Trading plan for January 21
EUR/USD is still sold on attempts to approach 1.10, but is holding above the key support of 1.08. The euro needs to go beyond one of these levels in order to emerge from the current sideways trend. Risk aversion is supporting the euro, while the approaching meeting of the European Central Bank of Thursday is limiting the single currency on the upside. The ECB rate decision will be announced at 12:45 GMT. Mario Draghi’s press conference will start at 13:30 GMT. The positive factors for the euro are a bit stronger than the negative ones: we see a series of higher lows. The ECB will likely leave monetary policy unchanged, though Draghi will try to limit the power of the bulls with dovish comments.
GBP/USD closed below 1.4228 on Tuesday. The oversold pound may hold in the current region with the help of better-than-expected UK labor market data. However, there are reasons to expect that the general downtrend will continue to 1.40 and lower. Resistance is at 1.4230 and 1.4350.
USD/JPY fell to 116.00 on the market’s risk aversion, but this area of 2015 lows attracted buyers. Market participants remembered that the Bank of Japan may increase monetary stimulus on January 29 or at least reduce inflation forecast. Still, there’s a series of lower highs and bearish pressure on 116.00 may intensify. The pair hasn’t reached the bottom of the daily Ichimoku at 113.60. Resistance is at 117.00/50.
AUD/USD returnedbelow 0.6900. The targets lie in the 0.6770 area. Resistanceisat0.6950 and 0.7000. NZD/USD is oversold, but the general picture is bearish with targets at 0.6300/0.6240. Resistance is at 0.6430.