Daily F.X. Analysis, January 02 – Top Trade Setups In Forex - Retracement Setups In Play!  

The trading volume still remains low, but we got technical setups that we can trade during this timeframe. The development over the US-Sino trade deal and the global growth outlook decreased the demand for the dollar. The thin volume of trades at the end of the year increased the weakness of the U.S. dollar and dragged it to its lowest level since June. 

Besides, UK Boris Johnson has promised to increase government spending in the next years. As the expectations of global economic growth have expanded on the back of decreased risks if Central bank raises its borrowing costs to a limited extent, the British Pound will surge further.

Economic Calendar - UK Final Manufacturing PMI

BTC/USD - Daily Analysis

The technical side of the Bitcoin hasn't changed much so far as the leading crypto pair trades around 7,238 after testing the support level of 7,150. On the downside, the next support stays at 7075, and the violation of this level can drive selling until 6,700 and 6,545. While bullish breakout of 7,450 can lead BTC towards 7,625.

Price action indicates for the crypto market: some say that it is symbolic of an upward breakout to the high-$7,000s or perhaps $8,000s in the following days. Whereas, others think that recent rejection is an antecedent to a further drawdown.

BTC/USD - Daily Technical Levels

Support      Resistance 

7,173.47      7,239.39

7,131.84      7,263.68

7,065.92     7,329.6

Pivot Point 7,197.76

BTC/USD – Daily Forecast

The Bitcoin continues to trade sideways around 7,238 after testing the support level of 7,150. It hasn't changed much this week due to New Year Holiday and thin volatility. On the lower side, the next support stays at 7075, and the violation of this level can drive selling until 6,700 and 6,545. While bullish breakout of 7,450 can lead BTC towards 7,625.

EUR/USD – Fibonacci Retracement In-Play

The EUR/USD was closed at 1.2171 after placing a high of 1.12392 and a low of 1.11976. Overall the movement of the EUR/USD pair remained bullish throughout the day.

Leaving behind the 1.12 level, the EUR/USD pair has hit new four months high during the trading session on Tuesday. The development over the US-Sino trade deal and the global growth outlook decreased the demand for the dollar.

The thin volume of trades at the end of the year increased the weakness of the U.S. dollar and dragged it to its lowest level since June.

Due to bank holidays in the European Union and lack of any specific news from the Europe side, the rise in Euro was caused mainly due to the weakness of the U.S. Dollar. The U.S. Dollar remained stable throughout the year. However, at the end of the year, when Beijing and Washington announced that the phase-one deal agreement had been agreed. Thus, the greenback lost its appeal as a safe-haven asset.

The reason for the fall of the greenback is not the weak U.S. economy but safe-haven liquidation. However, the single currency Euro has been supported by the bullish outlook for the Eurozone economy because of the global growth outlook after the trade truce between the U.S. & China.

Traders are looking for the release of Manufacturing PMI data from whole European bloc, which will further affect the movement of EUR/USD prices.

EUR/USD - Daily Technical Levels

Support    Resistance 

1.1209       1.1218

1.1205       1.1222

1.1196        1.123

Pivot Point 1.1213

EUR/USD – Daily Forecast

The direct currency pair EUR/USD is trading neutral around 1.1210. December 31st daily closing candle is half bullish and half bearish, exhibiting that buyers are exhausted, and bear may be entering the market. The pair may trade lower below 1.1225 to complete retracement around 1.1195 and 1.1175, which marks 23.6% and 38.2% retracement levels.

GBP/USD - UK Final Manufacturing PMI In Eyes

The GBP/USD was closed at 1.32448 after placing a high of 1.32842 and a low of 1.31048. Overall the movement of GBP/USD remained strongly bullish throughout the day.

The Sterling was one of the strongest major currencies in 2019, which rose 4% against the U.S. dollar. Although the Canadian dollar was the top-performing currency in 2019, the difference between the performance Sterling and Loonie differs by just a fraction of percent.

The Brexit caused most of the price fluctuation in pair GBP/USD in 2019. When PM Boris Johnson started making progress in negotiating a deal with the E.U. in September, the traders became confident that this time Brexit would reach an end. And the currency pair started to gain and traded about a 10% higher level from the lowest point of that time.

However, when Johnson threatened to leave E.U. without a deal, Sterling faced much pressure at that time of the year. The downward trend of British Pound has again raised when Johnson, after winning in the U.K. elections for the second time, said that no-deal Brexit could still happen. He made his Brexit deal as law and gave threats to E.U. that in case of no trade deal by the end of 2020, then U.K. will leave E.U. without an agreement.

The pair, however, started to gain again at the end of the year on the back of the weak U.S. dollar. The pair GBP/USD rose for the 5th consecutive day on New Year's Eve.

The pair GBP/USD is likely to remain on the upside if the economic growth increases in 2020. Johnson has promised to increase government spending in the next years. As the expectations of global economic growth have expanded on the back of decreased risks if Central bank raises its borrowing costs to a limited extent, the British Pound will surge further.

Furthermore, the broad weakness in the U.S. dollar, Interest cuts from the world's central banks, possible trade truce between the U.S. & China, and the possibility of Fed to further cut its rates might support he global economy and Pound in 2020. 

GBP/USD - Daily Technical Levels

Support Resistance 

1.3244      1.3262

1.3235      1.3271

1.3217      1.3289

Pivot Point 1.3253

GBP/USD – Daily Forecast

The GBP/USD pair is showing bearish retracement as the pair has dropped from 1.3280 to 1.3210, which marks a 38.2% Fibonacci retracement level. The 4-hour chart seems to close a bearish engulfing candle, which is followed by a strong bullish trend in the market. This may drive further bearish bias until 1.3205, along with resistance around 1.3250. A bearish breakout of 1.3205 can drive further bearish trend until 1.3165.

All the best for today.