06/01/2020
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
EURUSD started last week with a light drop even if the three first days were bullish and brought the pair to the area of 1.1240. The recent news though by the end of last week, changed the pair’s outlook, after the killing of Qassem Suleimani from the US forces. EURUSD took a strong downtrend that pushed it to the area of 1.1125 and it finally closed last Friday at 1.1159. During the current week, there’s a total return to the scheduled economic news and announcements after the Christmas holidays. The most important expected news for this week has to do with NFPs and Unemployment Rate in USA for the month of December. The long-term trend of EURUSD that started from the beginning of 2018 and the price area of 1.25, seems to still stand and after the latest markets’ turbulences, we’ll open sell positions targeting the price of 1.1070.
In case of de-escalation of the Middle East crisis may bring USD back to its downtrend and maybe we’ll see EURUSD to the area of 1.14. USD remains overbought and a risk on mood in combination with the US elections may push USD even more.
It takes a lot of attention in any case because the announcements by the end of the week may increase the pair’s volatility a lot.
GBPUSD
GBPUSD started last week with a strong bullish trend, especially last Tuesday, that brought it significantly above 1.32 (weekly high at 1.3284). After the New Year’s Day where traditionally we see low volatility, there were two strongly bearish days since GBPUSD was also affected from the USA – Iran news and so the week closed at 1.3080. This week does not contain very important news for the UK economy and as a result we expect to see Brexit’s domination again (there is an important meeting of Boris Johnson with an EU officer this week). News and progress from Middle East will also be important for the pair. Since prices are above 1.30, the scenario of the uptrend continuation is strong enough that’s why we will open buy positions this week, targeting the price of 1.32. GBPUSD may constitutes the best mid and long-term selection for the investors & traders, since potentially may reach prices between 1.45 and 1.50 in the next two years.
USDJPY
The biggest drop of the last weeks we saw for USDJPY which opened at 109.45 and closed at 108.08 (losses above 1.25%) since besides the weak USD that encourages pair’s sellers, new JPY buyers appear because JPY is traditionally a safe haven asset, especially during the periods of uncertainty and concerns. There’s serious evidence that after the killing of Qassem Suleimani in Middle East by the US forces, we’ll see a more deepen crisis since the red war flag in Iran already flows. On the other hand, the US economic announcements last week were rather negative, pressing USD even more. As a result, we see a further drop for the pair and we’re looking for a take profit close to 106.70 for our sell positions, even if JPY in the log-run is very weak.
EURJPY
Strongly bearish was last week for EURJPY which dropped from 122.36 to 120.61, approaching during last Friday even the price of 120 (weekly low at 120.17). From one side, such a drop puts the uptrend channel that has been developed since last September to the test but on the other hand since we don’t see a breakout of the milestone price of 120 (maybe of the support of 119.60 too), we cannot be sure for a trend reverse. Traders select JPY as a risk averse asset because the recent news from Middle East have brough a lot of uncertainty in the air and so we’ll take our chances with sell positions this week with main targets the price areas of 120 and 119.60.
EURGBP
After the big drop of last Tuesday that brought EURGBP to the price area of 0.8450, there was a strong bullish reaction the rest days of the week and finally the Friday’s close was at 0.8530, near enough to last Monday’s weekly open. It was the 2nd in the row week of uncertainty for the pair which has some movements during the week but finally it returns back to its opening price. This behaviour confirms the investors uncertainty for the near future of the pair and in such cases, the scenario that gathers probabilities is with the long-term trend which is currently bearish. We’ll trust this scenario by opening sell positions with main target the price area of 0.8450. As we’ve already mentioned at GBPUSD section, maybe this pair is a very good mid and long-term selection for the patient traders.
USDCAD
We witnessed the 6th in a row bearish week for USDCAD which opened at 1.3074 and lost on last Tuesday the “castle” price of 1.30, dropping at 1.2951. The rest of the days were rather consolidative, except Friday which was kind of bullish and brought the pair close to 1.30 again. It was another confirmation that the psychological supports and resistances of round numbers are very important to the markets. The weak USD and the high oil prices have been very critical for the strong CAD of the last weeks. Current week has also opened bearishly and since things remain this way, the scenario of prices fixing below 1.30 is really strong. We’ll open sell positions, looking for an exit close to 1.29. We should also remind that this price area is a multi-month low and in combination with the important economic announcement next Friday for both USA and Canada may signify surprises to the markets.
