Currency Analyst since 2010

Forex trading plan for January 14

Risk sentiment: The market’s sentiment improved on better Chinese data. Demand for the yen and franc – traditional safe havens – and the euro declined pulling down their exchange rates vs. the greenback.  

As for the US dollar, pay attention to the release of jobless claims and, more importantly, the speech of the new FOMC voting member Bullard at 13:30 GMT. Bullard is hawkish, so his comments will be potentially bullish for USD.

EUR/USD: The pair once again tested support at 1.0800. Below this point it will likely fall to 1.0760 (bottom of the daily Ichimoku) and 1.0670 (bottom of the bearish channel). Choose conservative selling targets as the market’s risk sentiment has yet to stabilize.

USD/JPY: The pair tried to find an interim bottom. However, there are still many important resistance levels on the upside (118.70, 119.15 and 119.60), so be careful with trading on the greenback’s recovery.

GBP/USD: The pound is oversold after falling to the multiyear low. Support is at 1.4350/00. The next important level on the downside is 1.4228 (2010 low). The downtrend is still in force. The Bank of England will announce results of its meeting at 12:00 GMT. MPC member McCafferty, who was calling for a rate hike, may this time vote to keep rates unchanged. Although such outcome is partly priced in, there may be more negative for the cable and will consider selling in the 1.4520 area with stop at 1.4570 targeting 1.4400/1.4350. Increase above 1.4570 is needed to confirm an interim bottom.

AUD/USD: Australia will release labor market data at 00:30 GMT. According to the forecast, the unemployment rate will increase, so the return down to 0.6930/00 remains a base scenario. If the data bring positive surprise, the upside should be limited by 0.7115 (the former support line). 

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