The pound tends to correct | 21 Februari 2014

21 Februari 2014, EUR/USD

Euro

The pound tends to correct

The leading economies manufacturing sector PMI could add some pressure on the European single currency. One should focus on business activity in Germany, after weak data from the Center for Macroeconomic Research ZEW. The inflation in the United States was published. The weak data on retail sales, consumer confidence and employment in January indicate an inflation slowing. We can expect the release of data slightly worse than the median forecast, which will put pressure on the dollar.

The support levels: 1.3740-1.3698 and the resistance levels: 1.3810-1.3892.

Trading recommendations

Yesterday, the euro/dollar dropped versus the resistance around 1.3773 level, but despite a continued pressure it was able to find the support at 1.3700.

The break of 1.3720-1.3700 may lead to a fall to 1.3620. The loss of this level will worsen the pair's perspectives.

Yen

The pound tends to correct

The January trade balance report is going to be published in Japan. The last three months the Japan's economy has been showing an increase. The equipment and machinery costs reductions in December indicate a slowdown in manufacturing, which is a negative for a trade balance.

The leading indicators point to a weak report on the CPI, which will put some pressure on the U.S. dollar. The U.S. Federal Reserve minutes supported the quantitative easing cutting, which is negative for a stock exchange market.

The support levels: 102.16 - 101.78 and the resistance levels: 102.60 - 103.37.

Trading recommendations

Traders are still interested in a growth. An inability to break above 102.74 dollar increases the chances of a downward correction continuation, but the bears still have to compete for the support in the levels 101.38 and 100.68.

Pound

The pound tends to correct

The pound remains under the pressure after the published data showed an unexpected rise in the unemployment rate to 7.2% for the three months, including December. Initial Jobless Claims surprisingly fell in January at 27.6K vs. 20.0K in December and 27.7 in value. Also, the Bank of England minutes showed that at the last meeting, the MPC unanimously decided to leave rates unchanged at 0.5% and QE program in the amount of £375 billion.

GBP/USD is trading below 1.6700 while the immediate support is at 1.6650. The strong resistance level is at 1.6820.

Trading recommendations

GBP/USD is correcting to the support level 1.6640. The volumes near the trend line are not particularly large which means a sellers' power weakening. The continued consolidation will mean that the price will bounce up to the nearest resistance level 1.6730. 1.6730 breakthrough will help buyers to reach the level 1.6800.

Ruban Sergey
Analyst of «FreshForex» company
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