FOREX Fundamental analysis for EUR/USD on January 24, 2023
Apparently, market participants are once again trying to get ahead of the event, and in full confidence of a "dovish" reversal of the Fed, as well as a rapid recovery in China, are buying stocks and risky assets, which may eventually lead traders to losses.
Markets are once again overconfident. They are waiting for inflation to fall sharply, forgetting that it only happens when the economy is in recession, as it did, for example, in 2008. But there are hardly any signs of an economic slowdown in the United States today. And the Eurozone has managed to avoid a recession.
If inflation does not fall as fast as investors expect it to, EUR/US will slow the pace of recovery anyway. Moreover, the volume of net sales of the dollar reached a maximum of June 2021, and investors can start taking profits at any time, taking advantage of the release of even the most positive news from the Eurozone (buy on rumor, sell on fact). After all, when the crowd sells there is a good opportunity to buy on the downside.
So it is no coincidence that the increase of the index of consumer confidence in Eurozone to the February maximum was a signal for the decrease of the Euro, though with the release of the report there was an additional argument for the evasion of the recession.
Investors are getting greedy and the EUR/USD pullback can start at any moment. The Eurozone manufacturing and service sector business activity indexes will be released today. If forex trading on the news will allow the crowd to go long, then large investors can sell well. We will keep an eye on the level of 1.087. If the "bulls" will not be able to go higher, we will expect the decline to 1.085; 1.083 and lower.
GBP/USD is consolidating after a strong decline triggered by last Friday's US labour market report, which supported the dollar. The pair remains close to the lows of January 6, just above the key support at 1.2000.A day earlier, some support for the pound was provided by a statement from Bank of England Councillor Catherine Mann who said she believed a further rate hike was necessary as the risks of further monetary tightening were incommensurate with the risks of insufficient monetary tightening as UK inflation remained far from the 2.0% target.Economists polled by Reuters expect UK Q4 GDP to contract by 0.3%, putting pressure on sterling's position as well as the construction sector business activity index, which showed a decline from 48.8p to 48.4p in January.At the same time, retail sales for January rose by 3.9% against expectations of a 1.4% decline.GBP/USD Technical analysisBollinger Bands on the daily chart have shifted into descending direction.MACD indicator has shifted into negative range and is developing a decline, generating a sell signalStochastic oscillator has reached the minimum values.The pair is supported at the level of 1.2000, therefore it is wise to open a short position after the price gets below this level. The target is 1.1900. Placement of a stop loss at 1.2050.Stronger price above 1.2084 will tell about the return of the buyers to the market. Take-profit for the "bulls" is located at 1.2240. Stop-loss will be placed at 1.2000. 
FOREX Fundamental analysis for EUR/USD on February, 7th 2023Forex trading is comparable to the volatility of the weather. You go out in the street on a hot day and suddenly find yourself in pouring rain. It's good, if you have an umbrella. In the market you have to be constantly prepared for various surprises and be able to adjust in time to the circumstances. The January Non-farm Payrolls gave investors back the idea of a continuation of the monetary tightening cycle of the Fed, backed by the steady recovery of the US economy.At the end of last year, investors stopped believing the Fed, expecting the regulator to either raise rates lower than promised or to start cutting them soon. For some reason, the markets did not accept either the FOMC forecasts or Jerome Powell's assurances. In the end, the Fed governor had to admit that "everyone is entitled to their own opinion". But last Friday's labour market report quickly put everything in its place. On the futures market, a 25 basis point Fed rate hike in March is out of the question and the probability of a cut in May is rising day by day. If the Fed hikes three times this year at 25 basis points each, that would