USDCHF
Slightly bearish was last week for USDCHF, which opened at 0.9747 and closed at 0.9723. During last week though, we saw prices a lot below 0.97, close to 0.9646. Since mid-week we saw a bullish reaction that caused a recover for the pair above 0.97. We also need to underline that we hadn’t seen prices close to 0.9650 since September of 2018 and although the USD is very weak, such a big drop for USDCHF is not completely justified. The continuation of the bullish reaction to the price area of 0.9820 is very possible that’s why we’ll open buy positions this week. Of course, we do not forget NFPs in the end of the week.
AUDUSD
Clearly bearish was last week for AUDUSD since last Thursday & Friday were really bearish and took back the profits of the first days. Weekly open was at 0.6974, during last Tuesday the price climbed up to 0.7032 and finally the weekly close was at 0.6947. Early this Monday, the Australian Services PMI was announced and even its price was above expectations, we don’t see a bullish reaction for AUDUSD. A very critical factor will be the NFPs in the end of the week as well as the Chinese Consumer Price Index. The point is that we don’t have strong uptrend reverse conditions yet and maybe the best selection is to stay out this week. Instead of opening positions on AUDUSD this week, we‘ll try buy positions on AUDNZD pair because statistically the big divergence between the two currencies is very possible to close and dull.
SP500
A week of price consolidation we saw for SP500 which closed at 3,235 points, very close to its weekly open. It was a break from the sequence of bullish weeks but it has happened again in the beginning of December and it was rather a necessary stoppage for the Index in order to gather more strength. Since we don’t have enough evidence for a price correction, the buyers will insist and the bet for a new all-time high price above 3,262 points is active again. Long is our selection for one more week. We should also pay special attention to the Middle – East updates because the scenarios of war events are very strong. Also let’s keep our eyes on US NFPs on Friday.
DAX30
Finally, we saw a good movement for DAX30 after the sideways trend of last weeks. This movement was bearish, the weekly open was at 13,292 points and the weekly close at 13,177 points (losses close to 0.86%). Now the next target for sellers is the price area of 13,000 points and a solid breakout of these levels may bring the Index significantly lower. We align with sellers this week by opening short positions. Also, there’s a lot of interest in a strategy of long on SP500 with a synchronously short at DAX30 andNikkei225.
FTSE100
The uptrend of FTSE100 stopped last week since we had a price drop from 7,627 points to 7,596 points or losses circa 0.24%. This drop would be even sharper but the bullish reaction of last Thursday provided a recovery. The Index seems to react bullishly above 7,500 points that is why we will favour long positions this week, targeting the price area of 7,630 points.
Gold
We saw a volatile price rise for gold last week which opened at $1,511.6 in the beginning of last week and closed near to $1,552 on last Friday with profits more than 2.6%. This strong uptrend carries on this week too as well and early this Monday that price is above $1,577. Now the gold prices are in levels that we have not seen since 2013 and as long as the investors trust the best safe haven asset in the world, the only stops for this uptrend would be some corrective movements and some short-term profit takings. The news from Middle East and the price of USD will be critical but it won’t stop us from opening buy positions this week.
US Oil
Oil prices had profits for the 5th week in a row. Oil price opened at $61.57 and closed at $63.90 with profits close to 3.8%. The Middle East news are rapid and heavy: Iran announced that pulls back from nuclear deal that signed in 2015 and the war scenarios now are very strong. Early this Monday, the prices are moving even higher, above $64, reaching to a multi-month high. Only a de-escalation of the crisis would stop this crazy rally but such a case is not possible under the current circumstances. On the contrary, if USD gets weaker, the oil prices uptrend will be stronger. We’ll open long positions this week and we’re looking for 1% – 2% profits. The Unemployment Rate announcement for USA on Friday will also be critical.
Bitcoin
Even if last week was marginal bearish for Bitcoin (weekly open at $7,372 and weekly close at $7,357 – 0.2% losses), the important fact is that after last Friday’s news and Middle East crisis, we see a bullish reaction. It proves that cryptocurrencies tend to become alternative solutions for investors. The bullish reaction seems to carry on due to global concerns and uncertainty and maybe this was the trigger for Bitcoin for a strong recovery. Trusting this scenario, we’re keen to become buyers with a first target at $7,850.
