STERLING LOSING GROUND AMID BREXIT TALKS

The EUR/USD is restoring positions after the recent decline. The positive impulse continues despite the lower than expected trade balance in Eurozone. The indicator was 19.0 billion in October compared to 24.4 billion forecasted. The main attention of the market is turned to the negotiations concerning tax cuts in the US. There is an increased probability that the greenback may fall if the proposed tax laws are passed as investors fix positions on the ‘fact-following-the-rumour’ following USD growth stemming from hopes of fiscal easing in the US.

Further pressure for the US dollar came from the Empire state manufacturing index in December data release which showed a decline to 18.0 compared to the 18.8 expected and the 19.4 in the previous period. The growth of industrial production in the US by 0.2% was also 0.1% short of the forecasted figure. We may see the price rollback by the end of the trading session ahead of the weekend during which statements on the tax cuts in the US may be made.

Meanwhile, across the Atlantic, the GBP/USD has fallen sharply on the background of fears regarding the negative outcome of negotiations on the Brexit terms.

The USD/JPY kept falling due to the US dollar weakening and despite the increase of the Tankan manufacturing index in the fourth quarter by 3 to 25. On Monday, we may see increased trader activity following the publication of the trade balance data in Japan.

EUR/USD

The EUR/USD price is trying to restore some of its previously lost positions. In case of breaking through 1.1850, we may see further increases with closest targets at 1.1925 and 1.2000. The RSI on the 15-minute chart is near the overbought zone, which points to a possible price rollback soon. In case of a decline, the closest goal will be at 1.1730.

GBP/USD

The GBP/USD has shown a sharp descending movement after some price consolidation in the 1.3400-1.3450 range. Currently the quotes are near the important support line and in case of the price breaking through the nearest low at 1.3250, the targets will be at 1.3150 and 1.3050. The RSI on the 15-minute chart is in the oversold zone and there is a high probability of a rebound soon with the nearest target at 1.3400.

USD/JPY

The USD/JPY keeps falling along the inclined resistance line and in case of maintaining the current impulse, the next targets will be at 111.70 and 110.30. On the other side, breaking through this line, may lead to the change of the local descending trend to positive with target objectives at 113.00 and 114.70.