Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Preliminary German CPI for January is predicted to increase by 0.8% monthly and by 8.9% annualized. Forex traders can compare this to the German CPI for December, which dropped by 0.8% monthly and surged by 8.6% annualized. The EU Harmonized German CPI for January is predicted to rise by 1.2% monthly and by 10.0% annualized. Forex traders can compare this to the EU Harmonized German CPI for December, which contracted by 1.2% monthly and accelerated by 9.6% annualized.
South African Mining Production for December is predicted to decrease by 6.0% monthly. Forex traders can compare this to South African Mining Production for November, which plunged by 9.0%.
South African Manufacturing Production for December is predicted to drop by 0.5% monthly and by 2.5% annualized. Forex traders can compare this to South African Manufacturing Production for November, which decreased by 2.0% monthly and by 1.1% annualized.
Euro traders are likely to await the latest EU Economic Forecast to get more details about how the monetary tightening by the European Central Bank has impacted the economy. The report coincides with the EU Leaders Summit. The Euro enjoyed a healthy rally, mirroring past performances when the EUR/USD briefly dipped below parity. The long-term trend remains bullish, but short-term factors favor a healthy pullback. The ECB could remain more aggressive than other central banks as inflation, and inflationary expectations, remain near multi-decade peaks. South Africa continues to face a contracting economy, but a strong US Dollar helps its commodity exports, especially for gold, where demand surged amid record central bank buying globally. It places a floor under the South African Rand.
The forecast for the EUR/ZAR turned bearish after price action advanced into its horizontal resistance area, from where bullish momentum is fading. Longer-term upside pressure exists, driven by the ascending Ichimoku Kinko Hyo Cloud, but short-term volatility could increase as bulls and bears fight for the next directional move. The flat Tenkan-sen confirms the absence of upside momentum, while the ascending Kijun-sen hints at choppy trading until a catalyst emerges to drive this currency pair in either direction. Traders should also monitor the CCI in extreme overbought territory. A negative divergence formed, and a breakdown below 100 could trigger a sell-off, as this technical indicator has plenty of downside potential. Can bears overpower bulls and gain control over the EUR/ZAR to force it into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the EUR/ZAR remain inside the or breakdown below the 18.9575 to 19.0325 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 18.9850
- Take Profit Zone: 18.3800 – 18.5250
- Stop Loss Level: 19.1100
Should price action for the EUR/ZAR breakout above 19.0325, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 19.1100
- Take Profit Zone: 19.2775 – 19.3250
- Stop Loss Level: 19.0325
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