The Swiss National Bank unexpectedly announced the euro/franc lower limit refusal. This refusal led to the euro strong decline against the Swiss franc that also had a negative impact on the pair EUR/USD that formed a new low since 2005. Although the euro decline dynamics against the US dollar was not as powerful as in the pair with the Swiss franc, but still the euro downward trend will be laid locally as investors are waiting for the ECB monetary policy easing program that, in their opinion, will put pressure on the euro.
It is now recommended to short with the first target of 1.1500-1.1520. If this target is overcome, the shorts will be relevant to the target of 1.1420-1.1440.
The British pound also strongly reacted to the Bank of Switzerland actions, declining against the US dollar. However, the good support level near 1.5130-1.5150 has not been broken through, limiting the downward pair movement.
There were no economic and political news. The pound will stay under the foreign news influence. We will receive the UK consumer price index data and according to the forecas this figure can be significantly lower than the previous one.
It is now recommended to long to the target of 1.5280-1.5300. The second target is the level of 1.5380-1.5400.
The Japanese yen was the only currency that was not affected by the European problems.
Japan released the November service sector activity, the index recorded a month growth and year on year decrease by 0.2% m/m, -1.7% y/y vs. -0.1% m/m, -0.9% y/y while we expected a stronger rise by 0.3% m/m. The Japanese yen fell slightly against the dollar, despite the shares prices decline on the Japan stock market. Obviously, the market began to move away from the shock produced by the SNB and began to correct its position. It is possible that this mood will be preserved and the dollar/yen will return to the place where it started to fall.
It is now recommended to sell with the first target of 116.05-116.25. When the first target is overcome, the level of 115.05-115.25 will bcome the next one.