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19 February Forex daily review

Sergiy Zlyvko
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The main currency pair in the second half of the week seems to have lost a landmark, which previously amounted to: protocol of January meeting of U.S. Federal Reserve had published, emerging economies are boiling and simmer, investors rushing in search of safe haven to sit out the whole roundabout in a relatively quiet setting.

Minutes of the Federal Reserve, in principle, said nothing new that has been sensationally reported: protocol confirmed that the folding of QE3 this year will be continued and on a monthly basis and it will last until the volume of the program is exhausted, or until the condition of American economy allows. That is, at a meeting in March (February meeting Fed skips) Janet Yellen may well announce a new, 10 billion reduction incentives.

Now, however, it is possible attitude to this market will be different: if the program is cut back, then the economy is going right – hence sympathy for the dollar should be increase. Today’s session will be rich in statistics. On the one hand, the euro and some of its member countries publish preliminary data on activity in industry and services. On the other, United States finally submit reports on construction beginning, weekly applications for unemployment benefits and a pair of other releases. EURUSD will remain in the range of 1.3800 and waiting for new drivers.

In the UK, the unemployment rate in December was 7.2% vs. 7.1% and employment came at 193 thousand vs. 250 thousand. After the publication of these data, GBPUSD pair fell to around 1.6635, but was soon able to recover to 1.6725. Weaker than expected, the statistics may reduce expectations of an earlier increase the interest rate by the Bank of England that will support the development of a downward correction.

The Australian dollar was under pressure and fell to 0.8935 after the release of weaker-than-expected preliminary China PMI for February, the index showed the fourth decline in a row. China’s slowing economy usually has a negative impact on the dynamics of the Aussie.

USDCHF could not rise above the level of resistance in the 0.8890 and after testing it fell to 0.8855. Here dollar bought that allowed him to return to the upper boundary formed band, but the sellers are not asleep, continuing to sell the dollar on growth. The pair is still in a downtrend, risk in the short term to test the 0.8800 level. The highest level above 0.9035 achievement will weaken the bearish momentum.

The USDJPY yesterday declined, but after testing support at 101.85 the pair has been bought and it rose to the resistance at 102.45. Nevertheless, interest in the growth of sales has remained and the pair returned to the ongoing support. Inability to break above 102.75 by the dollar increases the chances of a downward correction continuation, but the bears still have to compete for support in the levels of 101.40 and 100.70. Losing the last support will mean achievement and the development of vertices scale pair’s downward correction.

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