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19 December Forex daily review

Sergiy Zlyvko
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In the U.S. session weak economic data from the United States limited the growth of the U.S. dollar. The number of initial claims for unemployment benefits rose unexpectedly last week, home sales in the secondary market declined in November, the index of business activity in the manufacturing sector of Philadelphia was worse than expected.

On Friday two reports will be key events of the day: UK GDP for the third quarter (9.30 GMT) and U.S. GDP (13.30 GMT). Significant deviation of forecast actual value will cause market swings of British pound (in the afternoon) and the dollar (in the evening). It is expected that the pace of economic growth in Britain and the United States coincide with preliminary values.

The dollar index followed the main scenario and we expect today update the maximum after a rollback.

Thursday was quite calm, as investors were busy of small adjustment of positions after the sharp fluctuations on FOMC solving. As a result, EURUSD to close of Thursday came to the area of 1.3660 and GBPUSD – to 1.6380.

Euro/dollar, including Asian session, updated the maximum at 1.3630. Falling stopped at 1.3650 level. The rate may drop to 180 degrees following the trend without kickbacks, but as the EURUSD is only beginning from 1.3650 area there is strong support from it and usually the price bounces zone 1.3690-1.3720. For the euro, the zone of sales is situated between 1.3690 and 1.3720. If EURUSD updates the minimum, these levels must be recalculated.

UK today publishes data on state finances, which rarely cause market interest. GBPUSD is clearly set to resume an upward movement, but for this it is necessary to find the slightest excuse. Unfortunately, national reports are unlikely to cause a rather strong reaction, so only the hope exists for fixing profitable positions in U.S. dollars at the end of the trading week. If the breakdown of 1.6380 would still be able, we should wait for 1.6420 achievements.

According to the results of the day, the pound had to surrender the position to 1.6335. 1.6355 is a critical level, so when the 1.6355 is achieved, we start to consider selling of the pound in the main scenario to the region 1.6400-1.6430. We expect to fall from 1.6400 to 1.6300 on the main scenario. Alternative scenario will be actual in case of rollback to 1.6430.

The correction of AUDUSD is long. The pair retreated to 0.8890 mark. The last two corrections were lasted 30 hours. With a minimum of 0.8820 the pullback lasted 30 hours. Conditions for AUD sale are performed. The main scenario is a drop to 0.8815. During the fall, pulses consist on average of 40 points.

On Thursday USDCHF rate rose through the 0.8990 line in form of a comb. We considered this option, as it often occurs after strong movements. As a result, the divergence formed, after which the USDCHF may be rolled back to the 0.8980 mark. Under a strong trend the pair can grow without price rollbacks to 150 points. We would not call the current trend as strong, so from 0.8980 level we consider a decline to 0.8950.

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