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14 February Forex daily review

Sergiy Zlyvko
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Yesterday’s trading day was relatively calm, which nevertheless did not prevent the U.S. dollar from te fall against many of its competitors. U.S. retail sales data increased the pressure on it: -0.4% vs. 0.0%. EURUSD rose to the level of resistance at around 1.3690. News of the resignation of Italian Prime Minister virtually has no effect on the pair and did not prevent its growth. Expectations that the Bank of England will raise interest rates later this year continue to push on GBPUSD pair higher and higher, and it is already close to the maximum of 1.6745, reached in April 2011. The closer British pound to this level, the higher is the probability of a trend reversal.

Pressure on USDCHF pair is still present, which is why its rate yesterday fell to the level of 0.8925. After a rollback to 0.8945 the sales resumed and the dollar tested 0.8920 mark. Here again it was bought, which made the pair possible to grow to 0.8950 dollar. Nevertheless bears do not hurry to give up and decreased the rate to 0.8915. Thus, the pair is again in a downtrend. The loss of the 89th figure will open the way to the 88th, the breakdown of which, in turn, leads to a fall to 0.8570. To improve the prospects, the dollar must rise above 0.9040.

GBPUSD continues to be in demand and raised to the level of 1.6675, slightly exceeding the previous highs. Here the pair stopped, but kickbacks are limited by the support at 1.6620, where the pound has been bought again. Consolidation near the highest points cannot get bears nervous and gives hope for the bulls to test 1.6745 high reached in April 2011. But the inability to break the resistance by the bulls triggers profit-taking, followed by reduction of the pair. The immediate goal in this case would be the 1.6700 level.

At this point GDP of France and Germany data have published already, which were higher than the forecasts. It has maintained growth of EURUSD to 1.3715, but market participants now expect the publication of data on Eurozone’s GDP, which, as noted by Mario Draghi, will be guided by the ECB in its future monetary policy.

Last week the dollar fell, and yesterday was no exception, yen and pound were the main beneficiaries of dollar weakness, although for different reasons. U.S. data continued to show a drop in retail sales in the U.S. which yesterday showed a decline of 0.4% per month. As a result, continued folding is questionable closer to meeting of the Central Bank next month. Pound was one of the best currencies on the background as in the context of the relative momentum of growth, the currency continues to look more confident in comparison with the U.S. dollar.

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