886 will signal an opening of short positions for the pound, which will lead to the renewal of daily lows in the area of 1.3839 and will likely reach a new support level of 1.3797, where I recommend locking in the profit. In case of continued growth in the pound during the afternoon, short positions can be considered for a rebound from 1.3940.







Indicator description

Moving Average (average sliding) 50 days - yellow

Moving Average (average sliding) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA Bollinger Bands 20



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[IFX Yvonne]

USD/CHF right on major support, prepare for a bounce

The price is now testing major support at 0.9569 (Fibonacci extension, horizontal swing low support) and we expect a bounce above this level to push the price up to at least 0.9699 resistance (Fibonacci retracement, horizontal pullback resistance).

Stochastic (21,5,3) is seeing major support above 3.7% where a corresponding bounce could occur.
Buy above 0.9569. Stop loss at 0.9501.
Take profit at 0.9699.



*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

[instaforexgertrude]

Pound updates annual highs on the background of the report on the labor market



The euro managed to strengthen against the US dollar in the morning against the backdrop of data indicating the likely retention of the euro zone's economic growth rates earlier this year. However, a serious breakthrough in important levels of resistance has not occurred, indicating a restrained demand for risky assets.



According to the IHS Markit report, Germany's economy continues to show good results in early 2018 due to the growth of activity in the services sector. So, the index of supply managers for the German services sector in January 2018 increased to 57.0 points against 55.8 points in December. Economists, on the contrary, expected a decline in the index. The index for the manufacturing sector in January fell slightly, to 61.2 points.



In the eurozone, there are also signs of stable growth, as evidenced by the data.



According to the IHS Markit report, the preliminary composite index of supply managers of the eurozone in January 2018 increased to 58.6 points against 58.1 points in December. It should be noted that the index values above 50 indicate an increase in activity. This growth in the index corresponds to a quarterly growth of the economy by 1%.







In France, the preliminary index of supply managers for the manufacturing sector in January this year dropped to 58.1 points against the December value of 58.8 points. But the preliminary index of supply managers for the services sector, on the contrary, increased in January to 59.3 points against 59.1 points in December. Economists had expected that the service sector index would drop to a level of 58.9 points.



As for the technical picture of the EURUSD pair, there have been no significant changes. The main objective of euro buyers today will be to keep above the 1.2300 area, which will make it possible to count on continuing the upward trend, with the update of the new significant highs of 1.2390 and 1.2430.



The British pound continued its growth against the US dollar, after it became known that the employment rate in the UK from September to November 2017 reached a record high. Meanwhile, wages in the UK declined, which indicates a worsening of the financial situation of consumers after the referendum on Brexit.



According to a report by the National Bureau of Statistics, the employment rate in the UK was 4.3%, which fully coincided with the forecasts of economists. The average earnings in the UK for the period increased by 2.4%, while real wages fell by 0.5%.



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NZD/USD right on major support, time to go long







The price is testing major support at 0.7312 (Fibonacci retracement, horizontal overlap support, long-term ascending support, bullish price action) and a bounce could occur at this level to push the price up to at least 0.7436 resistance (major swing high resistance, Fibonacci extension). RSI (55) sees a long-term ascending support line since November 2017 hold up our bullish momentum really well. We're starting to see a possible break of this long-term support line but our major support remains at 51% and only a clean break of that level would be a precursor that a drop is coming. Buy above 0.7312. Stop loss at 0.7256. Take profit at 0.7436.



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Nobody wants currency wars



Eurozone



Markets continue to assess under the microscope the results of the ECB meeting on Thursday. Mario Draghi's press conference started with a few dovish statements, as Draghi focused on the slowness and austerity, indicating that it is not necessary to wait for surprises and, especially, some severe steps from the ECB.



Draghi called for dividing the expectations for the rate and the regulation of the asset purchase program. Regarding the rate, Draghi spoke directly, he said, the chances of an increase this year are small. With regards to the repurchase of assets, the position is more hawkish, as Draghi had to declare sustainable economic growth, which could mean confirmation of plans to curtail the repurchase program.



The ECB's lending report released on Friday showed that in December the growth rate of lending to the private sector and non-financial organizations slowed somewhat, but annual rates remain firmly strong, which confirms the conclusion about the sustainability of economic growth in the euro area.







A member of the ECB Executive Board, Benoit Coeure, commented on US Treasury Secretary Munchin's previous statements, saying that attempts to target exchange rates could provoke a currency war, and this is the last thing the world needs. On Thursday, indicating a similar tone, Draghi spoke out, as the issue for the euro is important - excessive strengthening can put downward pressure on inflation, as imports cheapen.



On Tuesday, a preliminary GDP report will be released for the fourth quarter, with a forecast of a 2.6% growth, which is no worse than in the US, which means it will support the euro, all other things being equal. On Wednesday, the report on inflation in January will be released, the forecast is negative, the euro could be under pressure. In general, the reasons for the euro to continue growth without a correction are few, likely a decrease to 1.2323 and consolidation just below the peaks that were reached.



United Kingdom



The UK economy grew slightly stronger in the fourth quarter than forecast, which had a limited support for the pound, which once again renewed its peak after Brexit. However, NIESR forecasted the possibility of growth up to 0.6%, so the market was not very surprised by the result.







The head of the Bank of England, Mark Carney, made an attempt on Friday to knock down a wave of demand for the pound, which, however, proved unsuccessful. Answering a question in an interview with the BBC about quantifying damage from Brexit, Carney said that the country's GDP lost 1% of its growth rate, and by the end of 2018 these losses will grow to 2%. To date, the result of Brexit has been a decline in economic activity of tens of billions of pounds, and it takes time to achieve a higher growth potential.



Carney highlighted the main point - companies are cutting back on investments, as they are waiting for clarity on the UK's trading positions after it leaves the EU.



On Tuesday, the Bank of England will report on consumer and mortgage lending in December. On Wednesday, the Gfk index on consumer confidence will be released. The pound looked very strong last week, and went far into the overbought zone, but the momentum is still strong, and therefore the highs will likely be updated, the nearest support is 1.3995.



Oil



Oil adheres to the most likely scenario, once again the peak is updated, the trends remain the same. Saudi Energy Minister Khaled al-Faleh said in Davos that $25 from its current price is secured by the OPEC + deal, confirming the cartel's position to adhere to the plan to stabilize the market. There is no reason to expect that the OPEC + countries will voluntarily give up the mechanism that fills the scarce state budgets of the oil-producing countries.



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Gold forming a cup and handle reversal, prepare for a strong drop!







Gold has formed a really strong reversal of a cup and handle formation. We look to sell below major resistance at 1344 (Fibonacci retracement, horizontal overlap resistance, cup and handle breakout level) where a strong drop is expected to push the price down to at least 1325 support (Fibonacci retracement, horizontal overlap support, Fibonacci extension).



Stochastic (34,5,3) is seeing descending resistance hold it down really well which corresponds to the drop we're expecting.



Sell below 1344. Stop loss at 1353. Take profit at 1325.



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