The tension is in the air before the Crimea referendum | 12 March 2014

Euro

Eurozone and the States have not published anything interesting. Geopolitical tensions have faded and they may escalate again after March 16, when a referendum will be held in the Ukraine, in the Crimea. Amid this news, investors will monitor the trading dynamics on the stock exchange market and cross-rate EUR/GBP. Leading European stock indices moderate growth will support EUR/USD.

The support level is 1.3810-1.3772, and the resistance level is 1.3892-1.3968.

MACD is pointing down, indicating the current corrective movement, if the indicator unfolds that fact can become the end of a correction.

Trading Recommendations

Yesterday the pair was traded in a narrow range bound 1.3897 and 1.3861. The demand for the euro has saved. Inability to continue to grow will trigger profit-taking. The immediate goal is the 38th figure, the next is the level of 1.3720.

Pound

The first month of the year the UK manufacturing sector seemed to be slowing, which, coupled with bad weather conditions in late January did not allow us to expect a good report. We can expect a median forecast or little worse, that will not cause a significant market reaction. Much more interesting is to hear Bank of England opinion regarding inflation and an economic growth.

The support level is 1.6623 – 1.6582, and the resistance level is 1.6672 – 1.6725.

MACD is pointing downwards.

Trading Recommendations

If there is a breakdown of 1.6600-1.6583 a fall to 1.6500 should be expected, and the loss of this level will lead to a fall to 1.6303. If the bulls manage to save its positions, the pound still will be able to test 1.6700-1.6741.

Yen

The GDP report for the 4th quarter of 2013 turned out to be weak – the economic growth, according to updated figures, decreased from 1% to 0.7% on an annualized basis, which may prompt the Japanese regulator to an increase in incentives in the coming months. In addition, in April, Japan is planning to increase sales tax, which also would have a negative effect on GDP. Additional quantitative easing is negative for Japan's national currency and against this background we will see demand for the pair.

The support level is 102.82 – 102.16, and the resistance level is 103.37 – 103.91.

AMCD turned down, indicating the current downtrend.

Trading Recommendations

Yesterday the pair was traded in a narrow range between 102.93 and 103.40. The break around 102.82 improved the pair’s outlook. The loss of this support will pave the way to 102.00-101.59. If the price breaks above 103.76 that will send the pair to 105.44.