The European political events still hold back the euro growth. The Greek parliament failed to elect a president in the first round of voting (Stavros Dimas). The Greek three-year bond yields rose from 9.75% to 10.13%. In addition, three creditors approved the new Greece budget. Switzerland has introduced the negative basic rate to 0.25% that further pressured the euro. The Eurozone economic events were positive. The December Germany Ifo business sentiment rose up to 105.5 from 104.7. The Germany PPI remained unchanged on a monthly basis in November.
The pair confidently consolidated above the level of 1.2270-1.2290 and decreased below this level towards new target near 1.2180-1.2200. This level breakthrough will allow bears to continue the downward trend in order to reduce it towards the level testing of 1.2120-1.2140.
The pair will trade in the higher range. It is supported by the exceeding expectations about the UK retail sales data in November (+ 1.6% m/m, + 6.4% y/y we expect + 0.4% and + 4.5%, respectively).The pair also supports demand for the British pound within the increasing pair pound/yen amid the positive market’s attitude to risk and demand for it within the declining euro/pound. According to the CBI, the UK retail sales balance was 61% in December, compared with the forecast of 30%. The potential pair growth is constrained by the positive market’s attitude towards the dollar. The pound slightly fell at the end of the last week.
It is now recommended to consider orders for sales with the target of 1.5510-1.5530 within the pound in the Forex market. If the target is overcome, the new target will be the level of 1.5460-1.5480.
As it was expected, the Bank of Japan has not changed its policy. The policy target is to increase the monetary base by 80 trillion yen a year. The meeting results had no effect on the pair USD/JPY. Last month the Bank of Japan gave rather pessimistic comments about the manufacturing sector, this month the specialists’ mood has changed for the better. In addition, the Bank of Japan revised its views on exports, saying that there are signs of growth in this area.
It is now recommended to buy with the first target of 120.20-120.40. Should the pair reach the first target the level of 121.30-121.50 will become the new one.