be 5.25%. Not a bad arithmetic for the dollar.And then Rafael Bostic added more oil to the fire, saying that the rapidly growing economy will force the central bank to do more work and raise rates higher than previously assumed. The head of the Federal Reserve Bank of Atlanta assumes that the rate will rise by 50 basis points at once during one of the meetings.The higher the rate hike and the longer it stays at maximum levels, the better for dollar buyers or EUR/USD sellersWhile the super-powerful Non-farm Payrolls has brought in losses for optimistic traders, I believe the markets have overreacted emotionally to the statistics. Most likely, the currencies will soon calm down and EUR/USD will move into a consolidation bounded by the 1.060-1.085 levels. A rebound from 1.069 or the 1.058-1.0605 support area will be used for a new buy entry.In Tuesday's Asian session the EUR/USD, after last Friday's strong bearish momentum on the release of the US labor market report, is consolidating near the low of January 12. The pair lost about 200 pips in two trading sessions.The United States economy gained 517,000 jobs in January against a forecast of 185,000. The unemployment rate declined from 3.5% to 3.4%. Also in January economic activity in the service sector grew at a high rate. The PMI for the month improved from 49.2 to 55.2 points.European statistics mostly disappointed investors. German output fell by 10.1% in January and Eurozone retail sales by 2.7%. Consumer activity in the Euro bloc lost 2.8% in annual terms.The single currency is also under pressure from rising tensions between the US and China. On Friday, Joe Biden postponed indefinitely Secretary of State Blinken's visit to Beijing after a Chinese balloonist was destroyed over United States territory.Fundamental background, technical indicators, candlestick patterns and chart patterns suggest a downward movement. In this regard, we suggest placing a sell order on EUR/USD.Sell-limit 1.0750 take-profit 1.0550 stop-loss 1.0810. 
USD/CHF is consolidating around 0.9250 on Monday after updating local highs on January 31."Bullish" momentum for the dollar was given by the US labor market report published on Friday, which recorded 517 thousand new jobs against the forecast of 185 thousand. The unemployment rate in January fell from 3.5% to 3.4%, which is the lowest in 53 years.In addition, the ISM US Services Business Activity Index strengthened from 49.2p to 55.2p for the month, rising above the critical 50p level.Tomorrow comes the Swiss labour market report.Technical analysis for USD/CHFMajor forex indicators are just beginning to rebuild after the strong dollar momentum. The Bollinger Bands are turning upwards. The MACD from below is approaching the zero line and may soon move into a positive range.Stochastic oscillator is actively rising.After a break above 0.9300, we form long positions with a target at 0.9400. Stop loss is placed at 0.9520.If pair fixes below 0.9250, we will start selling with Take Profit at 0.9150. Stop-loss is placed at 0.9300. 
The USD/JPY started the new week lower, correcting Friday's strong bullish momentum caused by the release of the US labor market report.In January the American economy created 517 thousand jobs against expectations of 185 thousand. Unemployment fell to 3.4% from 3.5% while a rise to 3.6% was expected.Friday's Asian session saw Japan's service sector business activity index reading rising from 51.1p to 52.3p. However, the indicator fell short of the forecast of 52.4 points. Nevertheless Japan's service sector continues to recover with the influx of tourists after the borders opened.Tomorrow investors are waiting for Jerome Powell who should somehow react to the strong Non-farm Payrolls.USD/JPY Technical analysisAfter such powerful price impulses, as it happened last Friday, technical indicators get confused, chart patterns and candlestick patterns can be redrawn, which increases trading risks.At the moment, the Bollinger Bands are turning up in the Daily. The MACD indicator is moving upwards from the bottom to neutral. Stochastic oscillator is rising and approaching the 80% overbought area boundary.If the price remains above 132.00, we open long positions with Take Profit at 133.60. Stop loss is set at 131.20.On consolidation below support at 131.00, short positions are generated, the target being 129.00. Stop-loss is set at 132.00. 
