Daily market Review - 1/22/2014

EUR/USD

The Euro is ranged. It pulls back from the upper boundary. The near term outlook is bearish. It coincides with a midterm bias, which is downward as well. Support line is around 1.3520 area.

USD/JPY

The pair is in a period consolidation with a broad range, which can be seen well on 30 minutes chart. The preceding trend was bullish, so it is expected to resume soon.

GBP/USD

Current pattern of the Pound is quite interesting. After an abrupt rally we see a narrow consolidation, which is followed by another rally. Overall outlook is definitely bullish.

Market Overview

On Tuesday we saw quite ambiguous statistics from Germany. For the first time in 6 months ZEW economic Sentiment Index dropped from 62.0 to 61.7. It is much lower than the forecast, which has suggested a significant growth. This piece of data was that very thing, which was missing to make concerns regarding European economic recovery really serious. If German economy is not doing so well, the more so it applies to the monetary union in general, where Germany is the only source of growth.

Dynamics of German GDP is also quite weak. According to preliminary estimates, in the 4th quarter economy added only 0.25% in comparison with 0.3% in the 3rd. The final growth of 2013 as expected might constitute 0.4%. That is not much, if we take a look at the US. Since the main trade partners of Berlin are EU states, which are having hard times, Germany has to count on inner consumption only.

At the same time European index of sentiments on the contrary has demonstrated growth, setting a practical 10 year maximum at the point 73.3. In other words, some signs of recovery are really seen, but there is a substantial risk of American scenario repetition. During last years in the US in spring statistics issued was quite strong, what lead to overall expectations of long expected growth, which were already dispelled by summer.

Economic Calendar