Forex Market Outlook & Trading Signals for January-February 2015

□ Market: Foreign Exchange

□ Assets: EURUSD, USDJPY, GBPUSD

The US Dollar ended 2014 with record gains of over 12% against a basket of major currencies. This was the best USD performance in the past 10 years. In this analysis, we will explore what to expect next in the Forex market for EURUSD, USDJPY, and GBPUSD as 2015 begins.

The Previous TCI Signal

In November 2014, we noted that December is traditionally the best month to buy the Euro against the US Dollar. However, the long-term strength of the USD outweighed this trend, and the forecast did not hold—ending a long streak of successful Forex signals in 2014.

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Foreign Exchange Market Outlook

The Euro remains under heavy pressure due to political, economic, and psychological factors. With the European Central Bank expected to ease monetary policy aggressively in 2015, many hedge fund managers predict EURUSD could reach 1:1 within the next 12 months. ECB President Mario Draghi recently said the bank is preparing to adjust its measures in early 2015. On the other hand, demand for the US dollar stays strong because of high US growth rates and expectations for higher interest rates starting in the third quarter of 2015.

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TCI on EURUSD, GBPUSD, and USDJPY

The Trading Center Indicator (TCI) is a unique technical analysis tool developed by TradingCenter.

Here are the TCI readings for EURUSD, GBPUSD, and USDJPY.

◙ EURUSD TCI Indications

The current TCI reading for EURUSD is -6.75%. This indicates an oversold market, so a normal correction is likely before the US Dollar becomes strong again. Remember, this is the year of the US Dollar, so be cautious and pay close attention to upcoming fundamental updates before trading against the USD.

EURUSD Major Technical Levels

EURUSD is trading at its lowest exchange rate levels since 2010. Here are some key support and resistance levels:

◙ Resistance Levels: 1.2000, 1.2050, 1.2140

◙ Support Levels: 1.1860, 1.1750, 1.1700

◙ EURUSD TCI Indications

Press the following Slider to reveal EURUSD TCI Indications:

◙ GBPUSD TCI Indications

Regarding GBPUSD, the British Sterling is under pressure, but a small correction is likely before the USD gains further. TCI forecasts a potential turnaround around January 8, 2015. Press the slider below to see the GBPUSD TCI indications:

◙ USDJPY TCI Indications

After the recent correction, USDJPY has the potential to move higher again. Press the slider below to see the USDJPY TCI indications:

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Forex Market Statistics

Here are some important statistics for January and February 2015, based on research by TradingCenter. Note that in December 2014, EURUSD showed a significant gap between statistics and actual returns, which makes us cautious about the coming months.

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Important Forex Updates

Here are some recent important updates from the Foreign Exchange Market:

• The US ISM non-manufacturing index fell more than expected in December 2014. Although below expectations, it still shows expansion for the 59th consecutive month.

• Greek parliamentary elections will take place in late January 2015. The main scenario points to a second election round, which may increase uncertainty in the Eurozone for a few weeks. However, 75% of Greeks strongly support staying in the Euro area.

• Crude oil prices continued to fall in January 2015. Currency pairs closely linked to oil prices include USD/RUB, USD/NOK, USD/CAD, AUD/USD, and AUD/JPY.

• 2015 is an election year for the UK, with elections scheduled for May 2015.

• UK manufacturing activity unexpectedly dropped to a 3-month low in December 2014.

• Inflation levels below 1.0% annually in the UK may delay interest rate hikes by the Bank of England.

• The real 2-year US Dollar rate remains more attractive than those in Japan and the Eurozone.

The chart above shows the spread differences between major Forex currencies.

 

■ Free Forex Trading Signals January 2015

George Protonotarios, Financial Analyst for TradingCenter (January 2015)