Market Outlook

Our daily market outlook articles help you stay up to date with the latest news and analysis on leading currencies, indices and commodities across European, US and Asian markets.

View More

EURUSD Holds Lows at Key Support as USD Strength Takes a Pause

Price action and Macro.

Connect via:

Never miss a story from James Stanley

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to James Stanley

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

EURUSD Holds Lows at Key Support as USD Strength Takes a Pause

- US Dollar strength has continued into another week, as a strong day of price action on Monday led to a push up to fresh 2019 highs. Pullbacks showed in the Dollar on both Tuesday and Thursday but, up to this point, buyers have remained very motivated, offering higher-low support at prior resistance intervals on the chart around 96.68 and 97.00.

- Next week brings a Monday holiday in the United States in observance of President’s Day, and the economic calendar is relatively light. The high-notes for next week’s calendar are FOMC meeting minutes from the January rate decision, set to be released on Wednesday, followed by Central Bank comments out of Canada and Australia on Thursday. On the FOMC-front, Fed-speak is on the docket for everyday next week from Tuesday-Friday.

- DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Next week brings a Monday holiday in the US as both stock and bond markets will be closed in observance of President’s Day. But after that, the economic calendar brings Fed-speak for every day next week, combined with the Wednesday release of FOMC meeting minutes from the January rate decision. Outside of that, next week’s economic calendar is rather shallow with just a handful of high-impact prints; the highlight of which is in the latter portion of the week when Central Bank heads from Canada and Australia offer commentary, going along with Japanese CPI numbers for the month of January.

DailyFX Economic Calendar: High-Impact Events for the Week of February 18, 2019

DailyFX Economic Calendar High-Impact Week of Feb 18 2019

And on the Fed-speak front, the below table shows the Fed speakers on next week’s economic calendar, along with time of commentary and the targeted topic.

FOMC Speakers on the Economic Calendar for Next Week

FOMC Speakers Week of Feb 18 2019

US Dollar Bulls Face Turbulence at 97.20; Hold Support at 97.00

All-in-all it’s been another strong week of price action in the US Dollar, with the bulk of the upward advance showing in the first half of this week. On Monday, the currency broke-out to a fresh 2019 high after which a quick pullback to find support at the 96.68 level showed up. But the response at that support was rather strong, as Dollar bulls posed another top-side drive on Wednesday to push up to another fresh high.

But since then, prices have oscillated with support continuing to hold around that prior swing high and the support area around 97.00.

US Dollar Four-Hour Price Chart

us dollar four hour price chart usd

For next week, the big question is for how much longer might USD bulls be able to continue pushing higher before a deeper pullback shows up. Ahead on the charts is the 97.71 level that helped to build a Double Top formation in the currency in November and December. A break-above that level would bring the highest print in the US Dollar since June of 2017, as the currency found a bit of resistance there before continuing its downward-descent.

US Dollar Daily Price Chart

us dollar usd daily price chart

EURUSD Holding Lows in Key Support Zone

Contributing to that US Dollar strength has been continued weakness in the Euro as political risks continue to show in the bloc. Spain has now become of concern, and European elections coming this May have many on their seat as anti-establishment parties may make a dent in the status quo of European Parliament. This goes along with continued slowdown in European economic data, illustrated again on Wednesday with the -4.2% print for Euro-Zone industrial production.

In EURUSD price action, the pair is posing another bounce in the longer-term support zone that came into play earlier this week. This support zone has held the lows in the pair since November, when fear was running high around the Italian budget. But since that swing-low was set on November 8th at 1.1215, prices have been unable to break-lower, seeing multiple support inflections when this zone of prices had come into play.

EURUSD Eight-Hour Price Chart

eurusd eur/usd eight hour price chart

Dow Tests Above Confluent Resistance – Can Buyers Hold the Move?

Also of note, US equity indices ran into some key resistance levels this week. After a firm push higher on Monday, a confluent resistance zone came into play on the Dow Jones Industrial Average and, since then, prices have spent the past few days in a range-like state. This resistance in the Dow comes from a couple of different areas, as the 88.6% retracement of the December sell-off remains very near the 14.4% retracement of the post-Election run in the index. In early-Friday trade, buyers have made a stern topside advance above this zone, bringing up the question of whether or not they can hold the line.

