Anglo-European trade talks are expected to weigh on the pound

[Focus on today] Tuesday, February 18, 2020

 

① 08:30 RBA releases minutes of February monetary policy meeting

② 17:30 UK unemployment rate and unemployment applicants in January

③ 17:30 UK ILO unemployment rate in December

④ 18:00 German ZEW Economic Climate Index in February

⑤ 18:00 Euro ZEW Economic Prosperity Index in February

⑥ 21:30 February US Federal Reserve Manufacturing Index

⑦ 23:00 U.S. February NAHB housing market index

⑧ 03:00 the Federal Reserve Cashikali speaks

Fundamentals:

 

[Japan’s GDP data hit a new low of nearly five years]

Japan’s initial annualized quarterly rate of GDP in the fourth quarter of 2019 recorded -6.3%, the lowest since 2014. Analysts said the poor economic data was due to an increase in consumer taxes and typhoons in October that could put economic activity into recession. At the same time, the current epidemic may affect Japanese manufacturing activities. Japanese stocks fell across the board on Monday. Bank of Japan Governor Tokuhiko Kuroda said that if the impact of the outbreak increases, he will not hesitate to consider additional easing measures.

 

[British hints that the cancellation of EU rules is the red line of the trade agreement] Brexit negotiator Frost said that following the EU rules, he broke away from the focus of Brexit, determined to regain legal sovereignty, and hoped to establish a relationship with the EU like the Canadian model. The outline of a future agreement will be planned in the coming weeks, without compromising on the essential parts of the negotiating position, and will establish its own state aid system and its own countervailing mechanism. The pound fell below 1.30 against the dollar.

 

[Eurozone finance ministers discuss a draft fiscal policy on Monday] The draft document calls for fiscal policies that are more conducive to economic growth in the euro zone, which may lead to increased spending in Germany due to concerns about the economic downturn. According to the meeting agenda, the euro zone finance ministers will discuss the document in Brussels later on Monday, and the draft is expected to be passed on Tuesday.

 

[Central Bank MLF interest rate cut by 10 basis points] The People’s Bank of China launched a 200 billion yuan MLF operation on Monday and lowered the MLF interest rate by 10 basis points. Analysts said that on the one hand, this can lengthen the deadline for funding and stabilize market expectations; on the other hand, it opens up room for LPR decline.

 

[National “two sessions” may be postponed in 2020]According to Xinhua News Agency, Li Zhanshu chaired the 47th meeting of the 13th NPC Standing Committee on the 17th and decided to hold the 16th meeting of the 13th NPC Standing Committee in Beijing on February 24. Draft decision to postpone the convening of the third meeting of the 13th National People’s Congress.

Technical side:

XAUUSD:

(Golden 1H chart)

From the golden daily chart, it reached a new high again and is getting closer to the previous high of 1593. The 1-hour chart is running above the uptrend line. It is now approaching a critical position. The top is the important resistance level and the bottom is the important support level. If it doesn’t break the uptrend line when it pulls back, there is still a chance to go to the previous high. If the trend line break, it will turn into a bear trend, so this area should be operated with caution.

Resistance level: 1594

Support level: 1583

Operation strategy: short near 1593, target 1584, stop loss 1596

EURUSD:

(EURUSD 1H chart)

From the euro-dollar daily chart, the market is still bear. But the decline has gradually weakened, until the market draws back to the pressure zone and then short.

Resistance level: 1.0850

Support level: 1.0820

Operating strategy: short around 1.0850, target 1.0820, stop loss 1.0870

GBPUSD:

(GBPUSD 1H chart)

Looking at the 4-hour chart of the GBP against the US dollar, the MACD has dead cross. In the 1-hour chart it falls below the trend line. There are signs of turning bear, and we can short when pulls back to trend line.

Resistance level: 1.3020

Support level: 1.2950

Operation strategy: Short near 1.3020, target 1.2960, stop loss 1.3060

USDJPY:

(USDJPY 2H chart)

Looking at the USDJPY daily chart, it closes the bullish candlestick with shadow. The box on the 2 hour chart is oscillating, selling high and buying low.

Resistance level: 110.10

Support level: 109.65

Operation strategy: long near 109.70, target 110, stop loss 109.50

USOIL:

(USOIL 1H chart)

From the US crude oil 4 hour chart, it closed with engulfing pattern of strong bear candlestick. MACD has dead cross, the rebound is over. If the 1 hour chart is reversed, the upper edge of the box can be shorted.

Resistance level: 52.3

Support level: 51.6

Operation strategy: Short near 52.3, target 51.6, stop loss 52.7

*************** Notes for trading **************

1. Follow the trend and keep in mind of risk control

2. Entry can be added or minused by 5 pips, exit can be added or minused by 5 points

3. It is recommended to take half of the profit after 50 pips of profit, and the rest position with stop loss of entry.

4. Orders that arrive at the entry point before 12 pm are valid, and subsequent orders are invalid. (Unless specified)

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(The above personal strategy is written based on the objective and independent principles. It is for reference only and does not represent any direct operational advice to investors. Investors will be responsible for the profits and losses of the market.

 

MYFXSchool Analyst: Michael

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