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2 December Forex daily review

Sergiy Zlyvko
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On Monday, the U.S. dollar closed up against the euro and pound. Fall of the single currency began after the publication of PMI production index. The euro/dollar fell to 1.3540. Single currency has been sold, despite strong manufacturing PMI in Eurozone, Germany, Italy and France, which were better than forecasts. Only PMI index in Spain was released below the forecast.

It is hard to believe that traders reacted by sales to the European statistics. It is likely that the technical factor has triggered and on Monday bulls were out of long positions ahead of the ECB meeting and Friday’s NFP report, but are stopped by the fall accelerated. The British pound won from the fall of the single currency. During the reduction of the single currency, the pound drew strength from EURGBP cross rate falling and strong November PMI report in the manufacturing sector in Britain.

At the trading in New York after falling to 1.3525 EURUSD rebounded to 1.3560.
Pound/dollar dropped to 1.6340 (-15 points compared to Friday’s close). Positive economic data in the U.S. put pressure on the euro and the pound against the dollar. The index of business activity in the U.S. exceeded expectations and reached the highest level since April 2011. In November ISM index was 57.3 against 56.4 the previous month. It should be noted that the employment component of the U.S. ISM index in November rose to 56.5 against 53.2 in the previous month. Before NFP publication this is an important indicator for the dollar. Gold ruled by positive statistics on the spot market on Monday fell to 1217.75 dollars per ounce.

The focus of the market this week is directed to the solutions of monetary policy of the central bank of Canada (Wednesday), the ECB and the Bank of England (Thursday). Producer price index for the euro area in October will be a single today’s economic indicator. Monday was volatile. Dollar index rebounded to 81.20 line. The main scenario is waiting to roll back to 80.80 and in the U.S. session to increase to 81.10.

We expect the lower decline of the euro. We were surprised by the reaction to the news. But on yesterday’s day we can be concluded – the fixing is started. In Asia, the euro/dollar dropped to 1.3525. Month began with the fall. Hourly upward trend completed recently. MA line turned down, so the main scenario we forward to rollback to the area 1.3565 and in the U.S. session falling to 1.3500. Ideally is to sell the euro from 1.3580. There won’t be important statistics in the evening, so they can stay in the band until Wednesday.

On Monday, the GBPUSD closed the session at the European and Asian growth to U.S. statistics dropped to 1.6340. Daily candle closed with shooting star formation. This is reversal candle, so from current levels we are waiting to roll back to 1.6405 and fall to 1.6310. If the pound will immediately fall after the opening of Europe, it is only strengthen all signals to sell the pound, because the bulls will start to close long positions. In this case, the pound will be under pressure until Thursday, while the Bank of England did not announce the decision on interest rates and stimulating program.

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