The single currency extended its losses against most majors in the second trading day in 2011 on the data that was released from Europe, showing further deterioration in conditions in the region, while investors await the release of the Fed's Minutes report later on today.
The European shared currency gained against the dollar after inflation overshot expectations asseen in the CPI flash estimate report for December. In addition, the German economy revealed that the labor sector in the country is still suffering from the ripple effect of debt problems and the credit crunch as the number of people out of work unexpectedly increased by 3.0 thousands, while markets were expecting a drop of 15.0 thousands.
Speculations that the debt-burdened nations in Europe may cause difficulties for banks to raise funds caused the euro to depreciate against the dollar over the past period, while the single currency lost ground as seen in the U.S. dollar index.
The dollar index, a six-currency gauge for the dollar's performance, traded lower Tuesday, where it opened trading at 79.24 while setting a high of 79.40 and a low of 78.96 before settling to trade near 79.05 levels.
The shared European currency gained in trading today, where the pair ascended from the opening levels of 1.3359 to reach a low of 1.3321 and a high of 1.3416 before settling to trade near 1.3390 levels. The pair found difficulty in surpassing the pivotal resistance of 1.3365 due to the negativity of Stochastic, where this fluctuation may remain for some time. Signs of a bullish technical pattern are appearing as its neckline is around pivotal 1.3365, alongside support offered by SMA 50.The expected direction is bullish over an intraday basisthat requires two factors to prevail; first, a clear breach of 1.3365 and the second is trading above 1.3245.
As for the royal cable, the currency surged against the dollar in trading, to trade at 1.5636, compared with the opening levels of 1.5486, where it set a high of 1.5644 and a low of 1.5452.
The breach of 1.5510 paved the path for the pair to appreciate further, targeting the resistance at 1.5690, noting that trading must remain above 1.5400 in order for these targets to be achieved.
Finally, talking about the dollar's performance against the Japanese currency, the dollar rose on the daily scale to trade at 82.18, compared with the opening levels of 81.70, while setting a high of 82.27 and a low of 81.59.
The pair's trend remains bearish for this week with fluctuation to be noted throughout the week along with a minor correction to the upside. The pair's nearing 82.30 caused the Stochastic Oscillator to enter an overbought areas; accordingly, keeping the bearish trend projection intact with targets at 80.35 levels where if breached, it will pave the path for the pair to depreciate further to 79.0, keeping in mind the importance of stability in trading below 82.30.