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By XE Market Analysis February 6, 2014 2:48 am
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    XE Market Analysis: Europe - Feb 06, 2014

    The main currencies are showing little net change from Wednesday's London closing levels, though the AUD popped higher on a set of firm Australian data. USD-JPY and EUR-JPY are fractionally higher at 101.48-50 and 137.24-26, with the backdrop of steady stock markets having brought a halt the recent firming trend of the yen. BoJ Deputy Governor Nakaso said that Japan is on course to make its 2% inflation target. EUR-USD has continued to consolidate recent losses in the low-to-mid 1.35s with the market looking to today's ECB meeting and press conference. AUD-USD rallied to a three-week high of 0.8980. Australian retail sales for December came in at +0.5% m/m while December trade data showed a surplus of A$468 mln, much better than the market consensus expectation for a deficit of A$200 mln.

    [EUR, USD]
    EUR-USD has continued its consolidation around 1.3500, oscillating around the 200-day moving average. The big picture technical view still looks bearish. The euro made a close under the 200-day moving average last week for the first time since last July, and projections from a two-month trendline imply a target of 1.3445-1.3450. Resistance comes in at 1.3550 and 1.3574-1.3581 (encompasses the Jan-31 high and the 20-day moving average).

    [USD, JPY]
    The yen's recent advance has come to a halt as the risk-off theme takes a breather amid a show of positive corporate earnings and expectations of a decent U.S. payrolls report this Friday. Big picture USD-JPY support comes in at 100.00-100.36, the latter of which is the 200-day moving average. Initial resistance levels come in at 101.76-102.00, while trend resistance is above here at 102.40. Resistance can also be expected at 102.80-103.00.

    [GBP, USD]
    Cable is consolidating recent losses but the technical picture is bearish following the double rejection from forays above 1.6600 in late January and the subsequent breach of both the 20- and 50-day moving averages. The breach of 1.6395-1.6400 builds the bearish view. We target the 1.6200-1.6220 area. Resistance is marked at 1.6344-50, though stronger resistance is at 1.6400-1.6440, which encompasses a cluster of former daily highs and lows, and the 50-day moving average.

    [USD, CHF]
    EUR-CHF has been flirting with 1.2200 amid the backdrop of risk aversion in global markets, though the steadying in stock markets has lent the cross some support. The Dec-17 cycle low of 1.2167 remains in scope. SNB-speak affirming that a removal of the 1.20 limit would only be considered if inflation was much higher has had little impact, though we don't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000.

    [USD, CAD]
    USD-CAD looks to be in the early stages of forming a topping formation. Last week's run to a five-week peak of 1.1224 came with declining bullish momentum, which is a sign that the underlying trend is weakening. Resistance is marked at 1.1175 and 1.1200, which would look to hold on a daily closing level basis to confirm potential of a topping formation in development. Key support is at 1.1000-1.1030, which encompasses as cluster of recent daily lows and highs.

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