Daily Market Review - 1/3/2014

Technical Analysis

EUR/USD

The Euro is declining and approaching resistance at 1.3620. If it doesn't hold the rate perhaps is going to fall further to test 1.3535. Otherwise a limited rebound will be possible.

USD/JPY

The pair is on the way down, implying strengthening Yen. On 8 Hour chart it still complies with an upward pattern. If projected up slanting trend line is not breached, we are likely to see a bounce back up in the near term.

GBP/USD

So, resistance at 1.6600 levels wasn't overcome, and the Pound eventually pulled back. Retracement was quite deep. Now the pair is consolidating without any specific bias in any direction.

Market Overview

The first trading day of a New Year was marked by massive sales of the main currency pairs. During Asian trading session consolidation was seen due to absence of Japanese investors. During European session “bears” took the initiative. In the leading economies of the Euro zone final results on manufacturing PMI index were released. Overall the data were moderately revised to better figures, but the EUR/USD pair ignored the indices.

On the 1st of January weak data on PMI index were issued in China. European investors decided to take advantage of Chinese news, as the implication is slow down of the pace of Chinese industry growth.

Against such background the EUR/USD and the main European stocks plummeted. In Britain we've seen a report on Manufacturing PMI as well. The numbers came out worse than forecasted, and traders decided to fix profits on long positions. The Yen on Thursday appreciated against the Dollar. Bulls continue to fix profits on long positions, what contributes to Japanese currency appreciation.

Today there are few market events, which are in focus. We've got an announcement of FOMC member Jeremy Stein and the one of Fed head Bernanke.

Economic Calendar