January 14, 2018
First, a review of last week’s forecast:
- EUR/USD. Recall that the majority of experts (55%), supported by graphical analysis and oscillators on D1, voted for the pair's growth to 1.2200. This forecast turned out to be 100% true: it was at this point that the pair ceased movement at midnight on Friday 12 January. It should be noted that the publication of the minutes of the last ECB meeting, according to which the regulator is planning to curtail its 2.5 trillion-euro bond-buying programme in 2018 - a programme which should seriously accelerate the recovery of the eurozone - contributed to such impressive growth of the euro;
- GBP/USD. The overwhelming majority of analysts (85%) voted for the fall of this pair, and the level of 1.3400 was named as the nearest support. The pair was bearish until Thursday, but it was only able to go down to 1.3455, after which it turned and, following in the euro’s steps, rushed up, completing the five-day period in the zone 1.3730;
- While the yield of 10-year and 25-year Japanese state bonds grows, the dollar fell against the Japanese yen. In this case, the experts called out 111.60 as a target, which is also the Pivot Point of the medium-term channel 108.00-114.75 in which the pair USD / JPY has moved during the entirety of the past year. This plan was not only completed, but also somewhat overdone -the pair ended up near 111.00 at the end of the trading session;
- As for USD/CHF, most analysts (65%) agreed that the pair would be able to break through the support of 0.9730 and fall to the zone of 0.9600-0.9650. With a small allowance, this is exactly what happened: mirroring the movements of EUR/USD, by the end of the week the pair was able to reach the local minimum at 0.9664.
As for the forecast for the coming week, summarizing the opinions of analysts from a number of banks and brokerages, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD. The pair is still in the barrier “zone of the decade”, marked by the two-year high of 2017 and the lows of June 2010 and July 2012; the direction in which it will move from there will depend on major economic and political developments and decisions. That's why there is uncertainty among experts: 40% see growth ahead, 40% see a fall, and 20% just shrug their shoulders.
As for the trend indicators, it is clear that they are all coloured green: the nearest target is 1.2360. But a quarter of oscillators on both H4 and D1 are already giving signals the pair is overbought, which indicates a possible trend reversal.
Graphical analysis also agrees with this scenario. According to its readings, the pair should return first to 1.2090, and in the event of a breakthrough, go down even further, to the support line of the two-month rising channel in the zone of 1.2000-1.2020;
- 40% of analysts believe that following the weakening of the dollar, the GBP/USD will continue its movement in the medium-term rising channel, which began a year ago when 2016 became 2017. In this case, its immediate target will be the 1.3835-1.4000 zone, with the next one being 1.4200.
An alternative scenario is supported by 60% of experts, who cite the uncertainty surrounding the Brexit negotiations. A trend reversal is also predicted by graphical analysis on H4 and by the approximately 20% of oscillators signalling the pair is overbought. The support levels are 1.3600, 1.3520 and 1.3465;
- USD/JPY. Graphical analysis on D1 still draws out a continuation of the lateral corridor, denoting 110.75-113.35 as its boundaries. 30% of experts vote for the growth of the pair in the coming days. Resistance is at the levels of 112.00, 113.35 and 114.75.
As for the opinion of most analysts (70%), supported by 10% of oscillators on D1, the pair will continue its fall to the lower boundary of the mid-term side channel 108.00-114.75. The nearest support is in the 110.00 area;
- The last pair of our review is USD/CHF. On January 16, we are expecting to hear the speech of the head of the National Bank of Switzerland: this has again reminded us of the "Black Thursday" on January 15, 2015. However, this time there will, most likely, be no surprises.
As for the forecast for the near future, like last week, about 60% of experts express bearish sentiment, believing that the pair may fall to the support at 0.9575. The next support is 0.9430.
Only 40% of analysts have given their votes for the rise of the pair to the resistance at 0.9835 and its subsequent return to 1.0000.
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