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Aayush Jindal

Key Highlights

  • USD/JPY started a downside correction from the 105.75 resistance.
  • There is a key support forming near the 104.40 level on the 4-hours chart.
  • EUR/USD is showing positive signs, GBP/USD traded towards 1.3865.
  • Oil price remains elevated above the $57.50 level and it could climb above $60.00.

USD/JPY Technical Analysis

The US Dollar failed to extend gains above 105.75 and started a fresh decline against the Japanese Yen. USD/JPY broke the 105.00 support, but it is still above the key 104.40 support.

Looking at the 4-hours chart, the pair formed a short-term top near 105.76 before declining. It broke a connecting bullish trend line at 105.30 level to move into a bearish zone.

The pair even traded below the 50% Fib retracement level of the upward move from the 103.55 low to 105.6 high. However, the pair found a strong support near the 104.40 level and the 100 simple moving average (red, 4-hours).

The 61.8% Fib retracement level of the upward move from the 103.55 low to 105.6 high is also acting as a support. If there are more losses below 104.40, the next support might be 104.00 or the 200 simple moving average (green, 4-hours).

If the pair remains stable above 104.00, it could start a fresh increase. A major resistance is forming near the 105.10 level. There is also a bearish trend line forming near 105.10. A clear break above the 105.10 level could open the doors for a steady increase in the near term.

Looking at EUR/USD, the pair gained pace above the 1.2100 resistance. Similarly, GBP/USD climbed above 1.3850 before correcting lower.

Economic Releases

  • UK Industrial Production for Dec 2020 (MoM) - Forecast +0.5%, versus -0.1% previous.
  • UK Manufacturing Production for Dec 2020 (MoM) - Forecast +0.6%, versus +0.7% previous.
  • UK GDP for Dec 2020 (MoM) - Forecast +1.0%, versus -2.6% previous.