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Last week’s Forex review

Sergiy Zlyvko
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Currency markets participants, as well as many enterprising people, used the holidays differing by reduced liquidity in order to make money. It was enough to provoke a fall of the dollar to levels where protective orders were placed and cause their activation. As a result, exaggerated movements were obtained, reflecting the actual situation in the markets. Furthermore, according to published information, the EURUSD gained impetus to growth through the comments of the ECB Governing Council member Jens Weidmann and adjusting positions of the banks at the end of the year. Thus, the EURUSD soared to a new high at 1.3895 and GBPUSD – to 1.6605. The Japanese yen continued to fall against the European competitors and against the U.S. dollar, which had reached the maximum of 105.45.

With the start of trading on January 2, the bulls on listed pairs started to lock the profits, which led to a drop in rates of these tools. The pairs approached the support that may predetermine their fate. Supports breakdown can be a cause to assume a reversal in trends and the development of a minimum correction. In general there aren’t any causes on dollar pessimism at this stage. U.S. macroeconomic statistics continue to show an improvement in the economy. In addition, the supporting factor for the dollar is the beginning of Fed stimulus measures folding. Nevertheless, strong Japanese currency is oversold that may limit further growth of the USDJPY and lead to a downward correction. In turn, the stock market is also planned to develop a downward correction that will help to reduce for this pair.

With the end of the old year and the coming of the new no change occurs in Forex. But currency markets in anticipation of 2014 and after the occurrence of certain changes in the situation yet occurred. On December 27 the dollar suddenly came under strong pressure against the European currencies against the background of EURUSD soared to a fresh high of 1.3895. Since the growth occurred in the thin market and fueled by ripped off stop-loss, there weren’t continued growth and the pair was doomed to return to some of the supports. So after testing 1.3895 EURUSD fell to 1.3735 level, which for a time acted as a support. Hence the bulls tried to go back to the 1.3800 level and overcome it. They have coped the first part of the problem, but the second did not happen. The fate of the pair became clear. Growth and ability to consolidate above 1.3800 would be bullish confirmation conservation, but it never happened. Moreover, the euro fell to 1.3700 level broken before, it struck again, this time from the top down and fell to the support in the mark of 1.3630. The 50-day moving average passes just below, below it – 100-day MA and from this level the euro resumed its growth in the end of December. Consequently, this level can be regarded as critical for the bulls on the pair and its loss will lead to a massive decline. Returning above 1.3710, which again acts as resistance, will return good mood for the bulls.

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