Daily FX Report
Happy New Year and welcome to our first Daily FX Report in the New Year. This will be a very hard year for the financial markets while all the countries around the world fear more and more bad news from the economic data. However we wish you a nice trading start in this year and hope for successful trades.
The EUR fell against the USD and the JPY before today a European manufacturing report is expected to show the recession is deepening in the 16-nation region. Europe's manufacturing index was at 34.5 in December, which was unchanged from a preliminary estimate and the lowest since the data was introduced in 1998. The index is based on a survey of purchasing managers by Markit Economics and a figure under 50 indicates contraction. The EUR/USD headed for its first weekly fall in more than a month on expectations the ECB could cut interest rates to support the economy and fight against the recession. A survey shows the ECB could cut its key interest rate to 1.5 % by the second quarter of this year. The central bank reduced the rate by 175 bps to 2.5 % in the past 2 months, which were the first cuts since June 2003, after a global credit crisis built the Euro region's first recession in 15 years. The EUR/USD was down 1.2 % to 1.3874, the most since December 19th. The EUR/JPY declined 0.9 % to 126.40 from 127.41, the largest fall since December 19th, after sliding 22 % in 2008. The USD/JPY rose to 91.12 from a high of 90.74, following a 19 % fall last year. However the EUR/GBP is down 1.08% to 0.9458 from a day-opening of 0.9561. The USD rose 0.2 % to 1.4650 against the GBP and 1.3 % to 1.0753 against the CHF.
Since October the CHF/JPY has been trading in Fibonacci retracement levels. After touching the 75.12 support level the market returned and reached the 50 % retracement line. The Market seems to be stopped by the resistance level after the pair has made some dojis in the past few days. If the market doesn't break through the 50 % resistance level it could pull back towards the support lines below.
Since the beginning of December the EUR/GBP has been trading along a bullish trend line. According to our MACD analysis the market could be able to make return to the downside. As you can see the pair has got also broken the bullish trend line, which is a further sign for bearish movements.
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