The global economy continues to disclose further mixed signals to add only to the mixed sentiment in the market. Today, we were supported by good Japanese GDP and strong Australian job figures, which guided equity markets into the green on buoyed recovery outlook.

We had good figures today and the positivity for equity markets, yet the same was not reflected on currencies, where the dollar reversed the early decline and the euro and sterling continued soft into the European session.

Obama extended the Bush-era tax cuts and unemployment benefits which is seen positive to aid the recovery in the United States for now, especially that it might aid the Feds means to stimulate the recovery and ensure price stability! The positive outlook in the market reflected more on the US than it did on Europe, especially as the focus is still on the BoE ahead of their last rate decision this year.

We can see that the dollar recuperated from the early session's decline, where the dollar index rebounded from the early lows recorded at 79.67 to currently trade at its highs of 80.24. The index today returned above 23.6% correction at 80.10 for the last upside rally which peaked at 81.43, where the index failed to breach the 38.2% correction in three attempts and now reversed higher aided by positive momentum over daily and intraday basis.

As for the euro, the fears are easing gradually over the debt crisis, yet still evident and reflected on the euro's volatility, the lack of fundamentals from the area are leaving the euro to the mercy of traders, and fortunately the sentiment is positively biased which helped the euro slightly.

The euro declined from the highs recorded this morning at 1.3322 burdened by negative momentum to set the low of 1.3197; the pair is entering oversold areas over hourly basis yet still loaded with negative momentum over four-hour and daily basis, yet if stability prevails above 1.3180 the pair might head higher again to attach 1.3380 and if the pair does not attack this resistance and return to the main ascending channel the decline will continue for the euro, especially as we see dollar strength on the rise!

For sterling, the pair was burdened by negative trade figures, which extended fears over the state of the euro area, the biggest trading partner for the UK and the lack of a major aid for growth in the UK in the coming period, especially as domestic spending starts to wane with the VAT hike this January.

Sterling is trading with jitters ahead of the BoE decision ideally accompanying the decision, though we do not expect a huge impact since the steady rate and APF are taken for granted and surely the BoE will not release a new statement.

The pair currently hovers around 1.5773 after recording the high of 1.5840 where strong resistance areas around those levels to 1.5855 which is the resistance for the descending channel and the negative momentum pressured the pair lower to record the low of 1.5757; where the pair still carries negative momentum and can continue south towards 1.5725 areas and even further.