Key risk events today:

US CB Consumer Confidence.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Areas of consideration:

• H4 resistance at 1.22/1.2180 (composed of the 1.22 figure, a collection of Fibonacci ratios and an AB=CD bearish formation [red arrows]) provided sufficient oomph to overpower buying and take the currency pair under 1.2150 into European hours on Monday. Therefore, 1.22/1.2180 and 1.2150 are noted as immediate resistances to be mindful of on the H4 scale, targeting at least 1.21.

• The 1.22 level is also noteworthy resistance on the H4, fixed just south of the lower side of weekly supply at 1.2420-1.2214. Consequently, 1.2214/1.22 is an area to be watchful of should buyers find some grip to push higher.
• Daily resistance at 1.2165—an active S/R level since June 2010—is a base currently in the spotlight. Downside targets on the daily timeframe are seen at trend line support, taken from the low 1.0774, plotted just north of support at 1.1965, a previous Quasimodo resistance level. North of 1.2165, supply drawn from 1.2344-1.2279 (nestled within the walls of weekly supply mentioned above at 1.2420-1.2214) could work its way back in sight.

Global Markets:

• Asian Stock Markets : Nikkei up 0.67%, Shanghai Composite up 0.48%, Hang Seng up 2.36%, ASX up 0.36%
• Commodities : Gold at $1850.85 (-0.29%), Silver at $25.59 (+0.13%), Brent Oil at $55.50 (+0.45%), WTI Oil at $52.59 (+0.61%)
• Rates : US 10-year yield at 1.098, UK 10-year yield at 0.308, Germany 10-year yield at -0.514

News & Data:

• (USD) Flash Manufacturing PMI 59.1 vs 56.6 expected
• (CAD) Retail Sales m/m 1.30% vs 0.00% expected
• (CAD) Core Retail Sales m/m 2.10% vs 0.30% expected
• EU should punish Putin for Navalny arrest by cutting money flows: Germany’s Weber
• Australia wants its ‘mutually beneficial’ relationship with China to improve, Treasurer Frydenberg says

CFTC Positioning Data:

• EUR long 163K vs 156K long last week. Long increased by 7K
• GBP long 14K vs 13K long last week. Longs increased by 1K
• JPY long 50K vs 50K long last week. Unchanged
• CHF long 9K vs 12K long last week. Longs increased by 3K
• AUD long 5K vs 5K long last week. Unchanged
• NZD long 16K vs 15K long last week. Longs increased by 3K
• CAD long 10K vs 12K long last week. Longs trimmed by 2K.

Markets Update:

Asian stock markets are mostly higher on Monday despite the mixed cues from Wall Street Friday. Optimism about the prospects for additional stimulus in the U.S. as well as upbeat corporate earnings results helped offset worries about the rising number of coronavirus cases around the world.

The Shanghai composite was 0.5% higher while the Shenzhen component advanced 0.9%. Hong Kong’s Hang Seng index also saw robust gains as it rose about 1.9%. In Japan, the Nikkei 225 nudged 0.4% higher while the Topix index gained 0.1%. Shares in Australia edged higher, with the S&P/ASX 200 up 0.4%.

In currencies, major pairs were trapped in a tight range as markets awaited the Fed’s Wednesday meeting. The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.136 after seeing a recent decline from levels above 90.6.

Upcoming Events:

Monday, January 25, 2021

Key risk events today:

ECB President Lagarde Speaks.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Weekly gain/loss: +0.79%

Weekly close: 1.2170

Weekly perspective:

Global Markets:

• Asian Stock Markets : Nikkei down 0.44%, Shanghai Composite down 0.40%, Hang Seng down 1.57%, ASX down 0.34%
• Commodities : Gold at $1860.25 (-0.30%), Silver at $25.52 (-1.29%), Brent Oil at $55.27 (-1.48%), WTI Oil at $52.28 (-1.60%)
• Rates : US 10-year yield at 1.092, UK 10-year yield at 0.315, Germany 10-year yield at -0.504

News & Data:

• (EUR) French Flash Manufacturing PMI 51.5 vs 50.6 expected
• (EUR) French Flash Services PMI 46.5 vs 48.3 expected
• (GBP) Retail Sales m/m 0.30% vs 1.40% expected
• (NZD) CPI q/q 0.50% vs 0.20% expected
• (USD) Unemployment Claims 900K vs 930K expected
• (USD) Philly Fed Manufacturing Index 26.5 vs 11.2 expected
• (EUR) Main Refinancing Rate 0.00% vs 0.00% expected

Markets Update:

Asian stock markets are mostly lower on Friday, tracking the mixed cues overnight from Wall Street and following the recent strong gains leading up to U.S. President Joe Biden’s inauguration.

