Forex trading plan for December 18
US dollar strengthened on Thursday after the US Federal Reserve raised the Federal fund rate from 0-0.25% to 0.25-0.50% and sounded less dovish than the market has expected. Although Janet Yellen underlined that further rate increases will be gradual and data dependent, the Fed’s members were confident about the American economy and still expect to raise interest rates 4 times in 2016.
EUR/USD was rejected to the downside and further losses are likely. German Ifo business climate disappointed (108.7 vs. the forecast of 109.2). On Friday the euro area will release current account data at 09:00 GMT. Support is at 1.0800: the loss of this level can dramatically intensify selling – to 1.0730 and lower. Resistance is at 1.0980, but only a break above 1.1030/60 will allow further increases.
GBP/USD slid towards 1.4900 area. Even the big increase in retail sales due to November sales wasn’t of much help to the pound (+1.7% vs. +0.6% expected). The loss of 1.4900 will bring the pound to 1.4880 and 1.4850. Recoveries should find resistance in the 1.5000/50 zone.
USD/JPY is rapidly returning to the upside driven by higher US yields. The Bank of Japan is expected to leave policy unchanged. The central bank is still far from its inflation target, but other economic figures from Japan have so far been above expectations. The pair still has room for gains (resistance is at 123.60), though we don’t expect the Bank of Japan to give it positive drivers. Support is at 121.60.
New Zealand’s Q3 GDP growth increased in Q3 from 0.3% to 0.9%, but NZD/USD declined because of general USD strength and dovish comments of the nation’s finance minister. The bears may test the lower border of the short-term uptrend at 0.6665 with the next support being at 0.6612. Resistance is at 0.6780. ANZ business confidence index is due during the Asian session on Friday.
AUD/USD is vulnerable for a decline to 0.7100 after all the failures on the upside. USD/CAD is overbought, but 1.4000 target is in sight. Canadian inflation data at (13:30 GMT) are expected to come weak.