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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

​​​EUR/GBP trades in near five month low, EUR/USD stays side-lined while USD/CNY stabilizes

​​Outlook on EUR/USD, EUR/GBP and USD/CNH following eurozone and UK flash January PMI releases and as China unexpectedly cuts bank reserve requirements.

Euro Source: Bloomberg

​​​EUR/USD remains side-lined

​​EUR/USD briefly shot up to $1.0932 on Wednesday but then re-entered its sideways trading range amid weak eurozone purchasing managers index (PMI) data and thus continues to be side-lined between its 55- and 200-day simple moving averages (SMA) at $1.0912 to $1.0846.

​Further sideways trading is at hand for now but a rise above this week’s $1.0932 high may take the cross towards the 5 and 11 January highs at $1.0998 to $1.1001.

A drop through the 200-day SMA would have this week’s low at $1.0822 in sight, though.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

​EUR/GBP tries to stabilize above near five month low

EUR/GBP decline from its £0.8714 December high has taken it to Wednesday’s £0.8536 low amid diverging eurozone and UK PMI data, the former coming in weaker-than-expected while the latter surprised to the upside.

​A fall through £0.8536 would put the September low at £0.8524 on the plate, below which more significant support can be spotted between the June-to-August lows at £0.8519 to £0.8493.

​A minor advance above Wednesday’s £0.8563 Doji high would eye the December-to-January downtrend line at £0.8576 which is likely to cap.

EUR/GBP chart Source: Bloomberg
EUR/GBP chart Source: Bloomberg

​USD/CNH drops on stimulus package hopes

​The surprise announcement late on Wednesday by the People’s Bank of China to reduce banks’ reserve ratios by 50 basis points next month in a bid to boost liquidity increased volatility in the USD/CNH pair.

​The currency pair recovered from Wednesday’s two-week low at CN¥7.1414 and is flirting with the 55-day SMA at CN¥7.1722.

​Resistance above the 55-day SMA at CN¥7.1722 is seen at Wednesday’s CN¥7.1797 high ahead of the 200-day SMA at CN¥7.1922. A slip through Wednesday’s CN¥7.1414 low could lead to the 5 January low at CN¥7.1409 being reached below which further potential support sits at the CN¥7.1124 November low.

USD/CNH chart Source: IT-Finance.com
USD/CNH chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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