The Euro saw mild volatility during the first trading session of the week, after a nosedive late last week despite the weak performance of the US Dollar against other currencies on the back of weaker-than-expected Employment Data.
The Euro has seen some lower-than-expected Inflation Data from the EuroZone, which supports the ECB’s move to maintain its stimulus program until next September, which will support Inflation over a medium to long-term period. The Euro Zone is expecting more data on December Retail Sales as well as German Factory Orders.
Technical reading continues to show that prices are still moving within a negative correction to the general bullish trend. The support levels at 1.2020 and 1.2000 remain the most important short-term levels and the pair’s strength above these levels will restore Buyers’ confidence. On the other hand, any change in direction on the short term will positively affect the movement of prices.
The Sterling fluctuated in a tight range edging lower during the Asian Session on Monday. Today, we are expecting the Halifax Home Price Index (YoY) data from the UK, which is anticipated to cause some volatility in the market.
The GBPUSD’s success in breaching near resistance levels at 1.3585 will boost optimism and push the price test to 1.3610. However, a reversal below the 1.3550 level would temporarily ease the bias.
The US Dollar, despite its weakness over the past period, was able to record gains against the Japanese Yen due to the difference in Monetary Policy as the Fed continues to tighten Monetary Policy and raise Interest Rate while keeping the Bank of Japan on its massive stimulus plan.
The Japanese Yen saw further declines on Monday as the demand for the safe haven currency declined while further exacerbated by the benchmark performance of Asian Stocks. Despite recent gains, the USDJPY pair still has to break above the resistance at 113.30 to confirm a continued uptrend. A drop below the near support at 113.00 would affect the current uptrend and cause the market to proceed on a sideways movement.
Gold consolidated during Monday’s Asian trading session but maintained its near four-month high. In the near term, we will hold for a definite breach in the pivotal resistance of 1325. Technical analysis however, confirms the return to the main bullish trend, and the possibility to attain the target at 1330 levels. However, a break of the support level at 1313 will push the price towards a downside correction and possibly support 1307 levels.