GBP/USD Weekly Forecast (18th January 2021 – 22nd January 2021)

Fundamental view:

Pound showed a stronger trend against greenback in the previous week. The BOE has come out of the shadows and supported the pound by all but shelving the option to set sub-zero borrowing costs. The specter of negative rates had been weighing on sterling since the summer but not anymore now.  Another positive factor for sterling was a drop in UK coronavirus cases. The harsh lockdown effect to fight the new, highly transmissible variant is showing some results. Unfortunately, deaths remain high on both sides.

US CB Employment Trends Index on 11th January  and US CPI yearly report favored bearish trend whereas Britain RICS House Price Balance on 14th January and US NFIB Small Business Optimism on 12th January favored bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are US TIC Net Long-Term Transactions at Jan 19, BoE Governor Bailey Speech at Jan 20, US Building Permits, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims at Jan 21,UK Retail Sales monthly report and US Markit Manufacturing PMI at Jan 22.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.05% higher than the previous week. Maintaining high at 1.3711 and low at 1.3451 showed a movement of 260 pips.

In the upcoming week we expect GBP/USD to show a bullish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout above 1.3710 may open a clean path towards 1.3840 and may take a way up to 1.3970. Should 1.3450 prove to be unreliable support, the GBPUSD may sink downwards 1.3320 and 1.3190 respectively. Chart formation of bullish bat pattern in H4 chart favors prospects of a bullish trend. Three outside down pattern along with spinning top formation escalates the expectation for a bullish trend.

Preference
Buy:  1.3582 target at 1.3839 and stop loss at 1.3445

 

Alternate Scenario
Sell: 1.3445 target at 1.3191 and stop loss at 1.3582

BTC/USD Weekly Forecast (18th January 2021 – 22nd January 2021)

Fundamental view:

Despite the positive metrics behind Bitcoin’s run, the flagship cryptocurrency remains extremely volatile. According to Goldman Sachs, Bitcoin needs more institutional money to flow in to mature as an asset and avoid extreme volatility. Jeff Currie, Global Head of Commodities Research at Goldman Sachs says Bitcoin has shown signs of maturity already but funds from institutional investment sectors are still low in comparison.

Not everyone believes Bitcoin is a great investment option. The European Central Bank (ECB) President Christine Lagarde called Bitcoin a speculative asset and that regulation will be needed. Nonetheless, she also stated that the digital euro could happen within five years from now.

The major economic events deciding the movement of the pair in the next week are TIC Net Long-Term Transactions at Jan 19, Building Permits, Philadelphia Fed Manufacturing Index, Initial Jobless Claims at Jan 21, Markit Manufacturing PMI, and EIA Crude Oil Stocks Change at Jan 22 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 4.86% lower than the previous week. Maintaining high at 40032.2 and low at 30260.6 showed a movement of 9772 pips.

In the upcoming week we expect BTC/USD to show a bullish trend. The Instrument is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout above 41230.8 may open a clean path towards 45517.6 and may take a way up to 51002. Should 31458.9 prove to be unreliable support, the BTCUSD may sink downwards 25973.8 and 21687.0 respectively. In H4 chart, if breakout of the Symmetrical triangle is to the upside then bullish expectation is favored. Also to be noted Hammer formation exerts the expectation of uptrend for the pair.

Preference
Buy: 35071.6 target at 43516.5 and stop loss at 31453.9

 

Alternate Scenario
Sell: 31453.9 target at 21688.4 and stop loss at 35071.6

USD/JPY Weekly Forecast (18th January 2021 – 22nd January 2021)

Fundamental view:

USD/JPY showed a mixed trend in the past week. Twin specters of unemployment and a consumer recession in the United States were unable to dislodge the dollar from its recent gains. American data in the New Year has detailed the impact of the renewed business closures in California, the largest state economy, and modified restrictions in cities like New York which has again shuttered indoor restaurants.

US CB Employment Trends Index on 11th January and Japan BoJ M2 Money Stock y/y & US CPI m/m on 13th January created uptrend for the pair whereas Japan Goods Trade Balance on 12th January and US Import Price Index yearly report on 14th January created downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are US TIC Net Long-Term Transactions at Jan 19, BoJ Monetary Policy Statement, US Building Permits, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims at Jan 21, Japan Markit Manufacturing PMI and US Markit Manufacturing PMI at Jan 22.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.29% higher than the previous week. Maintaining high at 104.40 and low at 103.53 showed a movement of 87 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading above the 100 Simple Moving Average and the MACD trades to the downside. A solid breakout below 103.40 may open a clean path towards 103.03 and may take a way down to 102.53. Should 104.27 prove to be unreliable resistance, the USDJPY may raise upwards 104.77 and 105.15 respectively. In H4 chart, Formation of diamond pattern breakout indicates reversal of the trend creating prospects of a bearish trend Along with a shooting star formation braces our expectation.

Preference
Sell: 103.78 target at 103.04 and stop loss at 104.27

 

Alternate Scenario
Buy:  104.27 target at 105.14 and stop loss at 103.78

Despite unfavorable Powell’s speech, dollar is up

The US President-elect Joe Biden unveiled a much-anticipated coronavirus rescue plan yesterday, with a promise of $2,000 in stimulus cheques to Americans, social equity, infrastructure spending, and a potential minimum wage of $15 per hour.

But, Biden did not give away the total size of the stimulus program, which, according to media reports released early Friday, is $1.9 trillion.

The Fed is currently buying US$120bn of US Treasury bonds and mortgage-backed securities every month but at some point, this spending will be tapered back. However, Powell told that now is not the time to be talking about a Fed exit.

On the employment mandate, Powell stressed the Fed’s new approach to inflation in which it will not raise rates even if unemployment falls below levels that historically would have been considered a warning sign for pricing pressures ahead.

“That wouldn’t be a reason to raise interest rates unless we start to see inflation or other imbalances that would threaten the achievement of our mandate,” he said.

“If inflation were to move up in ways that are unwelcome, we have the tools for that, and we will use them,” he said. “No one should doubt that.” “We were in a good place in February of 2020, and we think we can get back there, I would say, much sooner than we had feared,” he said.

And the rest Fed members have indicated this could occur later this year but comments from Powell indicate easing will not happen until inflation is at 2% for a year.

Apart from the latest dip in the dollar following the remarks from Powell, the dollar had risen for a second straight session, This was in line with a rise in Treasury yields, amid upbeat expectations about President-elect Joe Biden’s fiscal stimulus.

EUR/USD 4 Hour Chart:

Support: 1.2117 (S1), 1.2080 (S2), 1.2050 (S3).

Resistance: 1.2185 (R1), 1.2215 (R2), 1.2252 (R3).

Despite the fact that greenback is not favored with the powell’s speech, the dollar seems to be in uptrend against Euro and we expect a bearish trend for EUR/USD.