Daily F.X. Analysis, January 06 – Top Trade Setups In Forex - Risk-off Sentiment Dominates!  

The dollar has weakened over U.S. Iran tensions, which is underpinning the EUR/USD prices today. The U.S. airstrike killed top Iranian commander, the tensions between Iran & the United States escalated and caused a sudden drop in the Government bond yields across Euro bloc. On Monday, the market is trading with the risk-off sentiment, driving bullish bias for the safe-haven assets like gold and Japanese yen. 

Economic Calendar - Risk-off Sentiment In Play

BTC/USD - Ascending Triangle Pattern 

During the previous few weeks, the BTC/USD has been concentrating on the narrow trading range of $7,300 - 6,800, apparently stuck in within a rock and a hard area. Certainly, the cryptocurrency has many times jumped in the mid-$6,000s, where there is little support and has been rebuffed various points in the resistance zone around the high-$7,400.

On Monday, the BTC/USD surged dramatically in the wake of a weaker dollar and violated the 7,400 resistance level. The leading crypto is now testing the double top level around 7,610. Traders are also coming back to the market after the holiday session, which is resulting in increased trading volume and market price action.

BTC/USD - Daily Technical Levels

Support    Resistance

7,188.14     7,431.46

7,050.24    7,536.88

6,806.92    7,780.2

Pivot Point 7,293.56

BTC/USD – Daily Forecast

Weakness in the U.S. dollar has to lead to BTC/USD prices higher towards 7,585 level. The pair is overbought, and it can take a slight bearish correction until 7,445. Below this, the next support can be seen around 7,350. On the upper side, the breakout of 7,585 can extend bullish bias until 7,720

EUR/USD – Fibonacci Retracement In-Play

TheEUR/USD closed at 1.11558 after placing a high of 1.11797 and a low of 1.11250. Overall the movement of the EUR/USD pair remained bearish that day.

On Friday, after the U.S. airstrike killed top Iranian commander, the tensions between Iran & the United States escalated and caused a sudden drop in the Government bond yields across Euro bloc.

The German 10-Year Bond Yield dropped to the 2-week lowest point of -0.248%. The German10-year yields rose to a seven-month highest level just two days ago but fell on Friday. 

The falling government bond yields and escalated geopolitical tensions across the world caused more demand for safe-haven and less for riskier assets like EUR/USD. Hence, the pair EUR/USD dropped below 1.113 level on Friday.

The macroeconomic data related to inflation & Unemployment change from Eurozone was also not supportive of the single currency Euro on Friday.

The German Prelim CPI for December exceeded 0.5% from the expectations of 0.4% and supported Euro. At 12:45 GMT, the French Prelim CPI for December also came in favor of Euro as 0.4% against the expected 0.3%. The Spanish Unemployment Change at 1:00 GMT came against Euro when it increased in December to -34.6K in comparison of forecasted -40.2K.

At 1:55 GMT, The German Unemployment Change for December increased to 8K from expected 3K and weighed on Euro. The M3 Money Supply for the year at 2:00 GMT decreased to 5.6% from forecasted 5.7%. And the Annual Private Loans data from the whole bloc showed a decline to 3.5% from expected 3.6% and weighed on single currency Euro. Weaker than anticipated Inflation and Jobs data from Eurozone weighed Euro currency and boosted the downward trend of EUR/USD pair. 

EUR/USD - Daily Technical Levels

Support Resistance 

1.1153     1.1203

1.1133     1.1234

1.1082    1.1284

Pivot Point 1.1183

EUR/USD – Daily Forecast

The EUR/USD has traded mostly in line with our previous forecast. The 38.2% Fibonacci retracement level 1.1170 continues to hold up and keep the EUR/USD pair bearish below this level today. The dollar has weakened over U.S. Iran tensions, which is underpinning the EUR/USD prices today. 

The pair may find support around 1.1150 level, and I must say it's a crucial level to stay bearish below and bullish above this level today. A bearish breakout of 1.1150 can open further room for selling until 1.1125. Whereas, the bullish breakout of 1.1175 can drive more buying until 1.1195.

GBP/USD - Weaker Dollar Eyed

The GBP/USD closed at 1.30743 after placing a high of 1.31599 and a low of 1.30532. Overall the movement of GBP/USD remained bearish throughout the day.

At 12:00 GMT, the Nationwide House Price Index (HPI) for December was increased to 0.1% from the expected 0.0% and supported Sterling. At 2:30 GMT, the Construction Purchasing Manger's Index (PMI) for December showed a decline to 44.4 from the forecasted 45.8 and weighed on Sterling.

However, the M4 Money Supply for November from the United Kingdom increased to 0.8% against the expected 0.2% and supported single currency Pound. The Mortgage Approvals for November from Britain also remained flat with the expectations of 65K.

The Net Lending to the individuals for November decreased to 4.5B against the expected 5.1B and weighed on Pound.

The macroeconomic data from Britain was mostly not in favor of its currency Pound, where Construction activity in December declined, and the Mortgage approvals in November also decreased. The weak Sterling caused GBP/USD to move in a downward trend on Friday.

On the other hand, the Brexit bill of Johnson was overwhelmingly voted by the Parliament last month but was opposed by Northern Ireland MP's. On Thursday, the Northern Ireland parties tabled amendments to the government's Brexit bill in an attempt to seek changes.

On January 31, the U.K. will leave E.U., but the transition period will immediately begin, where the trading relations between the U.K. & E.U. will remain unchanged. During the transition, Northern Ireland's trading relationship with the U.K. would also remain unchanged.

The transition phase will conclude on December 31, 2020, and PM Boris Johnson has said that there will be no extension in this period. The Purpose of this transition period is to negotiate a new phase of a long-term relationship between the U.K. and the E.U. The focus of negotiations will be on a trade deal, but talks will also include the broad agreement on Northern Ireland.

It was also reported that the new president of the European Commission, Ursula von der Leyen will meet PM Boris Johnson on Wednesday just before three weeks of Britain's departure from E.U. on January 31. The meeting will hopefully be about to open talks on the country's post-Brexit trade deal.

GBP/USD - Daily Technical Levels

Support Resistance 

1.3094     1.321

1.3047     1.3278

1.2932     1.3393

Pivot Point 1.3163

GBP/USD – Daily Forecast

The GBP/USD is consolidating at 1.3085, holding below a strong resistance level of 1.3095. A bullish breakout of 1.3095 can help Sterling bulls to capture buying until 1.3135. In another case, the Cable can trade bearish below 1.3095 with immediate support around 1.3030 and 1.2985 today.

All the best for today.