Daily F.X. Analysis, January 23 – ECB Monetary Policy In Focus! 

On the forex front, the U.S. Dollar Index slipped 0.1% on the day to 97.50. The EUR/USD gained 0.1% to 1.1095. The European Central Bank is expected to keep its monetary policy unchanged (deposit facility rate at -0.50% expected). 

Besides, the U.S. government bonds were steady, as the benchmark U.S. 10-year Treasury yield settled unchanged at 1.768%. The House Price Index for November declined to 0.2% from the expectations of 0.3% and weighed on the US dollar. Let's monitor the ka

Economic Calendar - ECB Monetary Policy In Focus

BTC/USD - Daily Analysis 

On Thursday, Bitcoin stays over $8,500 after the support at $8,600 gave in to the selling price action. The bearish revision could be a reflex action to create a new demand for BTC in a bid to push towards $9,200.  

Bitcoin is likely to sink deep towards $8,400 (possible support). The leading technical indicator, the Relative Strength Index, has entered into the oversold region flags that selling is at its height. 

In the case of both $8,500 and $8,400 grant to the selling pressure, Bitcoin will gain added support at $8,250 and $8,000, respectively.

BTC/USD - Daily Technical Levels

Support    Resistance 

8,544.55     8,761.56

8,450.08    8,884.1

8,233.07     9,101.11

Pivot Point 8,667.09

BTC/USD – Daily Forecast

The BTC/USD is trading slightly bearish today at 8,555 with immediate support around 8,530. Violation of this candle can drive the selling trend until 8,465, while the resistance stays around 8,650 today. Overall, the BTC/USD is exhibiting sideways trend, and we may see a continuation of sideways trading until the pair breaks out of these support and resistance areas. Bearish bias seems stronger today.

EUR/USD – Traders Awaits ECB Rate Decision

The EUR/USD closed at 1.10920 after placing a high of 1.10983 and a low of 1.10701. Overall the movement of EUR/USD prices on that day remained bullish. EUR/USD pair dropped in the early trading session on Wednesday amid strong US dollar, but it started to rise in late-session ahead of ECB’s first monetary policy meeting for the year.

At 19:00 GMT, the US House Price Index for November showed a decline to 0.2% from the expected 0.3% and weighed on the US dollar. However, at 20:00 GMT, the Existing Home Sales from the United States for December increased to 5.54M from the expected 5.43M and supported the US dollar.

The pair after a sharp increase in existing home sales from the US dropped, and the fall was then supported by the expectations that European Central Bank policymakers would give cautious comments on Thursday’s meeting.

The European Central bank previously said that they would hold their monetary policy in the next meeting as well. But there are expectations in the market that, like Bank of Japan, due to the phase-one trade deal agreement between the US & China, the ECB would also acknowledge that the downside risks have subsided to some extent.

The latest survey by the German ZEW research institute on Monday revealed that the investor’s mood improved more than expected in January, which raised hopes that Europe’s economy would recover now after the US & China signed on a phase-one trade deal.

However, the survey only suggested an improvement, but in actual economic activity, it has not been evident yet, so the risks still remain in the market about Eurozone economic growth.

The Eurozone economy has been struggling despite desperate attempts from ECB to stimulate more lending. The demand for bank loans by the companies falls for the first time in six years in the final quarter of 2019.

The demand for loans dropped because of lower investment needs and the broader availability of alternative finance. However, the New President of ECB, Christine Lagarde, is expected to keep monetary policy unchanged this Thursday.

EUR/USD - Daily Technical Levels

Support Resistance 

1.1077      1.1106

1.1060     1.1116

1.1049      1.1134

Pivot Point: 1.1088 

EUR/USD – Daily Forecast

The EUR/USD has also stuck in a sideways trading range ahead of ECB rate decision today. The pair is trading around 1.1086 level with immediate support around 1.1076 and resistance of 1.1095. Both of these levels are temporary, as we may experience a breakout on the release of ECB rate decision. 

A bullish breakout of a 1.1095 resistance level can drive more buying until 1.1125. Conversely, the bearish breakout of 1.1076 can lead EUR/USD towards 1.1035.

GBP/USD - Descending Triangle 

The GBP/USD closed at 1.31390 after placing a high of 1.31527 and a low of 1.30345. Overall the movement of GBP/USD remained strongly bullish throughout the day.

The British Pound surged by over half a percent on Wednesday against the US dollar after the release of Industrial Order expectations from CBI and the increasing spending from the new government. The hopes for a further rate cut from Bank of England further dropped after these reports released and supported British Pound.

At 14:30 GMT, the Public Sector Net Borrowing from the United Kingdom for December showed a decline to 4.0B against the expectations of 4.5B and supported Britain Pound. At 16:00 GMT, the Industrial Order Expectations from the Confederation of British Industry for January exceeded to -22 from the expected -25 and supported British Pound.

The monthly survey from CBI of the manufacturing companies showed that industries are entering the New Year with more enthusiasm because of the raised optimism after the US & China moved one step closer towards solving their trade conflicts.

According to the CBI’s Deputy Chief Economist, Anna Leach, firms were planning to invest more in plants & machinery, which will ultimately help in increasing capacity & output. The positive data and positive comments from the United Kingdom supported the hopes that Bank of England would not go for another rate cut, and hence British Pound rose to its 2-weeks highest level around 1.31500.

On the U.S. side, the House Price Index for November declined to 0.2% from the expectations of 0.3% and weighed on the US dollar. The weak US dollar added to the downfall of GBP/USD prices on Wednesday.

On Brexit front, the EU bill, which covers the way for Great Britain to leave the bloc on 31st January, is now waiting for royal approval. The European parliament will meet on 29 January to debate the agreement. 

The terms for Brexit Agreement, including the rights of EU nationals in the UK and arrangements for Northern Ireland, will be discussed in the EU parliament. The UK will officially leave the European Union on 31st January after more than three and a half years when the country voted to leave from the bloc in June 2016.

GBP/USD - Daily Technical Levels

Support Resistance 

1.3069      1.3186

1.2994      1.3228

1.2952      1.3304

Pivot Point: 1.3111

GBP/USD – Daily Forecast

On the 4 hour timeframe, the GBP/USD has violated the double top pattern, which was extending support around 1.3111. At the same time, the GBP/USD has closed Doji candles above 1.3111 resistance become support area, which is now likely to extend bullish bias until 1.3180 at first. Continuation of upward trend can lead the GBP/USD pair towards 1.3260 as well, but the pair has to breach above 1.3180 resistance area first. On the lower side, the GBP/USD may find support at 1.3035. 

All the best for today.