EUR/USD: Euro drops to November 2022 levelsThe euro continues to show a decline in the EUR/USD pair during the Asian session on January 13, again trying to break through the 1.0200 mark and updating the November 2022 lows. The pair is rapidly approaching parity, and at the moment there are no obvious factors that can stop this movement.The US dollar is supported by expectations of the first steps of the newly elected President Donald Trump after the inauguration on January 20. Among the announced plans of the Republican administration is to increase import duties on goods from Canada and Mexico, which could accelerate inflation and force the Fed to tighten monetary policy. In addition, Trump's statements about the strategic importance of Greenland and the possibility of its return to US control are attracting the attention of the markets. His adviser Mike Waltz has already admitted that various ways of implementing this plan may be considered, including military measures.European investors are also analyzing December inflation data. On a monthly basis, the consumer price index rose from -0.3% to 0.4%, and on an annual basis — from 2.2% to 2.4%. Core inflation increased from -0.6% to 0.5%, reaching 2.7%. However, analysts believe that these figures are unlikely to affect the current policy of the ECB. Deutsche Bank experts note that despite the annual inflation rate in the service sector of about 4.0%, its growth rate and wages are slowing down. This allows us to expect to reach the target level of 2.0% by February. If the forecasts are confirmed, the ECB may consider lowering interest rates below the neutral level in 2025.Resistance levels: 1.0253, 1.0300, 1.0350, 1.0400.Support levels: 1.0200, 1.0150, 1.0100, 1.0050.GBP/USD: strong downward momentum of the pound is gaining momentumThe pound continues to develop the downward trend established last week, when the GBP/USD pair began to adjust from the local highs reached on January 7. The quotes are now approaching the 1.2140 level, testing it for a downward breakout. The US dollar is receiving additional support due to strong statistics on the US labor market.On Wednesday at 09:00 (GMT+2), the attention of British investors will be focused on inflation data. Analysts expect the annual core consumer price index to remain at 3.5%, while the overall figure could be 2.6% year-on-year and 0.1% month-on-month. Also at this time, a report on retail prices will be published, which predicts a slight increase from 3.6% to 3.7%. On Thursday, the market will focus on the November UK GDP and industrial production data. Economists assume that both indicators will show positive dynamics.: GDP may grow by 0.2% after a decrease of 0.1%, and industrial production — up to 0.1% after a fall of 0.6%.Market participants are also assessing recent statements by the Deputy governor of the Bank of England, Sarah Breeden. She noted that current economic statistics indicate the possibility of a gradual easing of monetary policy, but the exact timing and pace of rate cuts remain uncertain. According to her, against the background of tax indexation carried out by the Labor government, the weakening of the national economy may continue, which requires a balanced approach from the regulator.Resistance levels: 1.2150, 1.2200, 1.2230, 1.2261.Support levels: 1.2100, 1.2036, 1.2000, 1.1950.USD/CHF: NBS expects revenue of 80.0 billion francs for 2024he US dollar is showing mixed dynamics in the USD/CHF pair, holding near the level of 0.91 70. At the start of the new trading week, buyer activity remains subdued, and there are no prerequisites for a noticeable corrective movement yet. The dollar is supported by expectations related to the start of the new term of Donald Trump, whose inauguration will take place on January 20, as well as data on the state of the US labor market, which may affect the monetary policy of the regulator.The Swiss National Bank forecasts a record profit of 80 billion francs by the end of 2024, which will be the highest figure since the establishment of the institution. The main factors of this result are the growth of the dollar, the appreciation of precious metals and successful investments in shares of the largest technology companies. The strengthening of the US currency, which accounts for 39% of the bank's reserves, contributes to an increase in the value of assets when converted into francs. In addition, the increase in gold prices, which rose by 27% last year, increased the value of 1.04 million metric tons of this metal on the bank's balance sheet. The official report will be published on March 3, but analysts are confident that the bank's shareholders can expect to receive their first dividend payments in the last three years.Resistance levels: 0.9188, 0.9225, 0.9250, 0.9300.Support levels: 0.9150, 0.9130, 0.9100, 0.9037.USD/JPY: quotes are moving away from recent peaksThe USD/JPY pair is showing a decline, retreating from Friday's peak at 157.35. This trend is associated with the release of new data on Japanese macroeconomics.According to November statistics, the household spending index increased by 0.4% on a monthly basis, while analysts had forecast a decrease of 0.9%. On an annualized basis, the indicator decreased by 0.4%, which turned out to be a less significant decline compared to the expected decrease of 0.6%. Experts emphasize that the current wage growth rates offered by employers in Japan are insufficient to cover inflationary costs. This, along with the weakening of the yen, increases the financial burden on households and reduces the likelihood of continued tightening. Representatives of the Bank of Japan have previously stressed that the future of monetary strategy will depend on current economic statistics. In case of accelerated price growth, the interest rate may change. Currently, annual inflation is 2.9%, which exceeds the target level of 2.0%. If the growth rate continues, the regulator will have to take decisive action, which may support the Japanese currency.Resistance levels: 161.93 164.07.Support levels: 156.25, ...
