January 28, 2018
First, a review of last week’s forecast:
- EUR / USD. Analysts' votes last week were divided almost evenly. More precisely, 55% of them sided with the "bears" and 45% with the "bulls". The fate of the pair was decided by the good and mighty of the world: first it grew following the statements of the US Treasury Secretary on the weak dollar; then it was pushed back up by ECB President Mario Draghi’s speech, resulting in a three-year high at 1.2537.
The US currency received a bit of help from US President Donald Trump, who declared at the economic forum in Davos, Switzerland that his finance minister had not been correctly understood. Because of this "misunderstanding", the dollar briefly managed to win back 175 points, after which the pair once again rushed northwards and completed the week where the “bulls” had wanted it: near 1.2425;
- This doesn't happen often, but thanks to the several VIP statements, the GBP/USD graph almost completely repeated the EUR/USD graph. First, the pair showed impressive growth, rising by 500 points and reaching a height of 1.4345 on Thursday. Then, following Trump's remarks, it fell by 260 points, then rose to 1.4285, and then dropped again to 1.4165;
- Unlike GBP/USD, the Japanese yen managed to win back only half as much from the dollar: about 240 points. However, because of this fall, the forecast for which most experts voted (70%) ended up being 100% correct: the pair almost reached the lower boundary of the mid-term side corridor 108.00-114.75. When taking the last three weeks of January as a whole, the Japanese currency grew by about 500 points against the US currency during this period;
- USD/CHF, mirroring the dynamics of EUR/USD, fulfilled and exceeded the forecast of most analysts. They had been expecting the continuation of the downtrend; whose goal was the summer low in 2017 at approximately 0.9400. After some effort, it managed to break through this support and completed the week’s session near 0.9335.
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. An absolute majority of indicators are coloured green here. Only 15% of oscillators on D1 signal that the pair is overbought. As for the experts, the number of supporters of the dollar’s strengthening and the fall of the pair is much higher: 65% versus 35%. The closest target in this case is the 1.2190-1.2300 zone.
We should note that the upcoming week is filled with all sorts of events that can seriously affect the quotes of EUR/USD and other dollar pairs. This includes the publication of data on the US consumer market on Monday 29 January, the release of data on GDP and the consumer price index of the Eurozone on 30 and 31 January, the comments of the Federal Reserve on monetary policy on 31 January, as well as the publication on Friday 2 February of the data on the US labor market (NFP). And speaking about the US, as usual, we must not forget about the nation’s president: Donald Trump is expected to give another speech on the last day of January.
In the event of a negative market reaction to these events, the dollar may continue its decline, meaning that the pair’s growth will continue. The most probable targets in this event will be the resistance levels of autumn 2014: 1.2535, 1.2570 and 1.2630;
- GBP/USD. When it comes to trend indicators and oscillators, here the situation is like the EUR/USD one. But the opinions of analysts were divided into three equal parts: one third support the pair’s growth, one third its fall, and one third predict a lateral trend. Graphical analysis on H4 agrees with the latter, which predicts the pair’s near-future movement as being in the 1.4085-1.4345 side channel. After that, according to the graphical analysis on D1, the volatility will increase, and the pair should first grope the bottom at 1.3855, and then rebound upwards into the 1.4300-1.4485 zone.
As for the medium-term forecast, about 80% of experts expect the pair to fall to the 1.3450-1.3585 zone.
- USD/JPY. Here, the majority of experts (60%), supported by graphic analysis on H4 and D1, expect the pair to rebound to 109.35, and possibly even higher, to the Pivot Point of the medium-term channel near 111.00, after which it should fall once again to the lower boundary of the medium-term channel at 108.00. However, it is possible that quite soon, on the back of economic news, the "bears" will try to break through the support of 108.00 and reach the minimum of last August at 107.30;
- The last pair of our review is USD/CHF. 50% of experts, in full agreement with the graphical analysis on H4, as well as a quarter of the oscillators, expect the pair to go up first to 0.9435, and then 100 points higher. As for the second half of analysts, in their opinion, dollar weakening could pull the pair further downwards to 0.9135.
At the same time, it should be noted that in the medium term, the number of supporters of the pair's rise to 0.9500, and then on to parity at 1.0000, increases to 70%.
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