By Orbex
Risk sentiment was in check on Monday as investors stay on the sidelines for global cues.
The US earnings report for the fourth quarter of 2019 is underway. Meanwhile, Washington announced that it will remove China’s label as a currency manipulator.
Investors see this as another positive move towards improving trade relations between the two economies.
The German wholesale price index was flat for December. This pushed the WPI on a year over year basis to -0.1%. Besides the WPI data, economic data from the eurozone was sparse. The euro, however, brushed aside the data largely due to the weakness in the US dollar.
The common currency was retesting the resistance level of 1.1131 level amid a quiet day from the eurozone. The consolidation that is taking place near the confluence of the trend line and the horizontal level indicates a possible breakout. The bias remains to the upside with the target of 1.1177.
Free Reports:
The British pound fell sharply on Monday following weak GDP data. For the month of December, the UK’s gross domestic product fell 0.3%.
The report sparked comments by BoE Governor Mark Carney who said that the next move by the BoE will be a rate cut. Investors are pricing in the possibility of a rate cut as early as the January monetary policy meeting.
GBPUSD fell briefly to the 1.2960 level of support. This confirms the downside target of the descending triangle pattern. However, we expect a firm retest of the support level. There is a possibility that a rebound could see GBPUSD testing 1.3100 resistance.
The precious metal was trading weaker on Monday. Investors are waiting for further clues on the developments of the trade deal. The China GDP report and the US inflation and retail sales report will be the big-ticket items that will move markets over the week.
The current price action is consolidating near the current levels amid the lower high forming. Price action is trading slightly above the minor support of the 1546 level. A breakdown below this level will accelerate the decline to the 1534 level of support.
By Orbex
