Yesterday’s trade saw EUR/USD within the range of 1.1422-1.1223. The pair closed at 1.1381, gaining 1.26% on a daily basis.
At 7:33 GMT today EUR/USD was down 0.08% for the day to trade at 1.1369. The pair held in a daily range of 1.1224 – 1.1422.
Fundamentals
Euro area
French consumer confidence
Confidence among consumers in France probably improved in January, with the respective index coming in at a reading of 91.0, according to the median forecast by experts, from 90.0 in December. If so, this would be the highest level of confidence since May 2012.
The index of consumer confidence is based on a survey, encompassing about 2 000 households. Respondents give their opinion regarding past and future economic situation in France, past and future personal financial situation, unemployment, intention to make major purchases, current savings capacity and expected savings capacity.
The indicator is calculated using factor analysis technique. The index is then calculated in a way to measure the current confidence compared to the historic index values during the period 1987-2011. If the gauge shows a reading over 110, this suggests that optimism is higher than normal. If the index shows a reading under 90, this implies that pessimism is higher than normal. Readings of 100.0 signify neutrality.
Improving confidence is related with greater willingness to spend, therefore, higher than projected values may provide support to the euro. The National Institute of Statistics and Economic Studies (INSEE) is to publish the official data at 7:45 GMT.
United States
FOMC policy decision
The Federal Open Market Committee (FOMC) will probably keep its benchmark interest rate unchanged within the range 0%-0.25% for a 48th consecutive meeting, after the end of the Quantitative Easing cycle in October 2014, according to the median forecast by experts.
The minutes from the Federal Open Market Committee meeting, conducted in December, revealed that policymakers agreed borrowing costs were unlikely to rise for at least the next couple of meetings. The Committee said it will be ”patient” to begin normalizing policy. According to extracts from the minutes: ”Many participants regarded the international situation as an important source of downside risks to domestic real activity and employment, particularly if declines in oil prices and the persistence of weak economic growth abroad had a substantial negative effect on global financial markets or if foreign policy responses were insufficient. However, the downside risks were seen as nearly balanced by risks to the upside.”
”With regard to inflation, a number of participants saw a risk that it could run persistently below their 2 percent objective, with some expressing concern that such an outcome could undermine the credibility of the Committees commitment to that objective. Some participants were worried that the recent substantial fall in energy prices could lead to a reduction in longer-term inflation expectations, while others were concerned that the decline in market-based measures of inflation compensation might reflect, in part, that such a decline had already begun.”
”Most participants agreed that it would be useful to state that the Committee judges that it can be patient in beginning to normalize the stance of monetary policy; they noted that such language would provide more flexibility to adjust policy in response to incoming information than the previous language, which had tied the beginning of normalization to the end of the asset purchase program. This approach was seen as consistent, given the Committees assessment of the economic outlook at the current meeting, with the Committees previous statement. Most participants thought the reference to patience indicated that the Committee was unlikely to begin the normalization process for at least the next couple of meetings.”
The FOMC will announce its official decision on policy at 19:00 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.1342. In case EUR/USD manages to breach the first resistance level at 1.1461, it will probably continue up to test 1.1541. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1660.
If EUR/USD manages to breach the first key support at 1.1262, it will probably continue to slide and test 1.1143. With this second key support broken, the movement to the downside will probably continue to 1.1063.
The mid-Pivot levels for today are as follows: M1 – 1.1103, M2 – 1.1203, M3 – 1.1302, M4 – 1.1402, M5 – 1.1501, M6 – 1.1601.
In weekly terms, the central pivot point is at 1.1332. The three key resistance levels are as follows: R1 – 1.1551, R2 – 1.1894, R3 – 1.2113. The three key support levels are: S1 – 1.0989, S2 – 1.0770, S3 – 1.0427.
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