Market review for 14 – 18. 02, 2011Previous trading week started with a US dollar competitors’ weakness.
On Monday euro demonstrated sharp decrease against the competitors during the European trading sessions. Concerns over the Euro-zone budget crises reinforced. The 2-day meeting of the EC Ministers of Finance, which started on that day, might not result in a mutual agreement regarding target levels of reducing the country’s debt loads. In addition, according to the released information, chances of restructuring of the German state bank West LB AG were reducing, which rendered pressure on the euro as well. The Euro-zone Industrial production, published on Monday, turned out to be negative at the level of -0.1%, against the forecasts of 0.0% and previous month positive figure of 1.4%. As a result, the EUR/USD pair demonstrated minimums at $1,3426. The sterling demonstrated a decrease following the euro drop. The GBP/USD pair decreased to $1.5985 minimums.
By the end of the day the euro managed to rehabilitate and won back the previously lost positions. The EUR/USD grew to the levels of $1,3480. The pound managed to grow against the greenback during the American trading session as well. The GBP/USD reached the $1,6030 mark. Speculations regarding the possibility, that the Bank of England would increase the principal rate, reinforced.
On Tuesday the EUR/USD pair demonstrated growth up to the $1.3530 maximums during the Asian trading session. But the released Euro-zone fundamentals were diverse. German GDP data for the fourth quarter turned out to be below expectations. And the Euro-zone overall GDP for the same period was below forecasts as well. The German ZEW survey (Economic sentiment) for February was at the 15.7 level against the expected 20.0, which pressured the euro. But, at the same time, the German ZEW survey (Current situation) for February grew from the previous month and happened to be above forecasts: 85.2 against the 83.0, which rendered support to the euro. European session showed maximums of $1.3552 by EUR/USD pair.
Sterling demonstrated steady growth against its competitors due to the released strong British fundamentals on that day. UK Consumer price index turned out to be at the expected level of 4.0%. DCLG House prices were above forecasts too. And the Retail price indices were above expected level as well. Therefore, the GBP/USD pair reached the $1,6170 maximums. As a result, the speculations regarding possible increase of the principal interest rate reinforced.
According to the expectations, on Tuesday the Bank of Japan left the principal rate unchanged at the previous level of 0.10%. USD/JPY pair managed to grow to the Y83.80 mark.
Diverse US fundamentals were released during the American trading session. Eventually, the US dollar received support. Empire manufacturing index for February grew and hit 15.43 amid forecasts at 15.00 level. Net long-term TIC flows were above expectations. But advance retail sales dropped for 0.3% when the expectations were 0.5%.
On Wednesday the GBP/USD pair demonstrated maximums during the Asian trading session at the level of $1,6186. But later on the release of the negative UK fundamentals changed the trading dynamics. Nationwide Consumer confidence for January dropped to 47 against expected level of 50. Jobless claims increased for 2.4K when the indicator was forecasted to drop for 3.0K. Pound reacted with a sharp decrease. According to the publication of the Bank of England Inflation report, the inflation would likely remain high over this year. Following this report the GBP/USD pair dropped to minimums of $1,5985. The drop of the pound influenced the euro dynamics. The EUR/USD pair decreased to the $1.3459 mark.
The dollar price action was mixed on the same day. But the US fundamentals, which were released during the American session, changed the trading dynamics of the major currencies. Strong economic docket increased the demand for the risky assets, and the greenback turned out to be under pressure. The EUR/USD pair managed to rehabilitate and hit the $1,3587 maximums after the release of the Industrial production index, which turned out to be -0.1% against the forecasted 0.5%. The Federal release of the FOMC meeting, which was also in the market focus on Wednesday, did not have any relevant influence on the market.
Greenback was under pressure on Thursday. US dollar was not supported as a save-haven currency.
Political problems, which were spreading over the Middle East region, supported the growing demand for the save-haven assets. Iran confirmed that two warships were forwarded to the Mediterranean through the Suez Canal. As a result, the Japanese yen rate increased against its competitors. The USD/JPY pair traded around the maximum range of Y83.50 – Y83.70. Swiss frank received considerable support as a save-haven currency and reached two-week maximum.
Additional pressure on the US dollar was received from the released US fundamentals. The Initial jobless claims turned out to be elevated above the forecast and over the previous level as well: 410K against the expected 400K.
On Friday after the announcement of the ECB Board member, Lorenzo Bini Smagi, that the ECB would raise the principal rate due to the increasing pressure from the global inflation, the greenback competitors started to grow. The EUR/USD pair reached maximums of $1,3700, and the GBP/USD hit the $1,6250 level.
Weekly technical analysis for 21 – 25.02
The pair is trading in the triangle. Upper border (resistance) is 1.41130, lower border (support) is 1.30651. The pair needs to break one of these levels to be able continue rising or falling.
Resistance: 1.37441, 1.41130, 1.44835
Support: 1.33427, 1.2800, 1.25667
The pair has broken channel line. A return for a test to channel line maybe expected to 1.61380. If the pair stays above this level the pair will rise to Fibonacci retracement 38.2% at 1.64274 and Moving Average 9200) at 1.65789.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
The pair has rolled back to 0.94501. Lower is stronger support at 0.93264.
Resistance: 0.96525, 0.99031, 1.01369
Support: 0.93264, 0.91074, 0.88022
The pair is closed in the triangle. Resistance 83.330 supports 81.010. The pair needs to break one of these levels to be able to continue rising or declining.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126
The pair has risen to 1.01873 and may roll back to 1.00031.
Resistance: 1.01873, 1.03847, 1.05810
Support: 1.00031, 0.97889, 0.94048