Dow Jones Price Chart

djia dow jones four hour price chart

USDJPY Recovery Continues, Support Holds Above 110.00

On the long side of the US Dollar, the backdrop around USDJPY remains of interest. The pair came into the year screaming lower on the back of significant Yen-strength that appeared to be largely driven by a safe-haven run. But since the second day of the New Year, prices in the pair have largely remained in varying states of recovery.

Last week, price action in the pair had begun to build in a short-term range atop intermediate-term resistance, focusing in on the zone from 109.67-110.00. And coming into this week, bulls pushed through, helping to set a fresh 2019 high in the pair as prices ran up-above the 111.00 level. But, as discussed yesterday, that theme appeared rip for a pullback, and prices pushed down to the 110.30 level of support that was noted; after which bulls began to make another forward push.

The big question at this point is whether the yesterday’s retracement was enough; or whether prices will need to take a deeper pause to re-test support at that prior area of resistance that held for almost a full month at 109.67-110.00.

USDJPY Four-Hour Price Chart

usdjpy usd/jpy four hour price chart

USD Reversal Strategies

Given the length of the current US Dollar rally, the prospect of a pullback can remain of interest, even if just a temporary pullback in a longer-term scenario of strength. But, given the manner with which that Dollar-strength has shown of recent, it can be difficult to prognosticate reversal scenarios in an area like the Euro or the British Pound, each which could continue to be beset by political woes.

As discussed in yesterday’s webinar, there could be interest around USD-weakness in pairs like USD/CAD or USD/CHF. In USD/CAD, prices have held below the 1.3361-1.3385 resistance zone; and a bearish trend-line as taken from earlier January and February swing-highs continues to show some element of resistance on intra-day charts.

USDCAD Four-Hour Price Chart

usdcad usd/cad four hour price chart

USDCHF Spends a Week at Resistance

The week opened with a bang in the Swiss Franc as the currency posed a quick move of weakness that could be described as a ‘mini flash crash.’ But, USDCHF buyers were unable to test above the 1.0100 level and after pulling back to parity, buyers drove right back-up to resistance around the 1.0096 level, which is the 78.6% retracement of the December 2016 – February 2018 major move.

If sellers can hold this resistance through the early portion of next week, this could become a scenario of interest for a deeper pullback in the recent theme of US Dollar strength.

USDCHF Daily Price Chart

usdchf usd/chf daily price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX




Yen and US Dollar Aim Higher Amid Global Slowdown Worries

Fundamental analysis, economic and market themes.

Connect via:

Never miss a story from Ilya Spivak

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Ilya Spivak

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

TALKING POINTS – YEN, DOLLAR, RETAIL SALES, CHINA CPI, CONSUMER CONFIDENCE

  • Yen, US Dollar rise as APAC stocks fall on global slowdown fears
  • Aussie Dollar leads commodity FX lower on soft China CPI report
  • Stock futures signal risk-off bias, US consumer confidence on tap

The perennially anti-risk Japanese Yen and US Dollar traded higher while the risk-geared Australian and New Zealand Dollars followed stocks lower in Asia Pacific trade. The Aussie underperformed, brought lower by disappointing Chinese inflation data.

That released seemed to amplify global slowdown fears activated by a dismal miss on US retail sales data in the preceding session. Chatter warning of slow progress in US-China trade talks added to the downbeat mood. Regional shares dutifully followed Wall Street lower.

STOCK FUTURES SIGNAL RISK-OFF BIAS, US CONSUMER CONFIDENCE DATA DUE

Bellwether European and US stock index futures are pointing sharply lower, suggesting that sentiment is likely to continue to deteriorate in the hours ahead. That suggests APAC-session G10 FX trading patterns have scope for continued follow-through.

A lackluster offering on the European data docket may put February’s edition of the University of Michigan gauge of US consumer confidence in the spotlight. Sentiment is expected to improve after hitting the most pessimistic setting since October 2016 in the preceding month.

