Dukascopy Morning Forex Overview

Dukascopy Bank SA

Dukascopy Fundamental Analysis

“Euro-zone inflation has now passed its peak and is likely to fall further in the coming months”
– Nick Kounis, head of macro research at ABN Amro
Inflation in the euro zone declined for the first time since summer 2011, giving the European Central Bank room for more action. The inflation rate fell to 2.8 per cent in December from 3 per cent in November, said the European Statistical Office on Wednesday.


“The last few weeks of December helped to lift the full- month performance above our earlier expectation”
– Michael Niemira, chief economist at the ICSC
Retail sales at shops open more than a year may have increased 4.5 per cent in December, more than expected, as Americans pursued holiday discounts, said the International Council of Shopping Centers in a statement on Wednesday.


“The debt crisis is still a key issue that undermined the euro”
– Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.
U.K. stocks lost ground on Wednesday after soaring on Tuesday. The benchmark FTSE 100 index lost 0.55%, or 31.46 points, to 5,668.45. The FTSE All-Share Index shed 0.59%, or 17.23 points, to 2,906.40.

“European bond auctions look to be key drivers of sentiment”
– Jonathan Sudaria, a trader at London Capital Group
Swiss stocks edged higher for a fifth consecutive day on Wednesday, rebounding from day’s losses, after Germany and Portugal sold government securities.

“Concerns about the global economic future are receding”
– Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc.
Japanese stocks rose on the first trading day of 2012 after a U.S. report showed manufacturing sector’s growth is accelerating. The Nikkei 225 advanced 1.24%, or 104.76 points, to 8,560.11, while the broader Topix gained 1.97%, or 14.38, to 742.99.

Dukascopy Technical Analysis

“While a short-term euro bounce is possible because of positioning, pressure on the euro remains and we can’t be optimistic about its upside potential”
– Credit Suisse (based on CNBC)
EUR/USD bounced off 1.3057 (20 day ma), casting doubt on the possibility of an upward correction extending up to 1.3145/1.3200. In case the price slides below 1.2860, its primary target will be located at 1.2530/88.


“There’s really been nothing that would make you want to even play for an interim bounce in the euro”
– Westpac Banking Corp. (based on Bloomberg)
Rallies are not expected to prolong beyond a solid resistance at 102.55. Being that EUR/JPY has staved in supports at 100.77 and 99.92, the outlook is bearish. The currency pair is currently heading toward 98.71, en route to 94.92.


“[Wednesday’s data] keeps the spectre of more QE from the BoE in view as it suggests inflation pressures are non-existent, which could limit GBP gains in the medium-term”
– Forex.com (based on Reuters)
The Cable is not expected to move sharply in the near-term. From above it is capped by resistance levels situated at 1.5733 (55 day ma) and 1.5756. Dips, on the other hand, should be limited by supports at 1.5555, 1.5410/26 and 1.5363.


“On weekly chart, the dollar/yen still looks firmly trapped between Bollinger Bands”
– Bank of Tokyo-Mitsubishi UFJ (based on CNBC)
For now the currency couple is unlikely to pierce through a cluster of resistances formed by 78.08, 78.86 (200 day ma), 80.00 and 79.80 (55 week ma). Before challenging resistances once more, USD/JPY may test 76.20 first.


“The firms expected the Fed to raise its benchmark interest rate during the second quarter of 2014”
– Bloomberg
In case supports located at 0.9244, 0.9155 (55 day ma) and 0.9058 repel dips, USD/CHF is expected to eventually penetrate 0.9548/49 and then continue to advance until 0.9776/84 or even 0.9950 is reached.

What To Read Today

Greek prime minister warns of March default
Greek Prime Minister Lucas Papademos has said Greece may default on its debts in March unless unions accept further cuts to salaries.


Bernanke Sends Congress Fed Study of Options to Lift the Housing Market
A report from Federal Reserve Chairman Ben S. Bernanke called the weakness in the housing market a “significant barrier” to U.S. economic health and said Fannie Mae (FNMA) and Freddie Mac might have to bear greater losses to stoke a broader recovery.

Asia & Pacific

Top China airlines to ignore EU carbon tax, body says
China’s biggest airlines will not pay a new European Union tax aimed at cutting carbon emissions, their trade body has said