Daily Market Review - 07/02/2014

EUR/USD

The Euro continues to retrace from earlier pinpointed resistance. Support is seen at 1.3640 and the rate is rapidly approaching the line. Nevertheless the long term trend remains bullish at the moment.

USD/JPY

Apparently the downward trend has recurred. So now the next goal on the downside is 101.25. If it is broken the decent will exacerbate, otherwise we might see a trend reversal.

GBP/USD

The Pound continues growing. On the chart on current levels the Pound is catching its breath. So most likely we are going to see further appreciation after a short consolidation.

Market Overview

Economic situation in Italy remains complicated. Last statistics shows the fall of industrial PMI to 52.6, while unemployment continues to remain high. More over regardless of all efforts of the government the debt of the state is still growing and currently constitutes 2.15 trillion Euro. Only low interest rates on the debt market allow Rome to withstand.

Authorities have set a goal to reduce the debt of the state to 133.33% of the GDP next year from current 134.4% (the bigger ratio is only in Greece). At that in order to achieve even such insignificant decline of the index an economic growth is required. But by results of the first quarter the national GDP has dropped by 0.1%, and current assessments of the second quarter meanwhile suggest possible but minuscule growth.

In spite of all risks related to the Euro zone the pair has been growing. Apparently markets simply don’t believe much in ability of the ECB to start mass purchases of assets like the American FRS even in case of further inflation remaining on minimum.

Besides signals from the States continue coming, which suggest a readiness of Janet Yellen to keep soft monetary policy of the regulator even in conditions of growing inflation.

So the conclusion here is that at the moment there is a big influence of American news on the pair, even bigger than European news.

Economic Calendar

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