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15 January Forex daily review

Sergiy Zlyvko
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On Wednesday, the U.S. dollar strengthened across the market. The single currency and the British pound dropped by about 80 points against the dollar. The EURUSD fell to 1.3580 level, GBPUSD fell to 1.6320 mark after which the correctional phase began. The dollar had a recent economic data in the U.S. and rising U.S. bond yields.

Fed business activity index in New York with the forecast of 3.75 was published at 12.51 (the maximum of two years). PPI in the U.S. also exceeded expectations.

According to the U.S. Labor Department report, producer price index (PPI) in the U.S. in December rose by 0.4% compared with the previous month, after falling by 0.1% in November. Annual rate of 1.2% compared with a forecast of 1.1%. PPI core in December rose by 0.3% vs. 0.1%. By the end of 2013 PPI core index rose by 1.4% vs. 1.3%.

This morning his Australian dollar surprised with its fall, which fell against the dollar by 100 points. It was a reaction to the Australian labor market report. The number of jobs in Australia unexpectedly fell in December by 22,600, while expected to grow by 10,000. Strong deviation of the actual value of the forecast has a strong influence on the Australian currency.

AUDUSD pair recovery is not observed, so to Thursday we consider continued growth of the dollar relative to other currencies. Now this currency after yesterday’s fall rolled back and closer to the end of the Asian session we expect a reversal of the dollar up. It is time to provide reports on consumer price inflation in the euro area and the U.S. among the news, as well as a report on the number of initial applications for unemployment benefits. Let’s try to consider the test for today 81.30. It is hard to take 81.15.

The euro/dollar fell as predicted, but again in the morning it pushed away from the daily trend line. At the same pound recently broke the trend line. EURGBP cross is on the side of the bulls, so we consider a rollback to 1.3645. This will allow the bears to regroup and prepare for the assault of support zone at 1.3545. If a rollback is passed 1.3640 mark, the EURUSD exchange rate will achieve 1.3690 level.

As buyers would not have tried to keep the defense near 1.6410 line, the pair fell to 1.6320. Now pound is retracing, but on the daily time frame the trend line is broken. Closing the day at around 1.64 will fix false breakdown. The main scenario we consider is pound drop to 1.6305 mark.

AUDUSD pair recovery is not observed, so to Thursday we consider the continued growth of the dollar against other currencies, including AUD. Now the currency after yesterday’s fall rolled back and closer to the end of the Asian session we expect a reversal of the dollar up. Price is in the area of pinning so AUD aggressive sales are not expected. It may fall on the downstream of the triangle.

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