- EUR/USD has spiked above 1.1500 on Tuesday, but was capped by 100-period MA at H4. The rally has slowed down despite the upbeat euro zone’s PMIs, retail sales and weaker-than-expected US NFP by ADP, all released on Wednesday. According to our forecast, the downtrend in EUR/USD will soon resume. Decline below 1.1440 will bring euro down to 1.1355. Next support is at 1.1275 and 1.1210. Watch the German factory orders and the EU economic forecasts on Thursday. News from Greece will also impact the market. US are scheduled to release trade balance and unemployment claims tomorrow.
- GBP/USD was boosted to the levels above 1.5200 by the better-than-expected UK services PMI (57.2 vs. 56.5). However, pound approached the downtrend resistance line just below 1.5300. Tomorrow traders will be focused on the Bank of England’s meeting at 12:00 GMT. No changes in policy are expected. A break above 1.5300 can trigger an increase to 1.5475. USD/JPY may continue being sold on the upside in the area between 117.90 and 118.30 and bought on the downside in the 117.00 area.
- NZD/USD pushed higher on Wednesday, supported by the neutral RBNZ stance and higher-than-expected milk prices. However, the pair faced resistance at $0.7450 (38.2% Fibo) and returned below the $0.7390 support later in the day. AUD/USD has also recovered some ground, retracing most of the post-RBA losses. The pair is facing resistance at 0.7850 and is vulnerable for a return to 0.7700. Next resistance is at 0.8000. Watch the Australian retail sales release at 00:30 GMT. USD/CAD can weaken to 1.2300. Resistance is at 1.2500 and 1.2625. EUR/GBP will be a sell in case of the break below 0.7500.
The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. The main participants in this market are the larger international banks. Financial centres around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.
Wednesday, February 4, 2015
Thursday's FX Trades: Feb. 5, 2015
Forex - Euro shrugs off data, slips lower on Greece worries
The euro slipped lower on Wednesday, shrugging off upbeat private sector and retail sales data, as fresh concerns over the Greek governments plans to renegotiate its bailout weighed.
EUR/USD was down 0.35% to 1.1438, retreating from Tuesday’s highs of 1.1533.
Sentiment on the single currency was hit by fresh concerns over Greece, following reports that the European Central Bank is unwilling to back government plans to renegotiate the terms of the country’s €140 billion bailout.
The single currency had rallied in the previous session after Athens proposed debt swaps to ease the country’s burden debt, under which creditors would swap outstanding debt for new growth-linked bonds. This could help to reduce the risk of losses on privately held bonds.
The euro’s losses were held in check after data on Wednesday showed that the euro zone private sector expanded at the fastest pace in six month in January, as economic activity accelerated.
The euro zone composite purchasing managers’ index, which measures activity in the region’s manufacturing and services sectors rose to 52.6 up from a preliminary estimate of 52.2 and a final reading of 51.4 in December.
Output growth expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month.
A separate report showed that euro zone retail sales rose 2.8% in December from a year earlier, the strongest increase in nearly eight years.
Sterling was boosted after data showing U.K. service sector output grew at a faster than expected rate in January after slowing at the end of last year.
The services PMI rose to 57.2 last month, recovering from a 17-month low of 55.8 in December and well ahead of forecasts of 56.3.
However the report also showed that inflation pressures remained subdued, underlining expectations that the Bank of England will leave interest rates on hold until early 2016.
In other trade, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 94.03, recovering from the previous sessions lows of 93.39.
The index fell 0.9% on Tuesday, the largest one day decline since October 2013, pressured lower by the firmer euro and strong gains in commodity currencies.
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