EURUSD PRINTED NEW LOWS ON COMMENTS FROM BUNDESBANK. US RETAIL SALES DROPPED IN APRIL

EURUSD rose yesterday and closed at 1.3756. Negative sentiment for the Euro was fuelled from comments from the ECB Vice President Vitor Constancio who projected a prolonged period of low inflation and also hinted that the future monetary policy would act act as the main factor in determining its medium-term inflation outlook. Constancio confirmed that the ECB is monitoring the exchange rate of the single European currency.

In the session today comments from Bundesbank pushed the EURUSD lower. The German central bank stated that is open to significant ECB stimulus in June if the inflation forecast for 2016 are cut. Data from the United States revealed that the Retail Sales in the United States rose 0.1 percent in April. Market had expected a 0.5 percent rise.

Support for the EURUSD is seen at 1.3706 and resistance is seen at 1.3844.

The Pound Moves Higher on Strong Inflation Data

The Pound was able to gain traction on Tuesday as investors shied away from the greenback on the heels of continued failure of the US congress to come up with an agreement that would reopen the government.  The US treasury will run out of capital on October 17, 2013, with its first substantial payment due on October 31, 2013.  A default by the US government would rock the financial markets increasing volatility and reducing the value of the US dollar.

The strength in Cable has also been a function of stronger than expected economic data, and increasing inflation expectations.  Tuesday report by the UK government showed that year over year CPI increased by 2.7% compared to the 2.6% expected by economists.  Later in the week the UK will report its claimant count and its unemployment rate which will give investors a view of labor cost inflation, as well as, the potential for a tightening labor force.  YBS will report on its House Price Index and additionally, the UK will report retail sales which will help gauge overall consumer sentiment.

Another important currency related piece of news is that the UK and China have reached some agreements today with regard to currency trading.  China has granted the UK a 8 billion QFII quota.  The UK has become the most important offshore center yuan trading, after Hong Kong.  It accounts for a little more than 60% of yuan trading outside of China and Hong Kong, according to SWIFT.

Late in the US trading session, US Senators announced that they would suspend discussions until the House was able to come up with a new proposal on handling the debt issue.  The House has been coming up with new provisions to handle Obama care, which would likely not pass through the Senate or the White House.  At the end of the day on Tuesday, there were no deals in the works, and the likelihood of passing a bill before the October 17^thdeadline is relatively small.

The technical outlook for the pound is mixed.  Support is seen near and upward sloping trend line that connects the low seen in July, August and September and then the recent lows at 1.5920.  Resistance on sterling is seen near the 10-day moving average at 1.6046. 

Momentum on the GBP/USD currency pair is negative with the MACD (moving average convergence divergence) index printing in negative territory with a negative trajectory.  The MACD measures momentum by viewing the difference of two moving averages and then comparing that difference to the moving average of the difference. The MACD generated a sell signal on the pound in early October where the index moved from positive territory to negative territory.  The relative strength index (RSI) reflects consolidation as it is printing at 52 which is in the middle of the neutral range.

By Marcus Holland from ForexBonus.co.uk.

Euro Rises On Weaker Dollar Ahead of Fed Meeting

The EUR/USD posted a strong gain on Monday after a survey of purchasing managers showed manufacturing and services output in the Euro Zone region expanded at a faster pace this month than economist forecast. A lower-than-estimated U.S. Flash Manufacturing PMI report also helped to boost the Euro over the dollar.

The GBP/USD also gained ground mostly because of short-term oversold conditions and the weaker dollar. The dollar fell amid speculation the Fed will refrain from reducing monetary stimulus at this week’s two-day policy meeting on December 17 and 18. Traders are also reacting today to a lower than expected U.S. Flash Manufacturing PMI report released this morning.

Oversold conditions and a lower dollar also helped boost February Gold prices. After turning the main trend to up on the daily chart last week on a move to $1267.50, the market plunged sharply lower. Buyers stepped in on Friday, however, to temporarily stop the slide. If a secondary higher bottom does form at $1219.50 then this could serve as a sign that a bottom has been reached at $1210.10. If the Fed refrains from tapering on December 18 then look for the dollar to plunge and for gold to accelerate to the upside.

February crude oil is also receiving support from oversold technical conditions and a weaker dollar. The market made trade sideways to higher until December 18 when the latest weekly inventory figures will be released as well as the Fed monetary policy statement. Last week, the Energy Information Administration reported a 10.6 million barrel drop in supply. Many traders believe the figure was overstated and are looking for some kind of an adjustment this week.

EURUSD testing the 1.3700 level ahead of the Producer Price Index data from the United States

EURUSD dropped yesterday and closed at 1.3752. The Industrial Production in the Eurozone dropped 1.1 percent in October. The European Central Bank indicated in its December monthly report that is very keen on continuing with its accommodative monetary police for a long time, because of the downside risks for the Euro area. The market witnessed mixed data from the United States yesterday, but that didn’t stop the US dollar to gain against its European counterpart.

The Retails Sales in the US rose 0.7 percent month over month in November. The Business Inventories also recorded a 0.7 percent gain. A surprise to the market was the worse than expected Jobless Claims data which increased to 368K during the last week. Investors are now looking forward for the Producer Price Index month over month data due to be released later today.

Support for the EURUSD is seen at 1.3693 and resistance is seen at 1.3804. The HotForex Traders Board shows that 65 percent of the traders are short on the EURUSD.

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EUR/USD trading steady after the speech of the ECB President Mario Draghi

EURUSD rose yesterday and closed at 1.3737. There officials from the United States Federal Reserve supported the cut in the Fed bond-buying program at their meeting in December. The President of the Saint Louis Federal Reserve James Bullard suggested that a small taper could be appropriate at the December meeting, because of the improvements of the job market in the US.

The President of the Richmond Fed Jeffrey Lacker also highlighted the possibility of a discussion about tapering the size of the stimulus package of FED at their December meeting. The Dallas Fed President Richard Fisher warned that the cost of the 85 billion dollar asset purchase program exceeds its benefits and urged the US central bank to start tapering as soon as possible. Support for the EURUSD is seen at 1.3650 and resistance is seen at 1.3750. The HotForex Traders Board shows that 70 percent of the traders are short on the EURUSD.

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