Forex Update: Pound Surges as Euro Plunges Amid Brexit Optimism

Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1481 -0.16%
GBP/USD 1.2846 0.81%
USD/JPY 108.35 -0.07%
AUD/USD 0.7206 0.29%
GOLD 1,290 0.27%
WTI Crude Oil 51.78 -1.01%
BTC/USD 3,650 0.62%

The busy days continue in traditional financial markets with heavy trading across asset classes and with key technical developments in several key markets. The Dollar, the Euro, the Yuan, and the Pound all experience heightened activity in the forex segment, while stocks, bonds, and commodities are also mostly in interesting setups.

The possible delay of the Brexit has been the most important catalyst of the day, but the Turkish troop movements near the Syrian border, the ongoing debate on Trump’s Wall, and the Fed’s monetary options have also been influencing investor sentiment.

From a technical standpoint, the picture is little changed, with the oversold rally in risk assets that followed the horrible December still dominating markets. That said, the bullish momentum, which was boosted by the Fed’s dovish shift, is clearly waning, and we might already have started a short-term topping process in stocks, risk-on currencies, and other risk assets.

Next week, the bearish global leaders could be back in focus, while the main safe-haven assets, such as the Yen and gold could provide entry points for traders.

Technical Analysis

EUR/USD, 4-Hour Chart Analysis

The Euro took another hit today after trying to extend its break-out in early trading, and the most traded pair fell back below the 1.15 level, threatening with a move below 1.1440, which would confirm a failed break-out, and would likely lead to the continuation of the larger scale downtrend.

The US CPI report was in line with expectations, and the core measure’s strength points at a still ongoing expansion in the consumer segment, which could be bad news for those, who expect the Fed to end stop with rate hikes and at least pause its quantitative tightening program The coming days will be crucial in deciding the fate of the move, and a failed break-out would be yet another warning sign for bulls, that the global bearish shift will be persistent.

GBP/USD, 4-Hour Chart Analysis

The Cable hit its highest level since November, topping the 1.2850 level in the process, thanks to the recent weakness of the Dollar and today’s Brexit-related rumors which decreased the odds of a no-deal Brexit. Economic numbers were mixed in the UK, with the monthly GDP print beating the consensus estimate, together with construction output, but with manufacturing production missing big time.

While the Brexit situation is still fragile, and we would still stay away from Pound-related pairs, a confirmed delay could catapult the pair up to the resistance zone near the 1.3250 level, with another target level just above 1.30, even though the bearish global trends will likely weigh on the Pound too.

USD/CNH, 4-Hour Chart Analysis

The Chinese Yuan continued to surge higher thanks to the trade-related optimism and the global risk rally, and the USD/Yuan pair plunged its lowest level since June,     violating the 6.75 level and turning higher right off the key support/resistance level near 6.74. The pair is now severely oversold, and together with the toppy conditions in equity markets and other risk assets, the setup looks ideal for opening long-term long positions, with resistance levels ahead near 6.78 and 6.82.

WTI Crude Oil, 4-Hour Chart Analysis

WTI crude oil formed a reversal day today, after topping the $53 per barrel level overnight, and although the bounce, which led to one of the longest winning streak in history for the crucial commodity, could continue odds now favor at least a deeper pullback, and traders could be looking for entry points on the short side here. Should the risk rally continue, test of the resistance zone near $54.50 is still possible, but the commodity is now heavily overbought from a short-term perspective.

Key Economic Events Tomorrow



USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis



Gold Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

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Nikkei 225 Futures, 4-Hour Chart Analysis

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Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.