FOREX Fundamental analysis for EUR/USD on February 6, 2023Job growth of 517 thousand and falling unemployment to a minimum of 53 years have become a stronger argument for the dollar than Jerome Powell's assurances.Rumours of a recession in the US economy have been somewhat exaggerated. The US economy is strong and gaining momentum. The Fed can continue to tighten financial conditions without fear. This means that the risks of a corrective decline in EUR/USD are growing, the more so because hedge funds that have been building up short positions on the dollar index for seven months, are hastily covering their shorts.The symbiosis of declining inflation with a robust labour market and strong consumer activity is bringing the theme of American exceptionalism back to the markets. The waning drivers of support for the Dollar have taken on a new colour and experts are already starting to talk about a continuation of the Fed's rate-raising cycle up to 5.25%. Accordingly, the probability of a "dovish" reversal is rapidly decreasing.In addition, the dollar index is supported by geopolitical risks, namely, escalation of tensions between the USA and ChinaOf course it is unlikely that the employment figure will continue to rise at the same pace. But the markets are clearly in a hurry to change the leader amongst the forex currency indices. The USD is capable of making new 20-year highs, so EUR/USD buyers should take a break. If the pair is able to go back above 1.0825 and 1.0860, we will buy again. If not, then go short. 
On Friday AUD/USD is developing a moderate decline and trying to break below the support at 0.7050. The reason for the "bearish" dynamics was the strengthening of American dollar, caused by the results of FOMC meeting and the conference of Jerome Powell, where the head of the regulator confirmed the continuation of the cycle of tightening of the monetary policy until the inflation rate reaches the target of 2%.The dollar was also buoyed up by the release of the unemployment claims report, which showed a decline in claims over the week from 186,000 to 183,000."The Aussie gets support from the Australian and Chinese statistics. The Australian Services Business Activity Index for January rose from 48.3 to 48.6 ppts. A traditionally difficult situation in the Australian housing market, which has been exacerbated for the second year in a row by rising inflation and the RBA's rate hike.Technical Analysis for AUD/USDBollinger Band indicator remains in daily growth phase while MACD is declining in positive range and has formed a firm sell signal. Stochastic Oscillator is in a flat and does not give any signals.With a confident breakdown of the support at 0.7050, we form a sell with Take Profit at 0.6950. Stop loss is set at 0.7100.If the pair turns, consolidation above 0.7100 will indicate this. In this case we buy with a target level of 0.7202. Protective stop is moved to 0.7050. 
FOREX Fundamental analysis for EUR/USD on February 3, 2023The European Central Bank confirmed its intention to continue tightening of the monetary policy, but in 2023 the markets do not want to believe the regulators, which confirmed the decline in European bond yieldsIt would seem that the Bank of England raised the rate by 50 bps but in fact it only weakened sterling as investors cared more about UK inflation forecasts promising a decline to 4% this year.The same situation is with the European currency. Christine Lagarde assured that the work of the Central Bank is not over yet. Moreover, the regulator plans to increase the pace of monetary restriction, but investors pulled out of the accompanying statement the phrase that the further direction of monetary policy will be determined after March. Many experts believe that in the first month of spring the cycle of rate hikes from the ECB may end without really starting.An important report on the U.S. labor market is coming out today. Employment is expected to rise to 190K, which is the lowest level in two years. Notably, the weak statistics may spook the markets and support the dollar. John Murphy's technical analysis identifies 1.0865, 1.082 and 1.0800 as the key supports. If the levels hold, we will form new purchases. 
After yesterday's FOMC meeting and Jerome Powell's conference, the US dollar continued to decline as investors are waiting for the Fed to move to monetary policy easing. Against this backdrop, the USD/CAD broke support at 1.3300 and is developing a downward movement.The Fed predictably raised the rate by 25 basis points, and Jerome Powell noted the need to continue the cycle of monetary restriction. At the same time, the futures market believes that the February increase was the final one this year, and by the end of 2023 the Fed will lower the rate by 50 bps.Canada released its GDP report showing November growth of 0.1% (m/m) with a simultaneous decline from 3.1% to 2.8% (y/y).USD/CAD Technical AnalysisDaily USD/CAD is about in the middle of a downward channel and heading toward its lower boundary. The Alligator averages as well as the awesome oscillator give a sell signal.After the pair has consolidated below 1.3220, we open a sell position towards 1.3000. Stop-loss is set at 1.3300.In case of the pair's reversal we wait for the price to consolidate above resistance at 1.3300 and from here we start long positions with Take Profit at 1.3480. Protective stop will be set at 1.3240.