During Asian trading on Thursday, the pound weakened against the US dollar, retreating to the level of 1.2208, after violent movements the day before.Investors are following the inflation data for December with interest. The monthly figures showed an increase from 0.1% to 0.3%, while the annual figures decreased from 2.6% to 2.5%, which turned out to be worse than expected at 0.4% and 2.6%, respectively. Core inflation rose from 0.0% to 0.3%, but decreased from 3.5% to 3.2% year-on-year. Experts warn that inflationary pressures may intensify in the coming months due to rising energy prices and tax indexation under the new Labor budget. In the first half of the year, inflation may reach 3.0%, which is significantly higher than the Bank of England's target of 2.0%.Economists polled by Reuters expect the Bank of England to cut rates four times this year to support the economy. However, the growth of inflationary risks may force the regulator to slow down the pace of monetary expansion. The majority of respondents predict a reduction in rates by 25 basis points, to the level of 3.75%.In the US, annual inflation accelerated from 2.7% to 2.9% in December, which confirms the validity of the Fed's cautious approach to lowering rates in 2025. Monthly CPI figures increased from 0.3% to 0.4%, while the base indicators slowed from 3.3% to 3.2% in annual terms and from 0.3% to 0.2% on a monthly basis. The index of business activity in the manufacturing sector of the Federal Reserve Bank of New York in January fell from 2.1 to -12.6 points, significantly worse than the forecast of 3.0 points.Today, the attention of British investors is focused on the GDP data for November. An increase of 0.2% is expected after a decrease of 0.1% in the previous month. Industrial production is projected to grow by 0.1% after falling by 0.6%, but the annual dynamics may worsen from -0.7% to -1.0%.On the daily chart of GBP/USD, the Bollinger Band indicator shows a downward trend with a slight narrowing of the range from above. The MACD warns of a possible upward reversal, while the Stochastic retains short-term growth potential.After breaking down the 1.2150 level, it is recommended to open short positions with a target of 1.2036 and a stop loss at 1.2200.For purchases, you should wait for the breakout of the 1.2261 level. The target is 1.2400. Stop loss at ...
GBP/USD trading idea on January 15, 2025On Wednesday in the Asian session, GBP/USD shows a slight decrease, trading near the level of 1.2200. The pound remains near multi-month lows, due to the fall in the value of British government bonds and weak macroeconomic statistics, which increase the likelihood of further monetary easing by the Bank of England.Investors are evaluating the UK inflation data released this morning. In December, the consumer price index increased by 2.5% year-on-year, which is lower than the forecast of analysts who expected growth to 2.7%, and lower than the November figure of 2.6%. On a monthly basis, inflation increased by 0.3% against 0.1% in November. Core inflation, excluding volatile categories such as food and energy, increased by 3.2% year-on-year compared with the previous value of 3.5%. These data may give the Bank of England grounds to resume interest rate cuts in order to stimulate the economy and mitigate the effects of the new government's tax reform. Sarah Breeden, Deputy Governor of the Bank of England, noted last week that current macroeconomic data support the idea of a gradual rate cut. In this regard, UBS analysts expect that in February the British regulator may continue the cycle of monetary expansion.Additional pressure on the pound is exerted by the crisis of the UK debt market. The yield on 30-year bonds has reached its highest in 26 years, raising concerns about the country's fiscal sustainability. Investors are actively selling off British bonds amid rising government debt, slowing economic growth and ongoing inflation risks. Rising yields have already increased the government's debt service costs, which may lead to the need for higher taxes and government spending cuts. This worsens the prospects for the British economy and increases pressure on the GBP/USD pair.Pending GBP/USD orders:Sell Stop at 1.2160 with a target at 1.1900 and a stop loss at ...
