Trading plan for 12/01/2018

A calm night passed on the forex market with little change, though trends from Thursday have been sustained. EUR/USD approached 1.2065, supported by hawkish mentions in minutes of the ECB. USD remains in the middle of the area, modest increases are recorded by EUR, SEK, and GBP; on the other end are AUD, CAD, and NZD.Data from Chinese economy put raw material currencies under pressure.

On Friday 12th of January, the event calendar is light in important news releases, except for the US session, when Consumer Price Index, Retail Sales and Business Inventories data will be released.

EUR/USD analysis for 12/01/2018:

Yesterday’s publication of the ECB Meeting Minutes confirms what the market has speculated for weeks — the end of QE may come sooner than later. Currently, EUR/USD is facing a second chance this year to break 1.2090, but trade is accompanied by hesitation, as in the afternoon the market participants will have to deal with key US data. CPI inflation and Retail Sales data for December are important elements of the question: what will the Fed do? Expectations for inflation are not excessive from 0.1% m/m for CPI and 0.2% for core inflation. The greater risk lies on the weak side of the result (even with such low expectations), taking into account the fragility of sentiment towards the US Dollar. The forecast for retail sales looks better (0.5% m / m), but if inflation fails, even the strongest consumer impulse will not help. Even if the data falls according to forecasts, it is still possible that the market will consider it as a green light to break the EUR / USD above 1.21, which may give a broader signal bor USD related crosses across the board.

Let’s now take a look at EUR/USD technical pattern at the H4 time frame. The market has broken above the high at the level of 1.2086 and the next target projection is at the level of 1.2145. At this level, the wave five of the impulsive rally should terminate and the market should start a corrective cycle in wave four. When the correction is completed, there is still one more wave to the upside left.

Market Snapshot: Gold is going to fill the gap?

The price of Gold has made another higher high at the level of $1,331 and it looks like the bulls keep getting stronger. At the daily time frame, there is an unfilled gap between the levels of $1,340 — $1,342 and this level might be the next target for bulls is the rally gets extended.

Market Snapshot: USD/JPY at the key support.

The price of USD/JPY is testing the key technical support zone between the levels of 110.61 — 111.06 in oversold market conditions. Any violation of this zone will lead to further losses and the bears might target the level of 109.84 before any meaningful correction will occur. On the other hand, the nearest resistance is seen at the level of 111.45 and 111.61.

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