The euro returned to the growth | 16 October 2014

Euro

The Brent crude oil is now at the 3-year low which brings the Eurozone deflationary disease much closer. Yesterday the German 10-year bond yields renewed the yearly lows, confirming the negative trend presence. Deflation is very negative both for the economy and for the currency.

The US retail sales report can please traders by the positive data amid the employment growth that also supports the dollar demand. The US dollar and the euro inability to overcome the resistance near 1.2768 triggered another sales wave which led to the fall to 1.2623.

The support levels are 1.2730 - 1.2720, and the resistance levels are 1.2900 - 1.2910.

MACD is in a positive territory.

Trading recommendations

The risks of continuation decrease and the lows testing near 1.2500 are still high. While the support around 1.2800 holds back the bears’ efforts, bulls can try again to return the pair above 1.2900.

Pound

The British pound will be again under pressure despite the UK employment positive release. We observe the lower inflationary pressure in the UK. The CPI fell to its lowest levels since September 2009. Low inflation will force the Bank of England to take a pause in regard to the monetary policy tightening and against this background traders will react calmly to the Mark Carney’ comments.

Bulls have advanced to the level of 1.6040 and after its testing rebounded back to the level of 1.5870. The pressure on the pound is still preserved.

The support levels are 1.5960 - 1.5950, and the resistance levels are 1.6040 - 1.6050.

MACD is in a negative territory.

Trading recommendations

The next bears’ target can become the 58th figure. We cannot exclude the bounces towards 1.6040, but only the growth above this level will weaken the downward pressure.

Yen

The United States will publish retail sales release for September which is one of the private consumption components that accounts for GDP 2/3. We saw consumer confidence increase in the third quarter last month with the unemployment indicator decrease that point to the positive data output. In this regard, we can also expect the short positions closure in the American market that will lead to the pair USD / JPY demand.

The pressure on the pair USD/JPY is still preserved amid the stock indices decline, but the US dollar was sold off at the level of 106.67, so it was able to rise to 107.49 that hold the bulls’ efforts and preserves risks of renewed decline.

The support levels are 105.80 - 1.05.85, and the resistance levels are 106.20 – 106.30.

MACD is in a negative territory.

Trading recommendations

The US dollar needs to consolidate above 108.00-108.10 to renew its growth. The support breakthrough around 106.67 will worsen its prospects.