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12 February Forex daily review

Sergiy Zlyvko
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The main events of the day yesterday, as expected, were the inflation report the Bank of England and the performance of Mark Carney. The central bank raised its forecasts for economic growth in the country and allowed the possibility of interest rates’ rising next year. Though Mark Carney continues to indicate that the current level of rates will persist for a long time, speculators, however, began to think that regulator will raise the rates later this year. As a result, the British pound was again in high demand, which led to the strengthening of GBPUSD pair to reach 1.6620. Undoubtedly, the outlook has improved significantly, but it is doubtful that without the continued support of macroeconomic statistics for the UK, the pound will significantly advance above 1.6665 mark.

On the background of the British pound buying there was a strong cross-fall of EURGBP, which pulled it and EURUSD pair had fallen to 1.3560. Here, the pair was able to find the support and back above resistance to around 1.3620.

The Australian dollar has undergone the sale because of weak labor market data. Australia’s unemployment rate was 6.0% in January vs. forecast of 5.9% and the change in the number of employed amounted to -3.7 vs. +15.3 thousand people. As a result, AUDUSD pair fell to around 0.8930.

After rising to 102.70, USDJPY came under pressure, which led to depreciation to 102.20. Here a pair has been bought and it returned to the current resistance, where 100-day moving average is situated. Hence the pressure on the dollar resumed, which is why the pair fell to 101.95. Parabolic SAR is above the price that gives reason to assume support testing at 101.60. Its loss will confirm the development of a downward correction and to rise above 102.70 will signal the resumption of uptrend.

EURUSD yesterday came under pressure due to the cross-selling of the EURGBP. As a result, the pair broke through support at the level of 1.3620 and fell to 1.3560. Here has been bought and the pair came back above 1.3620 and already tested 1.3635 mark. The fact that a pair has been bought near 1.3545 support and it was able to rise above 1.3620 is a positive factor for it, giving reason to expect testing 1.3685 resistance in the short term. Falling below 1.3600 increases the likelihood of breakdown of the support at 1.3545.

Today investors will be focused on the publication of the ECB monthly report and data on retail sales in the United States. From the report we cannot hardly expect something new, so the market reaction to it is likely to be negligible. Retail sales figure in the U.S. is expected at 0.1% vs. 0.7%. Output indicator in line with expectations or below will weaken the dollar against the Japanese yen, but sales growth at or above the previous value can support USDJPY strengthening, though it is doubtful that its growth will be sustained.

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