17 October 2014, EUR/USD
Eurozone will publish the August trade balance report. We can expect the data output slightly worse than the forecasted medians that will have a moderate pressure on the single European currency. We still observe sales on the "black gold" market that is a negative factor for the single European currency and the US dollar as the inflation expectations are falling.
Attempts to renew the pair growth were faced with resistance near 1.2844. There is no reason for the euro sales. The US dollar is overbought.
Getting rid of the long positions within the US dollar can lead to the euro/dollar to 1.3000, the pair needs to overcome the resistance at the levels of 1.2844 and 1.2887. Otherwise, the renewed sales risks within the US dollar will be preserved.
Yesterday the British pound ignored the positive employment release for August, indicating the bearish trend power. The UK 10-year bond yields fell below 2% that is extremely negative for the monetary policy tightening. The lower inflationary pressure has also the structural risks for the economy as a whole. The US weak statistical data provoked the profit fixation within the US dollar that allowed the British pound and the US dollar to rise to 1.6069. The pound and the euro sales returned the pair back to support around 1.5874, but it soon rose again, although the growth was limited by the level at this time.
The level breakthrough of 1.6021will give bulls an opportunity to test the level of 1.6069, its level completion will result in growth to resistance near 1.6118-1.6131. While resistance near 1.6000-1.6021 is not still broken through, the renewed decrease risks will be preserved.
The Japan important macroeconomic releases do not please traders this week and against this background traders focused their attention on the United States. The corrective movement in the American stock market is delayed that does not give bulls the possibility to continue the bullish uptrend. The US and Japan bond yields have significantly declined during the last days that plays into the bears’ hands.
The long positions profit-taking within the US dollar and the stock markets’ collapse allowed the Japanese yen to continue its grow, against this background the pair dollar / yen fell to 105.19. After its testing there was a rebound to 106.40, but it is still preserved the sales interest there, so the pressure on the pair continues.
While the dollar is trading above 105.19, the risks of renewed growth will be preserved.