Good morning 2016. The forex market will likely to start with a similar themes carried forward from last year. 2015 was the year of the USD. Fed finally decided to gradually normalizing their monetary policy. Central bank divergence led by Fed will therefore remain in 2016. It is notable to see how the lower commodity prices and a weaker Emerging market, especially China, play roles in the global recovery.
This week, the focus will be on Chinese manufacturing PMI, euro area headline and core December inflation, US and UK December PMI, AUD retail sales and trade balance, as well as NFP report on Friday night.
Trade for the week ahead from Barclays FX thoughts:”Long USDCNH: as Chinese officials place increasing emphasis on stability of the trade-weighted CNY, we think there is scope for significant weakness against the USD in an environment of Fed tightening.”
Currency Updates:
EUR/USD ST: key resistance at 1.11.
Pivot: 1.11
Our preference: short positions below 1.11 with targets @ 1.045 & 1.019 in extension.
Alternative scenario: above 1.11 look for further upside with 1.1495 & 1.173 as targets.
Comment: as long as 1.11 is resistance, likely decline to 1.045. The pair stands below its strong resistance @ 1.11.
Supports and resistances:
1.173 ***
1.1495 ***
1.11 ***
1.0851 Last
1.045 ***
1.019 ***
0.985 **
USD/JPY Intraday: key resistance at 120.45
Pivot: 120.45
Our preference: short positions below 120.45 with targets @ 119.95 & 119.8 in extension.
Alternative scenario: above 120.45 look for further upside with 120.65 & 121 as targets.
Comment: the upward potential is likely to be limited by the resistance at 120.45.
Supports and resistances:
121 **
120.65 **
120.45 ***
120.29 Last
119.95 **
119.8 ***
119.6 **
GBP/USD ST: the downside prevails
Pivot: 1.533
Our preference: short positions below 1.533 with targets @ 1.456 & 1.423 in extension.
Alternative scenario: above 1.533 look for further upside with 1.566 & 1.594 as targets.
Comment: the RSI is capped by a declining trend line.
Supports and resistances:
1.594 ***
1.566 ***
1.533 ***
1.4727 Last
1.456 ***
1.423 ***
1.395 **
AUD/USD Intraday: the bias remains bullish
Pivot: 0.727
Our preference: long positions above 0.727 with targets @ 0.732 & 0.736 in extension.
Alternative scenario: below 0.727 look for further downside with 0.724 & 0.7205 as targets.
Comment: the RSI calls for a new upleg.
Supports and resistances:
0.7385 **
0.736 **
0.732 **
0.7296 Last
0.727 ***
0.724 ***
0.7205 **
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