Optimism about ramped up efforts to combat the coronavirus and more stimulus under the new Biden administration have helped to prop up the markets in recent days.

Mainland Chinese stocks closed mixed, with the Shanghai composite down 0.4% while the Shenzhen component rose 0.7%. In Japan, the Nikkei 225 slipped 0.4% while the Topix index shed 0.2%. Over in Australia, the S&P/ASX 200 dipped 0.3%.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.219 following earlier levels above 90.4. Crude oil prices drifted lower on Thursday after data from the American Petroleum Institute showed an increase in U.S. crude stockpiles last week. Also weighing oil down was worries that new pandemic restrictions in China will curb fuel demand in the world’s biggest oil importer.

Upcoming Events:

• 08:30 AM GMT – (EUR) German Flash Manufacturing PMI
• 08:30 AM GMT – (EUR) German Flash Services PMI
• 09:00 AM GMT – (EUR) Flash Manufacturing PMI
• 09:00 AM GMT – (EUR) Flash Services PMI
• 09:30 AM GMT – (GBP) Flash Manufacturing PMI
• 09:30 AM GMT – (GBP) Flash Services PMI
• 01:30 PM GMT – (CAD) Core Retail Sales m/m
• 01:30 PM GMT – (CAD) Retail Sales m/m
• 02:45 PM GMT – (USD) Flash Manufacturing PMI

Key risk events today:

UK Retail Sales m/m; Eurozone, UK and US Flash Manufacturing and Flash Services PMIs; Canada Retail Sales m/m.

(Previous analysis as well as outside sources – italics).

EUR/USD:

Areas of consideration:

• The round number 1.21 and trend line support combination (taken from the high 1.2344) persuaded a short-term bullish scenario on Thursday, elevating EUR/USD to 1.2150 resistance. As can be seen from the H4 chart, buyers attempted to overthrow 1.2150, yet have failed to find acceptance above the level due to daily resistance priced in at 1.2165.

• Apart from daily resistance, H4 also shows an area of Fibonacci confluence set just south of 1.22 around 1.2184, together with an AB=CD bearish formation (red arrows). As such, between 1.22 and 1.2184 could be a resistance area sellers welcome today. In addition to this, the 1.22 figure is supported by the lower edge of weekly supply pictured at 1.2420-1.2214.

Global Markets:

• Asian Stock Markets : Nikkei up 0.82%, Shanghai Composite up 1.07%, Hang Seng down 0.07%, ASX up 0.79%
• Commodities : Gold at $1869.00 (+0.13%), Silver at $25.91 (+0.56%), Brent Oil at $55.75 (-0.59%), WTI Oil at $52.98 (-0.62%)
• Rates : US 10-year yield at 1.079, UK 10-year yield at 0.288, Germany 10-year yield at -0.534

News & Data:

• (AUD) Unemployment Rate 6.60% vs 6.70% expected
• (AUD) Employment Change 50.0K vs 50.0K expected
• (CAD) Overnight Rate 0.25% vs 0.25% expected
• (CAD) CPI m/m -0.20% vs 0.10% expected
• BoJ Gov Kuroda: CPI Is Expected To Stay Negative For Time Being
• Japan Suga: Infection Rates Still High After Emergency Declaration

Markets Update:

Asian stock markets are mostly higher on Thursday following the record closing highs overnight on Wall Street after Joe Biden was sworn in as the 46th President of the United States. Investors are optimistic that the new Biden administration’s potential spending increase will spur growth in the world’s largest economy.

The Australian market is rising for a third straight day after U.S. stocks closed at record highs overnight and as data showed that Australia’s unemployment rate fell in December. The Shanghai composite in mainland China rose 1.1% while the Shenzhen component advanced 1.9%.

Hong Kong’s Hang Seng index lagged the broader region, slipping 0.5%, as of its final hour of trading. In Japan, the Nikkei 225 rose 0.8% while the Topix index advanced 0.6% to finish its trading day.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.30 after an earlier high of 90.452. In commodity markets, oil prices eased on an unexpected rise in U.S. crude stocks, though hopes for an economic revival kept losses in check.

Upcoming Events:

• 01:30 AM GMT – (JPY) BOJ Press Conference
• 07:45 AM GMT – (EUR) Monetary Policy Statement
• 07:45 AM GMT – (EUR) Main Refinancing Rate
• 08:30 AM GMT – (EUR) ECB Press Conference
• 08:30 AM GMT – (USD) Philly Fed Manufacturing Index
• 08:30 AM GMT – (USD) Unemployment Claims
• 04:45 PM GMT – (NZD) CPI q/q