The US Dollar was yesterday’s best performing currency among the major money instruments we monitor in our daily report and the US currency gained significantly against the Euro. Bullish comments from Fed policymakers and rumors that the ECB plans to expand their easing program in light of the lack of progress in the Eurozone have sent the Euro lower at the beginning of the week.
The Euro will remain in focus for the rest of the week as well as the release of the PMI levels tomorrow and the IFO Survey on Thursday will provide fresh data from the Euro area. The bias is bearish and if the reports reveal further weakness as expected then the Single European currency could be in for even more losses with the 1.1000 support floor coming into focus.
Today we will have the chance to find out how consumer confidence faired in the Eurozone and again analysts predict a retreat for this important metric but at the same time the Pound will also be in focus. The release of the Public Finances levels is due for later this morning and it will be important to see how the borrowing levels will affect the UK currency that ended the day looking for support around the 1.5500 area.
Taking a quick look at the price action yesterday, as we mentioned above the Euro came under a lot of pressure from the combined effect of easing talk from the ECB and tightening prospects from the Fed. The Single currency traded below the 1.1200 area having lost almost 300 pips in the last couple of trading days and today is trading around the 1.1160 level. The bias is bearish so we could see an extension of the losses all the way down to the 1.1000 area.
The Cable also traded lower but was able to hold on to some of its earlier gains, the UK currency came off its 1.5600 highs and tested the 1.5500 support area where it found enough support to end the day trading either side of this level. Today the release of the Public Finances report will take its toll on the Cable but we do not expect any radical changes in the currency that is well bid ahead of an expected rate hike in early 2016.
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