Elizabeth Belugina
Technical Analysis

USD/JPY: outlook for February 20-24

USD/JPY managed to test resistance close to 115.00 as Trump didn’t criticize currency Japan’s policy at the latest meeting with Shinzo Abe, but then got rejected lower on the general setback in demand for the greenback. The pair formed a shooting star candle against the 50-day MA. The force of this resistance has thus increased. However, the US dollar will have support around 112.50 (here was a buying interest in January). As long as the pair stays above this point, we’ll be looking for the opportunities for long positions. Below 112.50 focus on support at 111.40 and then 109.90. Japan’s GDP growth slowed down from 0.3% in Q3 to 0.2% in Q4, although industrial production increased more than expected in December. Japan will release trade balance figures on Monday and flash manufacturing PMI on Tuesday. In addition, don’t forget to watch US data and FOMC meeting minutes. Finally, remember that USD/JPY is sensitive to changes in global risk sentiment. Demand for the safe havens may lead to further decline in USD longs and buying of JPY.
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Elizabeth Belugina
Technical Analysis

GBP/USD: outlook for February 20-24

In line with our expectations GBP/USD spent the week consolidating between 1.2380 and 1.2550. The topic of Brexit is temporarily on the sidelines, ready to resurface later this month. Economic data released in the UK mostly disappointed. CPI growth was a bit lower than expected, while the growth pace of average earnings declined. British retail sales also contracted in January. The most important releases of the upcoming days include public sector net borrowing on Tuesday and second estimate GDP and prelim business investment on Wednesday. The bears made another assault on the 100- and 50-day MAs just above 1.2400, but failed to keep the pair below these lines. On H4 the 200-period MA once again acted as good support (cur
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Elizabeth Belugina
Weekly Outlook

US dollar: outlook for February 20-24

US dollar index rose to 101.75 during the past week before returning back to 100.55 area. Economic data released in the US were mixed. January CPI, PPI, retail sales, building permits and Philly Fed manufacturing index exceeded forecast, although industrial production disappointed. The Federal Reserve Chair Janet Yellen told the Congress that the regulator could cause a recession if it waited too long to raise interest rates. This statement surprised the market given the sluggish wage growth and the uncertainty created by Donald Trump’s presidency. The market players still don’t believe that the Fed will raise rates 3 times this year and this is diminishing USD strength. The resignation of the US National Security Adviser Michael Flynn did provoke investors’ concerns. However, Trump did promise to unveil a "phenomenal" tax plan in the coming weeks. Hopes of fiscal stimulus should provide the US dollar with some support.
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