The euro corrected against the dollar. Earlier the pair dropped to “10-year low” levels. We see only negativity in the coming data, the inflation forecasts are reduced to assumptions about the further price pressure reduction – up to -0.5% y/y vs. -0.2% y/y recorded in December. After the ECB meeting results the euro broke through the support near 1.1500-1.1520 and the low near 1.1320-1.1340 that resulted in the pair decreasing to below the level of 1.1200-1.1220. Bears tested the level of 1.1100-1.1120 and rebounded upwards above the level of 1.1220-1.1240.
The support levels are 1.1220-1.1220, and the resistance levels are 1.1340-1.1360.
MACD is in a negative territory.
Now rebounds are limited by the resistance near 1.1340-1.1360. A possibility exists to break through the support around 1.1100-1.1120 and the pair could decline towards 1.1000-1.1020 in the short term. The oversold euro increases the risks of short positions profit taking, so sales at the current levels should be carried out with precaution.
The British pound increased against the dollar, but much less than the European single currency. We expect consumer and mortgage lending slowdown as well as a reduction in the mortgage approvals. In the center of our attention most likely will be the UK GDP preliminary assessment information for the 4th quarter. All efforts for the pair to overcome the resistance near the 52nd figure were unsuccessful. Declining after the euro, the pair returned to the support near 1.5040-1.5040, broke through it and tried to breakthrough the support around 1.4970-1.4990. Then the pair increased above the level of 1.5040-1.5060. Now the level of 1.5100-1.5120 provides resistance to the pound.
The support levels: 1.5020-1.5040 and the resistance levels: 1.5100-1.5120.
The MACD indicator is in a negative territory.
The level of 1.5120-1.5140 breakthrough will allow bulls to test the resistance around 1.5160-1.5180. While the pair is trading below this level, the risks of renewed decline are high. The euro and the pound decline supports the pair pound/dollar.
The Japanese yen was an exception as opposed to other majors fell against the dollar. The news showed the foreign trade deficit reduction in December 2015, the deficit was reduced to 660.7 billion yen against-893.5 billion yen last month. The bears within the dollar/yen have not managed to break through the support near 116.95-117.15 and to continue the downward correction. In turn, the bulls were unable to overcome the resistance around 119.05-119.25.
The support levels: 117.95-118.15, and the resistance levels: 119.25-119.45.
The MACD indicator is in a neutral territory.
The loss of support will lead to the pair decrease near the 116th figures, the resistance breakthrough will signal about the upward trend resumption as evidenced by the level breakthrough of 120.20-120.40.