Fundamental Analysis of GBP/USD for February 12, 2019
2019-02-12
GBP/USD dropped below 1.2930 area under impulsive bearish pressure recently which changed the bias to bearish, aiming for further bearish momentum. The UK GDP showed a slowdown in the domestic economy in the final quarter of 2018. Besides, the BREXIT pressure is still going on that is certainly bearish for GBP in the medium term.
British Finance Minister Hammond's expressed an optimistic approach to turn the country's budget deficit to surplus by 2020. However, his optimism is currently fading away as he relaxed his grip on public spending last year. Recently UK GDP report revealed that economic growth contracted to -0.4% in December month-on-month from the previous 0.2% gain which was expected to be at 0.0%, Manufacturing Production decreased to -0.7% from the previous value of -0.1% which was expected to increase to 0.2%, Prelim GDP eased to 0.2% in Q4 2018 from the previous value of 0.6% which was expected to be at 0.3%, and Prelim Business Investments also decreased to -1.4% from the previous value of -1.1% which was expected to be at -1.3%. Additionally, UK Prime Minister Theresa May is currently looking for more BREXIT talks with the EU but the eurozone negotiator is not really falling for May's proposal. So, there is a growing likelihood of No Deal BREXIT on March 29th.
On the other hand, recently Federal Reserve Governor Michelle Bowman stated the US economy is on a sound footing and the ongoing monetary policy is likely to spur economic growth. The US congressional negotiators reached a tentative deal to avert another partial government shutdown on Friday as it is eroding the overall economic growth if no proper measures are taken in due time. Today FED Chair Powell is going to speak about the upcoming policies and steps of monetary tightening. His comments are expected to have a positive impact on USD gains in the coming days.
Meanwhile, USD is the dominant currency in the pair which is being supported by the optimistic FED and downbeat economic reports from the UK. Until the UK comes up with better economic data and fundamentals which is highly unlikely at present, GBP is set to lose more steam.
Now let us look at the technical view. The price is currently trading below 1.2930 area with an impulsive bearish daily close from where it is expected to retrace and retest in the coming days before pushing much lower in the future. As the price remains below 1.30 area with a daily close, the bearish bias is expected to continue further.
SUPPORT: 1.2500, 1.2700-50
RESISTANCE: 1.2930, 1.30
BIAS: BEARISH
MOMENTUM: VOLATILE
Elliott wave analysis of EUR/JPY for February 12, 2019
2019-02-12
After a day of range-trading, we are still looking for a break above minor resistance at 125.07 to confirm wave ii has completed and wave iii higher to 133.54 is developing.
That said, we need to be aware of the possibility of a deep corrective decline in wave ii as long as minor resistance at 125.07 is able to cap the upside. A break below support at 123.79 will call for a deeper corrective dip to 123.20 before wave ii should complete and wave iii higher will be ready to take over.
R3: 125.95
R2: 125.34
R1: 125.07
Pivot: 124.75
S1: 124.45
S2: 124.15
S3: 123.79
Trading recommendation:
We are long EUR from 124.65 with our stop placed at 123.70
Elliott wave analysis of GBP/JPY for February 12, 2019
2019-02-12
Nothing really have changed here. After a day of narrow range-trading, we continue to look for a break above minor resistance at 142.63 to confirm that wave iv/ has completed and wave v/ higher towards 151.50 is developing.
That said, we need to be aware, that as long as minor resistance at 142.63 is able to cap the upside. A dip to below 142.12 can not be excluded, even though we think the odds for this outcome is very low.
R3: 144.18
R2: 143.13
R1: 142.63
Pivot: 141.85
S1: 141.12
S2: 140.60
S3: 140.03
Trading recommendation:
We will buy a break above 142.63 with our stop placed at 142.00
Fundamental Analysis of EUR/JPY for February 12, 2019
2019-02-12
EUR/JPY is currently trading higher after breaking below 125.00 with a daily close recently. The price is expected to make a correctional decline along the way. The eurozone is facing a slowdown which has been proved by recent downbeat economic reports. This is certainly bearish for EUR.
Citing Finance Minister Mario Centeno, a slowdown in the eurozone's economy is caused by political risks which the EU policymakers should bear in mind. Most countries in the eurozone have reported evidence of a slowdown in their domestic economies that dents the overall growth in the eurozone. Another headwind is the looming divorce of the UK with the EU. Moreover, ECB Vice President Luis De Guindos recently stated that the inflation will rise on the back of higher wages and ultra-loose monetary policy. Today, German Buba President Weidmann is going to speak on the eurozone's key interest rates and future monetary policies. His speech is unlikely to provide EUR with support. In case the policymaker expresses hawkish rhetoric, certain bullish momentum is expected in the pair in the coming days.
On the JPY side, today M2 Money Stock report was published unchanged as expected at 2.4% whereas Tertiary Industry Activity showed a slight increase to -0.3% from the previous value of -0.4% which failed to meet the expected value of -0.1% and Prelim Machinery Tools Orders showed a slight decrease to -18.8% from the previous value of -18.3% which affected the overall JPY growth, leading to certain EUR gains for a while. At present, JPY is a firmer currency in the pair on the back of stronger Japan's economy, while a slowdown in the eurozone's economy is affecting EUR strength.
Now let us look at the technical view. The price has recently breached below 125.00 area and as well as the trendline support which is currently being retested. The price is currently expected to push lower towards 122.50 support area in the coming days as it remains below 126.00 area with a daily close.
SUPPORT: 122.50, 123.50
RESISTANCE: 125.00, 126.00
BIAS: BEARISH
MOMENTUM: VOLATILE
Technical analysis for EUR/USD for February 12, 2019
2019-02-12
EUR/USD has made a new lower low relative to the January low. This is a bearish development for the medium- and longer-term trend. Our expectations of a bounce were not confirmed as price remained below 1.1350 resistance and provided a new lower low below 1.1280. Nevertheless I believe bears will get better entry points after a bounce rather than short the market at current prices.
Green line - trend line support
Black rectangles - bounce targets
Black lines - bullish divergence
Despite the new lower low the RSI continues to provide a bullish divergence. The entire decline from 1.15 will soon be over if it is not already over and I continue to expect a bounce. Targets for a bounce are at 1.1360-1.1370 and at 1.1420. Trend remains bearish as long as price is below the red downward sloping trend line. Medium to longer-term target is at 1.10 as long as we trade below 1.15.
Technical analysis for Gold for February 12, 2019
2019-02-12
Despite Dollar strength Gold price remains above recent lows at $1,302 and continues to respect previous resistance now support at $1,300. Breaking above $1,317 will open the way for new highs.
Yellow rectangle- support
Black rectangle - resistance
Gold price remains in a bullish trend. Price is above the $1,300 support and still inside the bullish channel. Resistance is found at $1,317 and if broken we should see a test of $1,326 at least. A rejection at $1,326 will most probably lead to another move towards $1,300. If we break above $1,326 we should expect Gold price to reach $1,340-50 area.
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