Daily Market Review - 09/29/2014

EUR/USD

The Euro has broken below the line of support at 1.2820. The pattern suggests exacerbation of bearish trend. So it extends as far as 1.2600 and 1.2400 with no strong support seen on the downside.

USD/JPY

Apparently the rebound brought the rate back to test 109.35. Most likely the challenge is too tough for the asset. Resistance there is quite strong, thus retracement is almost inevitable.

GBP/USD

In spite of anticipations the Pound has dropped below the up slanting trend line. It is quite possible, that it is a trend reversal. That is why the outlook at the moment is bearish.

Market Overview

It has become a good tradition that macroeconomic statistics in the EU is coming out worse than expected. It helps the bears to push the market lower and lower. Data on German business climate haven’t become an exception, dropping to 104.7 (the worst figure from April 2013).It can’t be called an accident either. The fall has been proceeding 5 months in a row.

German GDP has contracted by results of the second quarter. Perhaps it played the key role in the ECB decision to start assets purchasing. Though it is not a complete quantitative easing in terms of understanding in the US and Britain. The ECB will be happy about such data, objections of Berlin against regulators measures now might calm down.

There were a lot of factors leading to current deterioration of statistics in not long ago stable Germany. First of all, it is of course an unsuccessful momentum of EU economy restoration. Quick leap to growth didn’t succeed, and Europe is in the period of low inflation. It already leads to increase of debt load. “Sanctions war” against Russia also didn’t contribute to economy growth.

Once again Draghi has made a statement about doing everything needed in order to defend the Euro. This is a remake of his words during the crisis, which have become a turning point and saved a lot of EU states from imminent bankruptcy. It is quite reasonable that the Euro has reacted to that with breaking below the minimum.

Economic Calendar

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