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Forex Today: Fears could escalate at the weekly opening

108779   January 31, 2021 22:21   FXStreet   Market News  

What you need to know on Monday, February 1:

Investors attention was diverted away from the FX board, amid turmoil in equities. The American dollar benefited from a dismal market mood but traded within familiar levels against its European rivals. Commodity-linked currencies and the JPY were the most affected by risk-aversion.

Gamestop shares soared amid retail investors’ actions gathered on social media looking for a short squeeze. The stock collapsed on Thursday as different brokers put restrictions in place on options trading, taking new positions and hiked margin levels. The frenzy grew as restricting trading borders illegality.  Silver also fell under individual investors’ radar. The situation is far from over, and turmoil will likely extend into the upcoming days.   

Wall Street finished the week with sharp losses after reaching fresh January lows. US Treasury yields, however, ticked higher ahead of the close, posting modest gains on the back of generally encouraging US data.

 Vaccine-related news added to the dismal mood. The one-shoot from Johnson & Johnson has proven 66% effective in phase three trials, while Pfizer’s CEO  said  that “there is a high possibility that future variants will elude vaccines.”   Despite delayed delivery, vaccines are rolling out and hopes are that immunity will boost growth in the second half of this year.

On a positive note, the number of new coronavirus contagions keeps decreasing globally after peaking at 845K early on January to roughly 500K reported on Saturday. Still, tough restrictive measures remain in place, particularly in Europe, as several countries extended lockdowns or curfews throughout February.

Israel, the United Arab Emirates and the UK are the countries that have vaccinated the highest percentage of their population. The UK leading immunization may take a turn to the worst, as on Friday, the EU  imposed export restrictions on vaccines after accusing the British- AstraZeneca of favoring its home market, in detriment of its contracts with the EU

Australia announced a five-day lockdown in the Pert area amid a new coronavirus case in a hotel worker, those set to quarantine arrivals. Authorities fear it could be one of the contagious strains coming from the UK or South Africa.

Gold and Oil gave up on Friday, weighed by equities. The bright metal settled at $ 1,847.50 a troy ounce, while WTI finished at $52.10 a barrel.

Bitcoin Price Analysis: BTC gets rejected near $39,000, correction to $32,000 likely

AUD/USD Forecast: Mounting chances of a bearish extension

108777   January 31, 2021 21:40   FXStreet   Market News  

AUD/USD Current Price: 0.7641

• Australian Pert area announced a five-day lockdown amid a new coronavirus case.
• Chinese data released over the weekend came in below the market’s expectations.
• AUD/USD is at risk of extending its decline in the next few sessions.

Commodity-linked currencies were among those most affected by the poor performance of equities, with AUD/USD finishing the week in the red at 0.7641. The pair may accelerate its slump at the weekly opening, amid weekend news indicating a 5-day lockdown in the Pert area, due to a hotel worker infested with COVID-19. Authorities are concerned it may be one of the more contagious strains coming from the UK and South Africa.

Ahead of the opening, China published the January official NBS Manufacturing PMI, which resulted at 51.3, while the services index for the same month resulted at 52.4, both missing the market’s expectations. Australia will publish the January AIG Performance of manufacturing index, previously at 52.1, and the TD Securities Inflation report for the same month.

AUD/USD short-term technical outlook

The AUD/USD pair bottomed for the week at 0.7591, and the daily chart indicates that it’s gaining bearish momentum. The pair broke below its 20 SMA which now stands at around 0.7720. Technical indicators stand below their midlines with uneven directional strength, but still favoring another leg lower. In the near-term, and according to the 4-hour chart, the pair is below all of its moving averages, while technical indicators hover within negative territory, also supporting a bearish continuation in the near-term.

Support levels: 0.7605 0.7570 0.7530

Resistance levels: 0.7685 0.7720 0.7770

View Live Chart for the AUD/USD

USD/JPY Forecast: Supported by dollar’s demand and rising yields

108775   January 31, 2021 21:40   FXStreet   Market News  

USD/JPY Current price: 104.74

• US Treasury yields advanced, underpinned by encouraging US data.
• Japan will release the January Jibun Bank Manufacturing PMI, previously at 49.7.
• USD/JPY is bullish and near a fresh 2021 high of 104.93.

The USD/JPY pair jumped to 104.93 last Friday, a level that was last seen mid-November, to close the day with substantial gains in the 104.70 price zone. Demand for the American currency offset the poor tone of equities in a risk-averse scenario, boosting the pair. Additionally, US Treasury yields advanced, with the yield on the benchmark 10-year note settling at 1.07%, underpinned by encouraging US data released on Thursday.

Japan published January Tokyo inflation, which resulted upbeat, printing at -0.5% YoY. Industrial Production in the year to December fell by 3.2%, better than the -3.5% expected. Finally, the  Consumer Confidence Index contracted to 29.6 in January from 31.8 in the previous month.  At the beginning of the week, the country will release the January Jibun Bank Manufacturing PMI, previously at 49.7.

