Daily Market Review - 1/17/2014

EUR/USD

Yesterday the pair was quite volatile, reacting to various market events. Eventfully it calmed down returning to its previous range more or less. So there is no firm trend. However the bias is rather bearish than bullish

USD/JPY

The pair has plummeted and is not consolidating. Support is seen near 104.20. Most likely the currency is going to rebound from that level, as the aforementioned dip was apparently the correction of the long lasting ascent.

GBP/USD

As for the British Pound there is no change here. The pair is going down at more or less the same pace. If support at 1.6321 area doesn't hold, the trend will continue further.

Market Overview

The main currency pair on Thursday was moving reluctantly, though there were enough triggers of activity exacerbation even without inflation release in the USA. Yesterday there were reports released on CPI in Europe and the US.

The first one wasn't a big surprise: December inflation in Europe remained at 0.8%. Basic index showed a monthly growth by 0.3% in the yearly count increasing only by 0.7%.

The market didn't react to such statistics almost at all. Earlier in January the head of the ECB Draghi said, that the low and weak inflation pressure was normal for the current state of region’s economy. Most likely that was a reason for players not to pay attention to these numbers, which didn't look so great.

The ECB representative clarified again, that there were no risks of deflation in Europe. They are very limited and there are no reasons for concerns, and soft monetary policy is relevant and appropriate for current economic situation.

One shouldn't think that the ECB has taken exceptionally observant position and is not going to react to statistics. If inflation is going down, sooner or later it will lead to a new easing stage. Such probability supports “Euro bears” for now.

Economic Calendar