- The Greenback was even against a bucket of currencies; the dovish FOMC sentiment is still in play.
- The sideways market may have a breakout today.
- US consumer confidence and housing-related figures are due later in the day. These could provide near-term cues for the forex market.
On Monday, the Greenback was steady but traded under bearish pressure against most its peers. It seems like investors are waiting for a solid fundamental reason to determine the direction of the market. As of now, the market trend is unpredictable as forex pairs and commodities are consolidating in narrow ranges. We may see price action on the release of economic events.
Major Economic Events Today
USD – FOMC Member Evans Speaks
At 10:30 (GMT), the US FOMC member Evans is scheduled to participate in a moderated question and answer session about the Federal Reserve policy’s impact on Hong Kong, at the University of Chicago Francis and Rose Yuen Campus, in Hong Kong.
Honestly, I’m not expecting any surprises here. But it’s a question and answer session, and any surprising remarks from Evans will make an impact.
GBP – MPC Member Broadbent Speaks
Broadbent is due to testify on the governance of statistics before Parliament’s Public Administration and Constitutional Affairs Committee, in London. The event is scheduled at 11:00 (GMT) and so far it’s not expected to drive any massive move in the market.
USD – CB Consumer Confidence
Here comes the most important economic event of the day, the Consumer Confidence. It’s a survey of around 5k households which asks respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall financial situation.
Is it a bit hard to grasp? Let me simplify it for you. The consumer with a higher level of confidence on economic growth tends to spend more, as compared to the rest of the folks. Hence, a higher level of consumer confidence can lead to a higher level of inflation, GDP and ultimately better employment status.
Lately, Consumer Confidence has deteriorated distinctly towards the end of the year, which I believe was mainly due to US companies enhancing imports from China ahead of the proposed tariff hikes in January.
For now, Consumer Confidence seems to gain upward momentum as the tariff hike from 10% to 25% is subsequently delayed, and US andChina are very likely to enter a trade deal. Anyhow, a rise of 132.1 vs. 131.4 beforehand is on the cards now.
EUR/USD – 200 Periods Moving Average Pushes the Euro Lower
It’s been a quiet session for the EUR/USD as most of the investors didn’t find any solid reason to determine the trend of the market. Technically, EUR/USD is consolidating in a thin trading range of $1.1310 – $1.1270. The RSI and Stochastics are out of the oversold zone, but the recent candlestick patterns are suggesting a potential for further sell-off in the pair.
On the 4-hour timeframe, the pair is gaining support above $1.1280 with resistance around $1.1320 and $1.1340. The bearish breakout of this pattern can lead the direct currency pair towards $1.1265. While we may see the pair soaring towards $1.1340 above $1.1305.
Daily Technical Levels
Key Trading Level: 1.1322
EUR/USD – Trade Plan
The idea is to stay bearish below $1.1310 with a stop loss above $1.1325 and take profit at $1.1270. While buying is preferred above $1.1320 for quick take profit of around 50 pips.