January 21, 2018
First, a review of last week’s forecast:
- EUR/USD. The pair never escaped the landmark "zone of the decade", defined by the two-year high of 2017 and the lows of June 2010 and July 2012. Therefore, we did not make a definite forecast last week. Uncertainty reigned in the camp of experts: 40% voted for the growth of the pair, 40% for its fall, and 20% shrugged their shoulders. All were right: the pair grew a little, then declined, then grew again. It eventually finished the week not far from where it started, at 1.2215;
- GBP/USD. If you look at last week’s forecast, you will find the following: "40% of analysts believe that following the weakening of the dollar, GBP/USD will continue its movement in the medium-term rising channel... In this case, its immediate target will be the 1.3835-1.4000 zone." This forecast was accurate, it was on Monday that the pair had already rushed up and, having reached resistance 1.3940, tried to break it twice; after two unsuccessful attempts, however, it finished the five-day period in the 1.3850 zone;
- As for USD/JPY, most analysts (70%) turned out to be right, as they identified the pair’s southward ambitions. The level 110.00 was identified as the nearest support, which the pair approached on Wednesday 17 January, after which the retreat followed. After some hesitation, the pair, just like the EUR/USD, returned to almost the same place where the weekly session began: the 110.80 zone;
- Giving a forecast for USD/CHF, about 60% of experts expressed support for the fall of the pair to a low of 0.9575. The pair fulfilled this task, even trying to overfulfill it when it reached a local bottom at the 0.9535 horizon. However, it did not manage to gain a foothold there, and quickly returned 100 points upwards to the 0.9640 mark.
As for the forecast for the coming week, summarizing the opinions of analysts from a number of banks and brokerages, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD. According to polls of experts, the "bears" are leading here with a slight advantage (55% vs 45%), expecting the pair to return to the support at 1.2165, and, in the event of its breakthrough, to fall to the 1.2000-1.2080 zone. This development is supported by graphical analysis and most of the oscillators on H4.
As for the “bulls”, they fully agree with the trend indicators and oscillators on D1, who foresee that the pair will grow beyond 1.2400;
- GBP/USD. Most of the indicators for this pair are colored green. However, 15% of the oscillators are already giving signals that the pair is overbought. As for the experts, while only 50% of them expect the pair to turn southwards immediate future, 85% of them agree that it will do so in the medium term.
The “bull’s” targets are 1.4000 and 1.4090. The "bears" also expect the pair to fall first to 1.3585, and then to the 1.3455 and 1.3300 support levels;
- USD/JPY. The pair is in the middle of the mid-term side channel 108.00-114.75. Most experts (70%), supported by almost 80% of the indicators, believe that, having broken through the support at 110.00, the pair will continue its movement to the lower border of this channel.
30% of analysts and graphical analysis on both H4 and D1 disagree with this version. In their opinion, the pair should rebound to at least resistance 112.05.
If we talk about the medium term, the number of expert supporters of the pair's rise to 112.00-113.75 increases to 65%;
- The last pair of our review is USD/CHF. 55% of the experts, in full agreement with the indicators on D1 and the graphical analysis on H4, speak of the continuation of the downward trend, whose ultimate goals are the summer minimums of 2017 near 0.9400. The remaining 45% of analysts and graphical analysis on D1 suggest that the pair's decline has ended, and that it is expected to grow beyond 0.9700. The next resistance is 0.9835.
Among the economic events of the upcoming week that may affect both the volatility of currency pairs and the direction of trends are the statements of the Bank of Japan on Tuesday 23 January and Friday 26 January, as well as the ECB decision on the interest rates and its comments on Thursday 25 January.
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