USD/JPY short-term technical outlook

The USD/JPY pair has settled above its 100 SMA in the daily chart for the first time since June last year. The 20 SMA has turned north below it, while technical indicators advance within positive levels, supporting a continued advance. In the near-term, and according to the 4-hour chart, bulls are in charge. Moving averages head firmly higher below the current level while technical indicators barely retreated from extreme overbought conditions.

Support levels: 104.40 103.95 103.50

Resistance levels: 104.95 105.20 105.50

View Live Chart for the USD/JPY

GBP/USD Forecast: Bulls encouraged by the improving pandemic situation in the UK

108773   January 31, 2021 21:33   FXStreet   Market News  

GBP/USD Current price: 1.3698

• The UK is among the top-three larger vaccinated nations.
• The Markit UK final January Manufacturing PMI is foreseen unchanged at 52.9.
• GBP/USD is neutral in the near-term, but the risk remains skew to the upside.

The GBP/USD pair closed the week with modest gains just below the 1.3700 level and not far from a fresh multi-year high of 1.3758. The pair spent the week consolidating amid a scarce UK calendar, while the pound was quite resilient to the dollar’s demand on risk-aversion.

Easing pandemic pressure provided support to the UK currency. Following a peak of almost 70K contagions per day, the number of daily new cases has averaged 25K this past week, taking off some pressure on the health system. Even further, nearly eight million people in the kingdom had already gotten their first shot, leaving the UK among the top-three larger vaccinated nations. On a down note, the EU  imposed export restrictions on vaccines Friday after accusing a British- AstraZeneca of favoring its home market, in detriment of its contracts with the EU. On Monday, Markit will publish the UK final January Manufacturing PMI, foreseen unchanged at 52.9.

GBP/USD short-term technical outlook

The GBP/USD pair has eased within range, maintaining its bullish stance in the daily chart, as a bullish 20 SMA continues to provide support, advancing above the larger ones. Technical indicators have lost their directional strength but hold within positive levels. In the 4-hour chart, the pair settled below its 20 SMA but above the 100 SMA, both directionless. Technical indicators hover around their midlines, lacking directional strength. A daily ascendant trend line coming from December 22 low provides support at around 1.3625, while the weekly low comes at 1.3609. A break below this last should open the doors for a steeper decline.

Support levels:  1.3655 1.3605 1.3560

Resistance levels: 1.3715 1.3760 1.3810

View Live Chart for the GBP/USD

EUR/USD Forecast: Fears limit demand for high-yielding assets

108771   January 31, 2021 21:33   FXStreet   Market News  

EUR/USD Current Price: 1.2134

• Equities closed in the red amid persistent turmoil related to individual investors.
• Vaccine-related news soured the mood amid possible reduced effectiveness.
• EUR/USD is technically neutral, could turn bearish below 1.2060.

The EUR/USD pair saw little action on Friday, ending the week with modest losses, but within familiar levels in the 1.2130 price zone. Investors’ attention remained on equities, these last subject to the turmoil related to the $GME scandal, and brokerage apps halting trading. Global indexes fell at the end of the week, with Wall Street reaching fresh January lows.

The dismal market mood was exacerbated by vaccine-related headlines, as the one-shoot from Johnson & Johnson has proven 66% effective in phase three trials, while Pfizer’s CEO  said that “there is a high possibility that future variants will elude vaccines.”  On a positive note, the number of new coronavirus contagions keeps decreasing globally after peaking at 845K early in January to roughly 500K reported on Saturday. Despite delayed delivery, vaccines are rolling out and hopes are that immunity will boost growth in the second half of this year.

Data wise, Germany published the preliminary estimate of Q4 GDP, which came in slightly better than anticipated at 0.1%. The US published December core PCE inflation that rose 1.5% YoY from 1.4% in the previous month. This Monday, Markit will publish the final readings of its Manufacturing PMI for January, while the US will release the official January ISM Manufacturing PMI, foreseen at 59.5 from 69.7 previously.

EUR/USD short-term technical outlook

The EUR/USD pair has spent the week trading between Fibonacci levels. It found support around the 38.2% retracement of the November/January rally at 1.2060, while sellers defended the 23.6% retracement of the same advance at around 1.2175. In the daily chart, the pair is neutral-to-bearish, as the 20 SMA caps advanced, converging with the mentioned Fibonacci resistance while technical indicators aim modestly higher but below their midlines. In the near-term, and according to the 4-hour chart, the upside seems limited, as the pair trades between bearish moving averages, while technical indicators lack directional momentum just above their midlines.

 Support levels: 1.2095 1.2060 1.2025  

Resistance levels: 1.2180 1.2225  1.2260

View Live Chart for the EUR/USD

Chainlink Price Prediction: Bullish outlook remains intact with first target at $25

108768   January 31, 2021 18:21   FXStreet   Market News  

• Chainlink follows an ascending trend line since early January.
• $25 aligns as interim resistance before LINK can test record highs.
• Key support is located at $20 if price breaks below trend line.

Chainlink notched a new record high at $25.84 on Monday and staged a deep technical correction all the way down to $20. However, buyers didn’t have a difficult time retaking control of the price mid-week and LINK was last seen trading near $23.

