Trading plan for 03/01/2019
The poor liquidity conditions due to the ongoing holiday in Japan has helped the overnight flash-crash.
About 20 minutes before midnight, the currency market experienced a shock with the biggest damage to USD / JPY, which fell under the level of 105 before calming down at 106.85. EUR / USD fell to 1.1291, but it is almost a figure above. The lows at GBP / USD was made at 1.2441 (now 1.2548). Fatal liquidity conditions broke down AUD / USD (0.6740, rebound to 0.6940) and NZD / USD (0.6550, now 0.6630).
On Thursday, the 3rd of January, the event calendar is light in important data releases but the global investors should keep an eye on Private Sector Credit and M3 Money Supply data from the Eurozone, Construction PMI data from the UK and ADP Non-Farm Employment Change data and ISM Manufacturing data from the US.
EUR/USD analysis for 03/01/2019:
After the meeting of President Trump with the leaders of both parties on the termination of the government shutdown, it did not bring a breakthrough. Majority leader in the US Senate, Mitch McConnel, said that "no particular progress has been made" and Democrat Nancy Pelosi said that her party would continue to work on a set of bills freeing public administration financing. However, it is unrealistic for the package to pass through the Senate or be vetoed by the president.
A very important indicator from the economic point of view, the ISM Manufacturing Index, will be published today at 03:00 pm GMT. This is a monthly index released by the Institute of Supply Management which tracks the amount of manufacturing activity that occurred in the previous month, that assesses the state of US industry by surveying executives on expectations for future production, new orders, inventories, employment, and deliveries. Today's ISM data are expected to be lower than a month ago: 58.2 versus 59.3, so the global investors might get another indication of an ongoing economic slowdown in the US.
Let's now take a look at the EUR/USD technical picture at the H4 time frame after the flash-crash. The market spiked down to the level of 1.1228, but quickly rebound towards the level of 1.1350 and currently is trading around the level of 1.1372, below the technical resistance at 1.1421. Nevertheless, the momentum is still below its fifty level, so the bulls are still perceived as weak. Moreover, no important technical level, neither support nor the resistance was violated anyway, so the market is still trading in a wide range between the levels of 1.1266 - 1.1500.
