Currency Pairs Market Review by AGEA Experts

In the past six months, the euro has risen by approximately 6.3%

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EUR/USD

Data on Tuesday showed that the EU zone ZEW economic sentiment rebounded from 54.4 to 58.3 in January. The European Commission warned that some countries preliminary plans to spend covid19 recovery funds lack details and need to be improved. On Thursday, ECB maintained its interest rate policy unchanged, in line with market expectations. The central bank keeps buying 20 billion US dollars of bonds every month and confirms that PEPP is 1.85 trillion euros.

President Lagarde delivered a speech. She said that the economy may contract in the fourth quarter and the inflation rate is still low. From the chart, the euro rebounded from the downward channel and managed to break through the 200-day moving average, even though the STOCH indicator has moved away from the overbought zone. Support 1.2065 Resistance 1.2215

GBP/USD

It is reported that the EU will seek to extend the deadline for ratification of the trade agreement with the UK, and member states hope to extend the deadline from the end of February to April. Data released by the Britain Office for National Statistics on Wednesday showed that the UK inflation rate rose to 0.6% in December and the core inflation rate rose to 1.4%. Both data were better than market expectations.

British Home Secretary Priti Patel said on Wednesday that it is too early to discuss when to lift the lockdown. The pound has entered a relatively obvious upward trend, but the resistance level in early January has been difficult to break through, and the MACD indicator has shown a sell signal. Support 1.3548 Resistance 1.3750

USD/JPY

On Wednesday, Japanese Minister of Health Norihisa Tamura said that it has signed a contract with Pfizer to purchase 144 million doses of vaccine this year. On Thursday, the Bank of Japan kept interest rates unchanged at -0.1%, kept the 10-year Treasury bond yield unchanged at 0.0%, and lowered its GDP growth target from -5.5% to -5.6%. BoJ Governor Haruhiko Kuroda said at a press conference that corporate financing support measures are working, and it is too early to consider withdrawing monetary stimulus.

Data on Friday showed that the December inflation rate fell further to -1.2%. The MACD indicator rebounded and was about to break through the zero axis, and the STOCH indicator has risen to the overbought zone. Whether it can close above the 200-day moving average is the key to the next week. Support 103.32 Resistance 104.19

AUD/USD

A data released on Wednesday showed that January Consumer Confidence in Australia fell to 107. Treasury secretary candidate Yellen told Congress on Tuesday that the exchange rate of the USD should be determined by market forces. Data released on Thursday showed that the employment change increased by 50K in December, in line with market expectations, while the unemployment rate fell by 0.2%.

Australian Prime Minister Morrison said at a media conference that employment is the focus of government work. On Friday, Australia’s December Retail Sales data fell sharply to -4.2%, far worse than the previous month’s 7.1%. AUD’s rebound did not last long. On Friday, the moving average pattern once again showed a death cross signal, and the STOCH indicator fell into the oversold zone. Support 0.7672 Resistance 0.7785

NZD/USD

Yellen testified in the Senate on Tuesday that the next coronavirus relief package should include large-scale operations, even at the cost of high debt. Standard Chartered Bank expects that New Zealand’s economic outlook is good in 2021 and will maintain interest rates this year. New Zealand’s inflation rate remained unchanged at 1.4% in the fourth quarter. On Friday, RBNZ issued a statement stating that due to hacker attacks on the data system, most statistics will be postponed.

Auckland Kiwibank chief economist Jarrod Kerr said that New Zealand’s inflation rate unexpectedly rose in the fourth quarter of last year and the RBNZ may not need to cut further interest rates. From the chart, the NZD’s attempt to break down the 200-day moving average failed and gradually recovered. The MACD indicator returned to above the zero axis, the upward trend was not over. Support 0.7107 Resistance 0.7239

USD/CAD

On Wednesday, the Bank of Canada kept interest rates unchanged at 0.25%, and Governor Tiff Macklem said that it is too early to consider reducing bond purchases. Macklem also said that the rebound of the epidemic and lockdown measures may put pressure on economic recovery, but he is optimistic about medium-term economic growth. The new US President Biden fulfilled his campaign promise and cancelled the Keystone XL pipeline license. The Canadian government expressed disappointment.

In addition, Canada’s December inflation rate fell from 1% to 0.7%, which was worse than market expectations. Since it slightly reached the 200-day moving average on Monday, the USD has no momentum to break through, but the MACD indicator has issued a buy signal again on Thursday, and STOCH has risen to the overbought zone. If it cannot break the high level of last Monday, then USD/ CAD may still fall. Support 1.2613 Resistance 1.2798