The euro was the most vulnerable during the last trading session. The ECB’s decision to expand the asset purchase program put pressure on the euro and it lost more than 200 points against the dollar.
It is expected that the preliminary January purchasing managers’ index assessment (PMI) will show a growth in France – in the service sector to 50.7 from 50.6 and in the manufacturing sector to 48.0 against the earlier 47.5, the Germany service sector growth up to 52.5 after 52.1 in December and to 51.7 from 51.2 in the production sphere.
The pair broke through the support near 1.1420-1.1440 and the previous low at the level of 1.1320-1.1340 which led to its fall to 1.1200-1.1220.
The support levels are 1.1220-1.1220, and the resistance levels are 1.1340-1.1260.
MACD is in a negative territory.
The euro decline from its highs was very ambitious and there were no substantive corrections after the support breakthrough around 1.1320-1.1340, indicators are oversold, therefore selling the pair should be carried out with the utmost care. The fact that the pair is oversold does not mean active purchases at the current levels, but the rebound risks are rather high.
The British pound has fallen against the dollar after the European Bank decisions. The pound fell to the new local lows.
We await the December retail sales, it is expected that its rapid growth has stopped and there are signs of the demand decrease – the forecast expects a decline by 0.5% m/m and + 3.0% y/y vs. + 1.6% m/m, + 6.4% y/y earlier.
The attempt of the pound/dollar to overcome the resistance near the 52nd figure was again unsuccessful. The pair resumed its fall and broke through the support near 1.5020-1.5040. The attempts to fall below the mark of 1.4970-1.4990 were unsuccessful as well. The sentiment remains negative; and it is possible for the pair to fall towards the support levels near the 48th figure.
The support levels: 1.4970-1.4990 and the resistance levels: 1.5040-1.5060.
The MACD indicator is in a negative territory.
The risk for a correction is rising, however this not a given at current levels. Though “bottom picking” by purchases could be very a dangerous occupation, as further downward momentum remains no the cards. It thus remains necessary to secure purchases along with protective stop orders. Its rise above the 51st figure will weaken the downward pressure and the confident 52nd figure break through will signal about the development of upward correction.
The Japanese yen was also under pressure from the dollar after the Eurozone Central Bank information hit the news. It is noted that the yen’s decline against the dollar was less ambitious than the Euro. The yen ended trading slightly higher.
The January business activity index in the manufacturing sector showed a slight increase to 52.1 against 52.0 in December which was worse than expected the stronger rise – up to 52.5.
The dollar/yen tested the support near 116.95-117.15 again, but bids returned the pair above the resistance near 118.15-118.35. The pair continued to fall back below the level of 117.95-118.15. Bulls still struggle to break through the higher level of 119.25-119.45. This preserves risks for a renewed decline and testing of yet another regular support level around 116.95-117.15.
The support levels: 116.95-117.15, and the resistance levels: 118.15-118.35.
The MACD indicator is in a positive territory.
The level of 119.25-119.45 breakthrough will open the way to 120th figure which needs to be overcome for the upward trend to continue.