The Eurozone deflation pressures the EUR/USD | 08 January 2015

Euro

The euro has given way to the dollar and finished the yesterday's trading day on the new local lows. The December consumer price index will be published that is projected to the price level pressure 0.0% y/y vs. 0.3% y/y fall in November. The pair is trying to consolidate below the 2010 low at 1.1860-1.180. If successful, the subsequent fall to the support line of the long-term downtrend that now is around 1.1700. The pair is heavily overvalued, the trend reversal can be held upwards from the current levels and from the support line channel.

The support levels are 1.1800-1.1820, and the resistance levels are 1.1880-1.1900.

MACD is in a negative territory.

Trading recommendations

When the trend reversal is near one of the supports we can expect a rebound to the resistance line 1.1880-1.1900, its breakthrough and sustainable consolidation above will confirm the transition to the medium-term recovery, the immediate targets can be resistance around 1.2020-1.2040.

Pound

Once again the pound fell against the dollar and other its main competitors. According to the British Retail Consortium (BRC) report, the retail price index showed a decrease by 1.7% y/y in December after -1.9% y/y. The pair tested the minor support of 1.5080-1.5100. The test will open the way to the 2013 year minimum testing in at 1.4810. At the same time, taking in consideration that pound is overvalued, the trend reversal can be held up from the current levels. In this case, the rebound can be around 1.5530-1.5550.

The support levels: 1.5080-1.5100 and the resistance levels: 1.5160-1.5180.

The MACD indicator is in a negative territory.

Trading recommendations

The circular mark completion of 1.5480-1.5500 will help to continue its growth to the resistance around 1.5600-1.5620. Only this resistance completion will indicate the transition to the medium-term recovery, the next target can be the resistance around 1.5650-1.5670.

Yen

The yen weakened slightly against the dollar during the Asian session, probably in the correction to the yesterday's growth with a slight rise in the Japan stock market. The yen driver will be the US news employment US news publication and the Fed protocols maintenance. The bulls dominate. The price worked out the level of 117.95-118.15 and rebounded from it, starting to correct itself. The price rebound from the critical line can also trigger the downward movement resumption.

The support levels: 117.95-118.15, and the resistance levels: 119.25-119.45.

The MACD indicator is in a negative territory.

Trading recommendations

It is now recommended to sell with the first target of 117.95-118.15. If the first target is overcome, then the new target will be the level of 116.95-117.15.