USDJPY and German 30 Index

The FOMC left rates on hold last night but changed elements of the FED Statement to reflect their more dovish stance. Stocks rallied to new highs for 2019 while the dollar slumped lower. The Fed said that they would be patient on future moves and that they were prepared to adjust any details for completing balance sheet normalization in light of economic and financial developments. The statement also said that economic activity is rising at a “solid” rate which was a change from the previous “strong” rate. Gold also benefited as yields tumbled. US Pending Home Sales were released yesterday and showed a drop to -2.2% from -0.9%. German December Retail Sales fell to -4.3% from 1.4% previously.

Today will see the release of GDP data for Spain, Italy, the Eurozone and Canada. Unemployment rate data will be released for Germany, the Eurozone and the US. US President Trump is due to meet Chinese representatives today in the Oval Office.


The USDJPY chart shows how the pair fell after the FED Statement yesterday, and is continuing to push lower today, having reached the 108.681 level. A loss of support at 109.102 has been retested as resistance and this level held to send price under 109.000. Supports below come in at 108.500 and 108.000, followed by 107.553. Further selling below this level may force price to retest the 106.750 level. A failure of traders to support price in this region potentially opens the way to the 105.000 area and a retest on the low for 2019.

Resistance may now be seen around the 109.102/109.000 area, followed by the 110.000 level and its associated zone. The rising trend line is part of this zone at 110.200. A break higher through this zone may target the 110.000 level, followed by the 111.385 area. This would require the US Dollar to find some strength going forward. Continued upward movement targets the 112.000 area, followed by 112.665.

German 30 Index

The German 30 Index has benefited from the FED decision yesterday and is continuing its upward move so far this morning. The main line of resistance for the index is now at the 11350.00 area and is shown here as the falling white trend line. A break above the 2019 high at 11322.00 may force a test on this line. A slip lower from the line may find support around yesterday’s low or create a higher low which would be the optimal scenario for the rally to be maintained. The 11500.00 area provides the next point of resistance, followed by 11560.00 as the lower high. Above this area, 11856.00 features strongly on the daily chart and may provide resistance going forward.

Support at yesterday’s low of 11130.00 may provide the first level of potential attraction for buyers. A loss of the trend line may see sellers enter the market but support at the 11000.00/11020.00 area might provide support on a pullback. Below this area the potential for a decline possibly becomes more dynamic and may push price down to 10800.00 as pressure is applied to bullish positions. The next level of support may feature around 10585.00 and is followed by the 10500.00 level. Below that, the 2018 low at 11279.00 comes into play.


Phillip Konchar


Core Spreads

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