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3 February Forex daily review

Sergiy Zlyvko
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On Monday, the dollar index corrected against Friday’s growth, and though the EURUSD fell back to 1.3480 mark and the rollback of index turned deep. It was not a good signal to fall below 1.3500, because the balance is beginning to lean toward the sellers.

Yesterday, the U.S. dollar strengthened against the pound after weak UK index PMI. GBPUSD rate fell to 1.6280. Pound per day lost about 130 points. Franc and euro vice versa strengthened against the dollar yesterday. Growth during the U.S. session was associated with a published report on the U.S. manufacturing PMI, which strongly decreased in January.

In the morning Australian dollar pleased the traders by its volatility. After RBA meeting, AUDUSD exchange rate rose by 130 points to 0.8890. The technical picture for the euro and the pound indicates a further decline. Just doubt that the unidirectional synchronous pairs go down. On Friday, the euro was down with the cross – the pound skidded. Pound fell yesterday with growing cross – the euro strengthened. Today EURGBP cross can go to rollback and the euro will come under pressure again, the pound will get a temporary boost. According to forecast scenarios, we considered a rising dollar, but more like what currency pairs until Thursday to go sideways. We have to wait for data on the production of inflation in the Eurozone. If reducing inflation accelerated decline of the euro (on Friday), then the bearish trend resumed with renewed force.

The single currency is corrected to 1.3480, but it did not go in the main scenario. Given the current rise of AUDUSD after RBA meeting, the sellers may refuse to attack. We have to wait for the publication of the inflation report on producer prices. Reaction to it is lower than to the report on consumer prices, but with the reducing of inflation the euro will go down. Before the ECB meeting and the rumors that on Thursday the rate will be lowered, the reaction to the report can be strong. AO indicator is above, so the main scenario is waiting to fall to 1.3435 mark from the maximum of 1.3535. The pair is unlikely to decrease below, because the market will prepare for meetings and payrolls.

From the maximum 1.6518, GBPUSD fell to 1.6290 mark. According to the latest quotes the rate decreased to 1.6280 and eventually, between AO and the price a bullish divergence has formed. Unsuccessfully after the RBA meeting AUDUSD rose sharply. Assuming this increase, sellers can begin to cover short positions. Because 1.6330 level has passed, then we try to consider a drop to 1.6230. For today it is important, because tomorrow the market will already be preparing for the Bank of England and the ECB meetings.

Yesterday AUDUSD rolled away up to 0.8835, then went back to 0.8730. After RBA meeting AUDUSD exchange rate fall into the zone of pinning. Now the price is at 0.8900. On the overall recovery of the dollar, AUDUSD forwards a correction to 0.8760. It is strictly, of course, but we do not yet see further growth of the Australian dollar.

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