Ascending trend line continues to limit losses

LINK trades above the three-week-old ascending trend line, which was last tested during the pullback earlier in the week. As long as this line remains intact, Chainlink could try to renew its all-time high above $26. However, $25 area, where LINK closed following Monday’s upsurge, is likely to act as a near-term hurdle.

Meanwhile, the Relative Strength Index (RSI) indicator on the same chart stays near 60, suggesting that buyers don’t yet need to worry about LINK becoming technically overbought.

On the downside, the ascending trend line forms the initial support at $22. Moreover, IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model confirms this level as significant support with investors having purchased more than 12 million LINK there. 

If sellers manage to drag the price below $22, Chainlink could extend its slide toward $20 psychological level, at which this week’s selloff ended.

Ethereum Price Prediction: ETH could test all-time highs if $1,300 support holds

108765   January 31, 2021 17:51   FXStreet   Market News  

• Ethereum continues to follow the ascending trend line on daily chart.
• RSI indicator suggests there is room on the upside before ETH turns overbought.
• Strong support seems to have formed around $1,300, according to on-chain metrics.

Ethereum climbed to a fresh record high of $1,477 at the start of the week but struggled to preserve its bullish momentum. After staging a technical correction toward $1,200, however, ETH regained its traction and seems to have gone into a consolidation phase. At the moment, Ethereum is down 2.03% on a daily basis at $1,350.

Key support sits at $1,300

On the daily chart, the ascending trend line coming from late December remains intact and is currently located around $1,300. If ETH manages to hold above that line, it could renew all-time highs and target the next psychological level at $1,500. Moreover, an ascending triangle using the trend line and the static resistance at $1,400  seems to have formed on the same chart, confirming the view that a bullish breakout is likely.

In the meantime, the daily Relative Strength Index (RSI) continues to float around 60, suggesting that ETH has more room on the upside before becoming technically overbought.

Punctuating the significance of $1,300 support, IntoTheBlock’s In/Out of the Money Around Price (IOMAP) chart shows that nearly 10 million ETH had been bought by around 500K addresses at an average price of $1,320.

On the other hand, a daily close below $1,300 could attract more sellers and drag ETH toward next static supports at $1,230 and $1,100.

ICYMI: Australia’s Perth goes into five-day lockdown after hotel quarantine security guard tests positive for COVID-19

108763   January 31, 2021 14:40   Forexlive Latest News   Market News  

That puts an end to Western Australia’s 10-month coronavirus-free streak

This comes as the security guard working at the hotel – which serves as a quarantine facility for inbound travelers – tested positive for COVID-19 with fears it could be a UK or South African variant. Western Australia premier, Mark McGowan, said that:

“Beginning at 6:00pm tonight the whole Perth metropolitan area, the Peel region and the South West region will be going into full lockdown. This lockdown will last until 6:00pm on Friday.

When the man was working at this hotel there were four active cases of COVID-19 in hotel quarantine. Of those four cases we have at least three confirmed variant strains, two UK and one South African. We are told the guard was working on the same floor as a positive UK variant case.”

Masks are also to be made mandatory with the only exceptions to stay-at-home requirement being for the reasons/activities below:

Germany bans travel entry from UK, Brazil, South Africa, Portugal, Ireland over coronavirus variants

108761   January 31, 2021 14:29   Forexlive Latest News   Market News  

The travel ban will stay in effect until 17 February at least

ICYMI, the restriction has gone into effect yesterday and covers land, air, and sea travel into the country, according to local media citing the German interior ministry.

The exceptions to the restriction is only for Germans living in those countries, those who have residency in Germany, and passengers in transit or the movement of goods.

“The German government has restricted air and sea travel to Germany at its external Schengen borders. Travellers from the UK are currently only permitted to enter Germany if they are returning to their place of residence, if they serve in an important role or if they have an urgent need, such as urgent medical treatment.”

Generally speaking, if more countries in the EU adopt similar restrictions, it isn’t quite a good look on how virus developments are playing out in Q1. And that also adds another negative point to the list for risk sentiment.

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China Non-Manufacturing PMI below forecasts (52.6) in January: Actual (52.4)

108760   January 31, 2021 09:05   FXStreet   Market News  

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Trading 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 trade 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.

Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

China January PMIs: Manufacturing 51.3 (vs. expected 51.5) & Non-manufacturing 52.4 (expected 55.0)

108759   January 31, 2021 09:02   Forexlive Latest News   Market News  

China’s China’s National Bureau of Statistics (NBS) official survey PMIs 

Manufacturing 
Non-manufacturing 
Composite  

• prior 55.1

The PMI index of manufacturing sentiment hit a 38-month high of 52.1 in November last year. Its been above 50, and in ‘expansion’ for most of 2020 despite the pandemic impact. China’s policy of “internal circulation” (in a nutshell business buying locl inouts rather than imported where possible) has been an underpinning. Export industries have been a contributor also but on this front the rising cost of shipping and an appreciating yuan are becoming stiffer headwinds.

—

The private-survey,unofficial, Caixin/Markit PMIs for January are due on the new week:

China NBS Manufacturing PMI registered at 51.3, below expectations (51.6) in January

108758   January 31, 2021 09:02   FXStreet   Market News  

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading 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 trade 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.

Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.