An upbeat result may help paint yesterday’s retail data disappointment as dated, especially in the context of January’s impressively strong labor-market data. That might revive investors’ spirits somewhat, but the release might come too late into the trading day to meaningfully alter overall performance.

What are we trading? See the DailyFX team’stop trade ideas for 2019 and find out!

ASIA PACIFIC TRADING SESSION

Asia Pacific Trade Economic Calendar

EUROPEAN TRADING SESSION

Yen and US Dollar Aim Higher Amid Global Slowdown Worries

** All times listed in GMT. See the full economic calendar here.

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter




S&P 500 Fails to Close the Gap as Market-Wide Risk Aversion Ensues

Classic technical analysis, macro and economic themes.

Connect via:

Never miss a story from Daniel Dubrovsky

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Daniel Dubrovsky

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Asia Pacific Market Open Talking Points

  • Worst US retail sales since 2009 sparked market-wide risk aversion as S&P 500 closed down
  • USD little changed due to earlier gains when Germany narrowly avoided technical recession
  • Fading upside momentum, fundamental risks leave equities at risk. Asia stocks to trade lower?

Find out what retail traders’ equities buy and sell decisions say about the coming price trend!

3 Things to Know Before Trading APAC Markets

1) Dismal US Retail Sales Data Sparked Market-wide Reaction

Delayed US retail sales (for the period of December) contracted 1.2% m/m which was the largest subtraction since 2009. Looking at the immediate chart below, financial markets worldwide defaulted to risk aversion. The S&P 500 gapped lower and closed to the downside while DAX, Nikkei 225 and ASX 200 futures all fell in tandem. More boradly, US shares are showing signs of fading upside momentum.

Financial Markets Reacting to US Retail Sales Data

S&P 500 Fails to Close the Gap as Market-Wide Risk Aversion Ensues

Chart Created in TradingView

US 2-year government bond yields fell as prices rose, signaling a flight to safety and a reduction in hawkish Fed monetary policy expectations. The anti-risk Japanese Yen ended the day little higher while the pro-risk Australian and New Zealand Dollars were mostly little changed. The haven-linked US Dollar saw a similar result, finishing the session close to flat. While it dropped sharply on the retail sales reports, that only earsed earlier gains.

2) Germany Narrowly Avoided a Technical Recession, For Now

The preliminary estimate of fourth quarter German GDP saw stagnation (0.0% q/q from -0.2% in Q3). This means that the nation narrowly avoided a technical recession after Italy went into one recently. There could still be a chance that the final reading of economic growth surprises lower. European major currencies, such as the Euro and British Pound, dropped sharply around the news. This led to gains in the Greenback.

3) Key Political Developments

There was a rally in US equities towards the end of the session, but upside momentum fell apart in the final moments. This may have been due to the markets digesting conflicting headlines that competed for their attention. First, UK Parliament rejected Theresa May’s Brexit approach with few signs that there may be an extension to the withdrawal deadline on March 29.

Meanwhile reports crossed the wires that the US and China are still far apart on reform demands. This comes after President Donald Trump reported mulling an extension to the tariff deadline on March 1. Then, Mr. Trump said that he is expected to sign a spending bill that will avert another government shutdown. He added that he expects to declare a national emergency to secure additional funding for a border wall.

Friday’s Asia Pacific Trading Session and Beyond

S&P 500 futures are pointing cautiously lower as we head into the end of this week, suggesting that Asia Pacific equities may trade narrowly lower. However, the Nikkei 225 has cleared key technical resistance which argues that it may extend its near-term uptrend. This highlights the importance of confirmation. We will get Chinese CPI data for January, signs of slowing price growth may reignite concerns about weakening global growth, especially with Europe now on the edge. Fundamentally, the S&P 500 may be running out of reasons to rally.

US Trading Session Economic Events

S&P 500 Fails to Close the Gap as Market-Wide Risk Aversion Ensues

Asia Pacific Trading Session Economic Events

S&P 500 Fails to Close the Gap as Market-Wide Risk Aversion Ensues

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter




Advertisement
Advertisement
Advertisement