An impressive sight is unfolding in the foreign exchange market: the British pound, which had recently shown signs of strength, is now rapidly losing ground. After reaching local highs on January 7, the GBP/USD pair is steadily moving down, approaching the critical mark of 1.2140, where a real battle of bulls and bears may unfold.The catalyst for the current movement is the American economy, which has once again surprised the markets with its resilience. The December labor market data turned out to be truly impressive: the US economy created 256 thousand new jobs, which exceeded the most optimistic forecasts of analysts by almost a hundred thousand. At the same time, even the November figures were revised only slightly – from 227 to 212 thousand, which indicates the stability of the positive trend.The dynamics of wages also paints an interesting picture: despite a slight slowdown in growth – from 4.0% to 3.9% year–on-year and from 0.4% to 0.3% month-on-month - the indicators remain at levels comfortable for the economy. The unemployment rate also pleased investors, dropping from 4.2% to 4.1%.Such strong statistics significantly change expectations regarding the actions of the Federal Reserve System. Previously, the market actively priced in aggressive monetary policy easing, but now forecasts have become much more restrained: only two rate cuts of 25 basis points in the second half of the year. The Fed seems to have taken a pause to assess the potential impact of the new administration's policies on inflationary processes.On the British side of the Atlantic, investors froze in anticipation of important statistics. On Wednesday, the market will closely monitor inflation indicators. Analysts predict a slight decrease in the core consumer price index from the current 3.5% in annual terms. Thursday will bring data on GDP and industrial production for November, where a moderate recovery is expected: by 0.2% and 0.1%, respectively.Of particular interest is the position of the Bank of England, voiced by the deputy head of the regulator, Sarah Breeden. Her recent comments indicate a willingness to gradually reduce interest rates, although the exact pace of this process remains a matter of debate. It is noteworthy that the regulator is already detecting signs of a slowdown in economic activity, which may intensify against the background of tax initiatives of the Labor government.Technical analysis for GBP/USD for todayTechnical analysis paints a bearish picture. The Bollinger Band indicator is expanding, showing an increasing downward momentum. The MACD is confidently signaling sales, and the stochastic oscillator is approaching the oversold zone, hinting at a possible short-term correction.Under these conditions, traders should closely monitor the 1.2100 level: its confident breakdown can open the way to 1.1950, while a rebound and an upward break of the 1.2200 resistance can reverse the trend towards ...
The foreign exchange market is better known as Forex or FX. Trading in this market has become very popular in recent years. However, this is not the case - Forex trading raises a number of questions. For example: what is the foreign exchange market? Which currency pairs are best to trade? Is currency trading risky? Some of the answers to these questions will be found in this article.What is the Forex market?The foreign exchange market is also called the Forex market or the English foreign exchange market. It is simply a market where currencies are exchanged. According to the Bank for International Settlements (BIS), the foreign exchange market is the largest market in terms of total volume, with up to USD 5 trillion traded daily. It is not a physical place, but rather an electronic network where institutions or individuals trade with each other.The left-hand currency is called the base currency and the right-hand currency is called the quote currency. The second currency indicates the value relative to 1 unit of the base currency. For instance, the formula EUR/USD = 1.4000 implies that EUR/USD trades at 1.4000, i.e., 1 Euro has a value of $1.40. The first currency is always expressed in the second currency. USD/JPY at 110.50 means that one USD is worth JPY 110.50. EUR/USDWhat are the best currency pairs to trade?The best currency pairs to trade effectively depend on your trading style. If you have a short term strategy, for example, if you like to scalp, then the major currency pairs will be most profitable for you because of the low spreads.On the other hand, for a fundamental trader, smaller currency pairs will be of interest based on long-term analysis. The most profitable currency pairs may be those involving the Australian dollar, Japanese yen or Canadian dollar.The best forex currency pairs:EUR/USD: this pair has the lowest spread and is not very volatile.GBP/USD: this pair is interesting in terms of spreads and possible gaps, but it is quite volatile.USD/JPY: this pair has low spreads and offers some interesting possibilities. GBP/USDHow to get started trading currencies online?To start trading currencies online, follow these steps:- Choose a regulated and reputable broker- Choose a broker by the quality of execution of trading instructions- Decide on the trading style that suits you best (scalping, intraday trading, swing trading - you keep your position open for several days)- Determine the appropriate leverage effect in the stock market according to your strategy and experience.- Do not invest more than you can afford to lose.- Choose an intuitive, simple and secure trading platform such as MetaTrader 4.- Try all the above steps on a demo account, before trading live.Read more: Features of intraday trading on the Forex marketGoldIs online currency trading dangerous?Like any financial investment, currency trading online is subject to risks. However, there are different methods to control these risks:- Determine the price of the currency pair at which you want to close a position if developments are unfavourable (for example, if you buy and the price falls, or if you sell and the price rises),- Determine the size of the trade so that your potential loss should not exceed 2-3% of your capital per trade,- Estimate your risk/return ratio (loss/profit) before you open the trade. By default you should have a greater potential for profit than loss, e.g. risk 50 pips, but try to make a profit of e.g. 100 pips.For proper money management and risk reduction it is advisable to start trading on a demo account and try things out on the dirt first. Such an account will allow you to trade in real market conditions, but with fictitious capital, so that you have a complete understanding of the foreign exchange market without any risk.Read more: Forex broker: how to choose a good ...
