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Technical Outlook


-EUR/USD’s reversal from a potential breakout due to strong U.S. data puts focus on support at 1.07800; a climb faces resistance at 1.10300-1.10800 zone.

-USD/JPY’s breach of key levels suggests bullish momentum with sights on 150.00, while a bearish turn could target support at146.00 level.

EU (EUR): Eurozone Producer Price Index (PPI) YoY

The Producer Price Index (PPI) measures average changes in prices received by domestic producers for their output. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. Usually a rise in PPI will lead in a short time to a rise in CPI and therefore to a rising interest rates and rising currency. during recession, the producers are not able to roll over the rising cost of material to the consumer, so a rise in PPI will not be rolled over to the consumer but will lower the profitability of the producer and will deepen the recession, that will lead to a fall in local currency.

The previous reading was -8.8% worse than the expected -8.7%. The next report is due on February 05, 2024 at 10:00 GMT. Its forecast stands at -10%.

EURUSD Technical Analysis:

The EUR/USD pair came really close to breaking past the upper edge of its falling wedge, but took a turn for the lower just as the weekend was about to kick in, driven by a wave of strong economic data from the U.S. This shift sent the pair heading down towards a critical support area at 1.07800 zone. Holding onto this level is crucial; if it gives way, we could see the pair sliding further down towards 1.07250 to 1.06500 if the momentum continues.

On the other side, if the pair finds its footing and starts to climb from where it is now, it is going to run into a resistance zone stretching from 1.10300 to 1.10800. Should it manage to break through this barrier, traders might then turn their gaze towards the next set of goals at 1.12200 zone.

Pivot Points: EURUSD

  Support  Resistance
S21.0703  R21.0939  
S31.0625  R31.0981

US (USD): U.S. Initial Jobless Claims

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

The previous actual data was 224K worse than the forecast of 213K. The upcoming report is due on February 08, 2024 at 13:30 GMT and its forecast figure stands at 219K.

USDJPY Technical Analysis:

On last Friday, the USD/JPY pair successfully breached significant technical thresholds, yet it encountered resistance just shy of the 148.35 trendline. This suggests that the market momentum has shifted in favor of the buyers, hinting at a possible overcoming of this resistance level shortly. If the pair pushes beyond this barrier, we might witness a progression towards targets of 149.00 to 150.00, given continued bullish momentum.

On the flip side, should the market see a resurgence of selling pressure leading to a bearish reversal, the critical level for traders to watch is the 50-day smoothed moving average at 146.30. A break below this point could signal a deeper retracement towards the support zones at 142.00 to 141.00. These levels are key for traders to consider for strategic positioning in anticipation of market swings.

Pivot Points: USDJPY

  Support  Resistance
S3144.59  R3148.31

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