The Reserve Bank of Australia is widely expected to keep interest rates on hold at this meeting, following recent rate cuts. Meanwhile, what can traders expect from the GER30, UK100, GBPUSD, and AUDJPY? Gain insight into today’s forex market analysis.
4 February 2020 | AxiTrader – GER30 is testing a key area of support between 12.880 and 12.935 points and a clear break below could signal an extension of the decline towards the 200 DMA (currently near 12.520 points). Sentiment remains negative, and the re-opening of Chinese stock markets may increase the pressure on the major indices. To the topside, traders will be keeping an eye on the psychological level of 13.000 points for resistance, followed by 13.180.
Forex Market Analysis – UK stocks extend losses as Britain exits the EU
UK100 extended losses on Friday, along with the other European and US indices. The index closed the day below the 200 DMA and traders are now looking at 7130 as the next major level of support. The Daily RSI is not yet signaling oversold conditions, hinting that there might be scope for further losses.
The UK has now officially left the European Union, and this has cleared some of the uncertainty. Nevertheless, negotiating a trade deal with the EU will not be an easy task and the risks remain high.
There might be potential for an extension of a short squeeze in GBPUSD following the Bank of England´s decision to keep rates unchanged. The currency pair managed to bounce off the trendline support from the November low, and is approaching resistance at 1.3285. Should GBP bulls be able to clear this obstacle, a test of the December high at 1.3510 could follow soon.
AUDJPY under increased pressure
The on-going risk aversion has put AUDJPY under increased pressure. The currency pair fell below another key area of support last week (73.20-50) and a test of the 71.70 level seems increasingly likely. The Daily RSI is signaling slightly oversold conditions, but there’s no signs of a potential recovery yet, and sentiment remains bearish.
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