31.01.201810:41 Forex Analysis & Reviews: Trading plan for 31/01/2018

Donald Trump's overnight statement did not ensure a solid reshuffling of the sentiment on the currency market. The New Zealand Dollar is the strongest currency, which, due to data coming from China and Australia, places the NZD / USD rate around 0.7380. In his shadow, there is a pound sterling (0.4%) with a notable indication of the consumer mood index according to GfK. In view of the weakness of the Dollar, the Japanese Yen (0.1%) passed by, which was under pressure to increase Bank of Japan purchase of medium-term government bonds.

On Wednesday 31st of January, the event calendar is busy in important data releases, but the news of the day will be FOMC Interest Rate decision in the evening. Nevertheless, the market participants should keep an eye on Retail Sales, Unemployment Change and Unemployment Rate data from Germany, Consumer Price Index Flash Estimate from Eurozone, ADP Non-Farm Employment Change, Pending Home Sales, Chicago Purchasing Manager Index and Employment Cost Index data from the US and Gross Domestic Product data from Canada.

EUR/USD analysis for 31/01/2018:

The Wednesday session can be treated as a quite interesting performance with a well-known ending. In this case, the Fed's decision in the evening on the monetary policy framework will be the most important event. Currently, the chance of a rate hike by another 25 bps oscillates at the verge of statistical error, which allows investors to attach even greater importance to the policy statement. Yesterday's disappointment with the December consumer price dynamics from Germany contributed to the lowering of market expectations for HICP inflation from Euroland to 1.3% (previously: 1.4 %). Investors' attention will also be drawn to the ADP report, which, according to the expectations of market participants, should indicate a change in employment of 185,000.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The price has bounced from the local support at the level of 1.2387 and currently is trading just above the 61% Fibo retracements of the previous swing down. The momentum is still above its fifty level, so there is a chance for another test of the local resistance at the level of 1.2493.

Market Snapshot: SPY starts the correction?

The price of SPY (SP500 ETF) has started a corrective move down towards the technical support at the level of 280.10. The market has gapped down below 21 and 50 periods moving averages and so far is not looking back. The momentum looks weak (below its fifty level) and the market conditions are slowly become oversold.

Market Snapshot: USD/CAD still going lower

The price of USD/CAD keeps breaking the potential resistance as the new local lows are being made despite the oversold conditions and growing bullish divergence between the price and momentum oscillator. In a case of worse than expected data from Canada today, the next important technical support on a daily time frame is seen at the level of 1.2140.