Today is the first trading day of February, so pay attention to the monthly closes.
Today is an important day both from a technical and macroeconomic point of view, given the release of essential data right after the monthly closure of the charts.
In this context we see the exchange rates retreat in the last few days compared to the trends of the last few months, with a EurUsd which in the morning approaches 1.08, thus losing a flat figure from the highs of yesterday, as well as GbpUsd approaching 1.2320 after yesterday’s highs at 1.2410 area.
UsdJpy saw the release of Japanese unemployment data, which stood at 2.5% status, a figure released according to estimates and equal to the previous figure. Basically, today is a preparation day for the month ahead of us and for tomorrow’s movements which, if the opposite occur, could see important squeezes on the highs of the exchange rates against dollar.
The same thing goes for the stock market which still rises according to the dynamics of flight to quality that we have observed from the beginning of January to today. In this regard, let’s focus on short-term dynamics to understand how the month can close and how the market is actually preparing for tomorrow’s and the day after tomorrow’s data, with the release of rates by the Fed, BoE and BCE.
The weekly closures of the exchange rates against the dollar
In the morning there will be the release of data on European GDP for the fourth quarter, an important figure but which takes a back seat to the data released tomorrow, with inflation and unemployment in Europe and Fed rates in the evening for the USA.
Today is a day of preparation for tomorrow, with monthly closures that will probably be in line with the dynamics seen in previous months, therefore positive for EurUsd and GbpUsd. At this juncture we see EurUsd which this morning approached the 1.08 area, after having touched the highs in the 1.0910 area yesterday.
The market seems to be strongly bearish, even if on the 4 hour and 7 hour timeframes one could think of a movement that could reverse upwards during the day. This hypothesis leads back to the possibility of seeing bullish movements on exchange rates tomorrow and the day after tomorrow, which would act as a squeeze, i.e. movements from false breaks of important levels to then bring the market to reverse course immediately and start bearish movements, which could bring prices back to really interesting levels in the long term.
The same thing applies to the GbpUsd exchange which is replicating the EurUsd dynamics, while for the UsdJpy exchange we still see a lot of indecision, even if this actually seems to be the only exchange ready to reverse course for losing ground against the US dollar.
UsdJpy is the only exchange that could have a positive closure on a monthly basis and reverse the trend of the last few months. In the morning, it beat the 130.30 area and to close the month positively, it would be enough to return above the 131.10 area, a movement that could be possible given the short-term volatility of this change. In this regard, therefore, pay attention to today.
Technical situation
Beware of levels close to 1.08 for EurUsd, as we are today on the fourth consecutive day of declines and, moreover, we find ourselves with an unusual short-term technical situation, given that on a 4-hour basis and 7 hours there is a bearish dynamic which could be weak and subject to rebounds also important.
The same goes for GbpUsd, which is facing the support area at 1.2310, an important area to see a possible short-term rebound which could mean a return towards area 1.24 over the next few hours and days.
On UsdJpy, the dynamics seem to be well oriented towards the upside, with supports that are always bought but which, given the imminent release of very important data, could take the form of a "false" upward reversal. So pay attention to today, because we could see some unclear dynamics, albeit directional, subject to probable reversals, in practice a rather difficult day.
Original article published on Money.it Italy 2023-01-31 15:06:35. Original title: Mercati vedono il Pil europeo in attesa della Fed
