Positive risk vibes and a full calendar ahead for the U.K. and euro area makes this short-term setup on EUR/GBP one to watch to close out the week.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13390.47 +1.07% FTSE: 7600.95 +0.78% S&P 500: 3239.28 +0.26% DJIA: 28659.06 +0.42% |
US 10-yr 1.854% -0.056 Bund 10-YR -0.23% -0.043 UK 10-YR: 0.779% -0.046 JPN 10-YR: -0.02% -0.015 |
Oil: 60.89 -0.28% Gold: 1532.70 +0.63% Bitcoin: 7111.79 -0.83% Etherium: 129.08 -0.59% |
Fresh Market Headlines & Economic Data:
- China cuts banks’ reserve ratios again, frees up $115 billion to spur economy
- Oil starts 2020 steady as trade optimism, Mideast tensions support
- U.S. jobless claims edge lower but trend points to uptick in filings
- U.S. Manufacturing output continues to recover amid further new order growth
- Canadian Manufacturing PMI hits four-month low in December
- UK manufacturing output contracts at fastest pace in almost seven-and-a-half years
- UK companies turn a little less gloomy over Brexit impact: BoE survey
- Eurozone Manufacturing downturn deepens during December
- German PMI shows weak end to 2019 for manufacturing, but brighter prospects for year ahead
- German employment hits record high in 2019, but momentum fades
- Australia Index of Commodity prices fell by 2.1% y/y in SDR terms
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. Housing Prices at 7:00 am GMT (Jan. 3)
- French Inflation at 7:45 am GMT (Jan. 3)
- Spanish Unemployment change at 8:00 am GMT (Jan. 3)
- German Unemployment rate at 8:55 am GMT (Jan. 3)
- Euro area Loan growth & M3 money supply
- U.K. Mortgage approvals at 9:30 am GMT (Jan. 3)
What to Watch: EUR/GBP
Kicking of the new year with this look at EUR/GBP on the one hour chart. We’ve got a positive global risk environment after China adds stimulus to their economy and slew of upcoming European and U.K. economic data points that could keep volatility elevated into the Friday trading session.
If you’re a short-term bear on EUR/GBP, the technicals currently play in your favor as the market recently saw bearish momentum to the 0.8450 handle before bouncing to currently levels around 0.8500. This area was a strong area of interest in mid-December and it’s also the Fibonacci retracement area of the recent swing move lower. So, this retest could draw in sellers once again, especially if the U.K. housing data surprise positive while the European unemployment data disappoints. A positive global risk environment would also likely support a bearish move in EUR/GBP, so be on the look out for that as well.
If you’re a bull on EUR/GBP, some combination of positive European data, weak U.K. housing data, and/or a negative shift in global risk sentiment would likely support a move higher in the market, and if traders can push the pair above the Fibs/consolidation area around the major psychological level of 0.8500, look out for traders to build a support base there before considering a long position.