Vang SJC

Yesterday (12/01), EURUSD fluctuated moderately as stock market has been stabilized and oil prices slid. EURUSD was traded between $1.08184 and $1.08992 before closing at $1.08561, remained almost unchanged in comparison with the opening price of $1.08574.

Fundamental analysis

Fundamental analysis

After having dropped 3.7% in November, official data which was released on Wednesday (13/1) showed China’s exports to have risen 2.3% in December, compared with last year number. The outperformed data has blown a breath of fresh air on the outlook of China economy as stock was rather stable today and cash flows seem to have been pulled out of safe-assests such as gold and the Yen.

Another issue concerning investors is the liquidity of the renminbi in offshore market, where borrowing cost was 66% on Tuesday and even when it has dropped down to 58%, is still considered as relatively high. This might proved to be more difficult for speculators to take short position and wait for lower prices, which in turn helps support and fix the Yuan in the open market, narrowing the gap with the Mainland exchange rate. However, It’s very unlikely for  China to keep intervening in financial markets  as foreign reserves are diminishing. Having the Yuan pegged against a basket of currencies instead of only the dollar is expected to allow further devaluation of the Yuan given Fed hiking. But risks to the Yuan and China Economy is still persisting if regulators do not come up with appropriate reforming measures asides from intervention. Bonds and the dollar will be more favoured than gold as oil prices slump.

Oil prices has rebounded from the low of $ 30 / barrel. Tonight, the U.S will release data on weekly oil reserves, which is anticipated to rise 1.9 million barrels in the week from 04-08 / 01. In the last week of 2015, oil reserves fell 5.1 million barrels as number of drilling rigs and investement in oil decline.

Falling oil prices is directly affecting commodity, cost of living and producing in the U.S, keeping inflation at a lower level than Fed’s target of 2%. Fed tightening cycle includes special attention to the labor market and inflaton. While the government has managed to create 200,00 jobs/month, they are still struggling to meet their inflation target as oil slump and no support is received from supply and demand side. China as the world’ second largest consumer of oil is currently having its demand cutback due to the economy deceleration, meanwhile, tension between two big supplier, Arabia Saudi and Iran is preventing OPEC cooperation to cut output. A inadequate inflation may delay next Fed hike, hence devaluate dollar.

Technical Analysis

Technical Analysis

Currently, at 15:08 GMT + 7, the pair is trading at $ 1.08162, lower than the opening price of $ 1.08565.

jan 13 d1 tech

Deriving from chart D1, price is still in a downward trend since mid-January 12. After hitting resistance in the second session and unable to make breakout, price is heading down and may reach the support of $ 1.07205.

jan 13 h1 tech

H1 showed that price opened at $ 1.08544 at the 38.2% level, broke through  the 50% level at $ 1.08264 and continued to drop. The pair rose slightly afterward but unable to break through this resistance. It seems that the 50% level was acting as a sentimental resistance as price also could not go beyond this point in 08/01 and 12/01 session, price is currently approaching the 61.8% level at $ 1.07990 .

At the momment, the RSI is below the 50% level, indicates sharply downtrend. Trend Signal MUAEA tool signaled short position from the Monday session (11/1) is now earning 72.5 points.

Sentiment Analysis

Sentiment Analysis

jan 13 h1 sentiment

Regarding to chart H1, the session began with 4 consecutive bearish candles with long body and short shadow implied lots of selling activity. This trend continued to the fifth candle as long lower shadow and no upper shadow were being shown sugestting buying was taking place and the candle resuled in green. However, from here on is the period of consolidation as price start to move sideways with two force were nearly equal, the following  candles had short body and long shadow.

European stock markets opened with green color pulled money out of safe-haven assets such as the US dollar. Today, apart from oil news, the stock market will greatly affect the pair.

Risk

Risk

Shares of energy companies are recovering as oil prices rebound from below $ 30 / barrel. At the meantime, the FTSE 100 index has risen 1.23%, which led by oil/gas companies along with commodity producers. European stocks also prospered as Stoxx Europe 600 index rose 1.2%. In addtion, Europe economy is showing sustaintial recovery since the introduction of ECB monetary easing after December meeting and there are predictions that the interest rate is unlikely to be lowered  in the next meeting in 21/1. Hence, Euro is supported to go up.

The U.S stock market is expected to grow stronger today as concerns about China outlook has diminished and oil prices has escaped the dangerous area. Cash flow fleeing from dollar to riskier assets will also be another cause for today rate climb.

Market commentary

jan 13 d1 final

EURUSD may end in red if additional positive news is to be released from the US market. Given the case, EURUSD is predicted to dropped to $ 1.09000.

However, as per discussed in the Risk section, EURUSD is still likely to climb up to the $1.07800 threshold.

Analysises of Group IF24h

Linh Nhan