25.01.201811:21 Forex Analysis & Reviews: Trading plan for 25/01/2018

Asia joined to the US Dollar sell-off, although the first bars of trade in Europe bring some sort of a rebound. Inflation from New Zealand clearly disappointed by hitting NZD. EUR has a big day ahead with the ECB meeting. Nikkei 225 lost 1.1% and Hang Seng fell 0.4%.

On Thursday 25th of January, the main event of the day is the ECB Interest Rate Decision and Press Conference, but there are other important data scheduled for release, like German Ifo Business Climate data, Canadian Retail Sales data and Goods Trade Balance and Unemployment Claims data from the US.

EUR/USD analysis for 25/01/2018:

Usually, on the day of the ECB's decision, the market calmly expects afternoon events, but today it is different. The US Dollar sell-off has been sustained during the Asian session and it is only in the morning when the start of trade in Europe shows the first signs of calmness.

The European Central Bank will publish its decision and statement on today at 12:45 pm GMT. The global investors do not expect any changes in the parameters of monetary policy (the reference rate: 0.0%, deposit rate: -0.40%, asset purchase amount: EUR 30 billion / month). At 13:30 pm GMT a press conference of the President of the ECB, M. Draghi, is scheduled.

Let's now take a look at the EUR/USD technical picture at the H4 timeframe. The price has broken above the 127% Fibo Extension at the level of 1.2399, made a new high at the level of 1.2457 and currently tests the level of 1.2400 again. There is a clear bearish divergence between the price and the momentum oscillator present and the market conditions are overbought, so the lower levels are expected when the corrective cycle start.

Market Snapshot: NZD/USD drops hard

The price of NZD/USD has made a new high at the level of 0.7437 and drop towards the level of 0.7332 after the worse than expected inflation data were released. If the level of 0.7332 is violated, then the chances of falling out of the channel are high. The clear bearish divergence between the price and the momentum indicator support the bearish view.

Market Snapshot: DAX opened with a gap down

The price of German DAX index has opened with a gap down, just above the level of 13,336. Yesterday's daily candle close was close to the lows, so there is a high chance of a continuation of a drop towards the level of 13, 254. The clear bearish divergence supports the view.