The Eurozone economic growth is still unstable | 20 February 2015

Euro

The pair euro/dollar will stay in a higher range, supported by the news that the ECB had provided additional liquidity to the Bank of Greece in the amount of 5 billion euros. The pair is also supported by the market deteriorating relationship towards the dollar after the disappointing retail sales release and the US initial jobless claims, information on the Ukraine cease-fire agreement and the investors’ strengthening risk appetite. The attitude towards the euro negatively affects the euro area industrial production zero growth in December. The pair growth potential is also limited with the ongoing concerns over the situation in Greece. The ECB large-scale quantitative easing program inhibited the pair growth and the positions correction before the weekend.

Trading recommendations

It is now recommended to long with the first target of 1.1440-1.1460. If this target is overcome, longs will be relevant to 1.1600-1.1620.

Pound

The pair GBP/USD is expected to consolidate with a tendency to increase after it reached the 6-week high of 1.5415-1.5435 last week. The pair is supported by the market deteriorating relationship towards the dollar that is more optimistic than expected the Bank of England inflation report and the investors’ increased risk appetite. The pair growth potential was constrained by the positions correction before the weekend.

Trading recommendations

We advise to long with the target of 1.5490-1.5510. The second target is the level of 1.5570-1.5590.

Yen

The pair dollar/yen has a tendency to decrease. The pair is under pressure from the market deteriorating relationship towards the dollar amid the greater-than-expected US retail sales decrease in January (0.8% vs. 0.5%), a larger-than-expected number of US jobless claims and a smaller-than-expected inventories growth in December. The pressure is added and from the US Treasury bond yields and the Japanese exporters decrease and according to the Bank of Japan, the new incentives will be counterproductive and the further yen decline will have a negative impact on the consumer sentiment.

Trading recommendations

The support is at the level of 117.95-118.15. After the level breakthrough the pair may enter the range near 116.95-117.15 and 116.05-116.25. The resistance is at the levels of 119.25-119.45 and 120.20-120.40. These levels break may lead to the growth towards 121.30-121.50.