The pound keeps falling below 1.5400 | 05 January 2015

Euro

Eurozone problems continue to affect the European currency that was traded in the mixed trend against the dollar and fall with a gap. The November money supply increase reports could support the euro more than expected – the M3 aggregate expanded by 3.1% y/y against the forecast by 2.6% y/y after 2.5% y/y in October. The US ISM manufacturing index fell to the level of 55.5 in December. The pair euro/dollar continues falling. The pair broke through another low at the level of 1.2070-1.2090 and fell below the level of 1.2000-1.2020.

The support levels are 1.1930-1.1950, and the resistance levels are 1.2000-1.2020.

MACD is in a negative territory.

Trading recommendations

We expect the short-term downward movement in the descending corridor near 1.2020-1.1950, it is likely a turn into a correction here. The level of 1.1930-1.1950 test allows us expect a rebound upwards.

Pound

The pound fell with a gap on Friday. Earlier the British pound rose against the dollar. Obviously, interest in pound was caused by technical factors that with a strong support presence stimulated investors to take profit. The construction-spending fell to -0.3% in November (forecast 0.3%) against the earlier 1.1% in the US. Another attempt to recover the pound/dollar failed after the mark of 1.5600-1.5620 testing. The bulls’ attempts were unsuccessful that led to the resumed decline, the support breakthrough near 1.5395-1.5415 and the pair decrease below the level of 1.5360-1.5380.

The support levels: 1.5260-1.5280 and the resistance levels: 1.5380-1.5400.

The MACD indicator is in a negative territory.

Trading recommendations

We expect the short-term downward corridor movement 1.5380-1.5280. The price may rebound upwards from the level of 1.5260-1.5280.

Yen

The US dollar continues to rise to the four-day high of 120.71 against the yen. The final data are already published - the US manufacturing sector business activity index rose to 53.9 in December against the earlier 53.7. We expect the stock markets decline, in particular the Nikkei fell by 1.57%. The dollar was sold off during a decrease to 119.05-119.25 that allowed it to rise to 120.73. The dollar did not manage to overcome the bears’ resistance 121.30-121.50.

The support levels: 120.00-120.20, and the resistance levels: 121.30-121.50.

The MACD indicator is in a neutral territory.

Trading recommendations

The short-term upward movement is possible near the level of 121.30-121.50, the last level breakthrough will cause the directional movement, the target is 122.40-122.60. We expect a consolidation.