The Euro saw a significant rally on Thursday, hitting a three-year high against the dollar, ahead of the ECB meeting later in the day. The sharp rise in Euro levels comes after the collapse of Dollar levels to the lowest level since December 2014, on the back of statements by the US Treasury Secretary at the Davos World Economic Forum, regarding the desire of the US Administration to lower the Dollar to support business processes.
Focus is on the ECB Meeting today, as the Bank tries to determine the future of its Monetary Policy and impact of same on the movements of the Euro and the Dollar.
Technical reading is positive for the EURUSD pair showing a clear control of the buyers on the trades. The price action is expected to continue its upward movement until the price targets 1.2470
The British Pound rose significantly yesterday to test 1.42 per Dollar for the first time since June 24, 2016, following the economic developments and data that followed the British Economy and the US Economy, the largest economy in the world.
The RBA’s release of Labor Market Data showed the stability of the Unemployment Rate for the three month period in November, at its lowest level since 1975, in line with expectations at 4.3%. The average Income Index showed Growth Stability at 2.5% with claims reading showing a decrease of 3.6K to 8.6K, down from expectations of 2.3K
Technically, the GBPUSD pair is retreating slightly with today’s trading, but a fresh reversal of the pair will reinforce the current bullishness. The pair’s success in breaching near resistance levels at 1.4300 will boost optimism and push the price test to 1.4350. However, a return of prices below 1.4260 support will temporarily ease the bias.
The Yen rose for a third straight day to its highest level in four and a half months. Everyone is now wondering about the change in US Policy that supported the strong Dollar, vis-a-vis the change in the US direction for the Dollar recently supporting steady decline, now being explicitly expressed by the Treasury Secretary at the World Economic Forum in Davos.
Japanese Yen has strengthened as a result of its relationship with the Dollar, and as a safe haven in the financial markets, especially after the BoJ has stabilized Interest Rates and left Monetary Policy unchanged, indicating the continuation of the massive stimulus program until reaching the inflation target.
Technical reading is negative for the USDJPY pair’s movement and a clear control for sellers on the price movement is expected to continue to fall until the price targets 108.60
The return of selling pressures on the pair’s move would reinforce the current bearish trend. A break below the support levels near 0.9425 will consolidate the declines and cause a test at the 0.9370 levels. A return above the resistance level at 0.9470 would however, ease the selling pressure temporarily.
The US Dollar fell to its lowest level in three years against a basket of major currencies, following the statements of the US Treasury Secretary to favor the decline of the Dollar as it revives the business processes, which foreshadows a trade war with China.
Gold prices rose during the Asian session on Thursday after small gains in the Dollar index reversed losses to allow investors to buy dollar-denominated commodities, in anticipation of a clear shift in US Dollar policy by US Treasury Secretary Stephen Mnuchin last night.
Gold prices rose sharply on Wednesday, supported by the Dollar’s decline as fears of US-China Trade War increased, boosting demand for safe haven. The rebound in the price of the breach of the near resistance levels at 1364 will strengthen optimism and cause a test of the price levels at 1377. A return of prices below the 1357 resistance level would temporarily ease optimism.