EUR/USD

Yesterday the market stood still and the EUR/USD pair was no exception. It is a rare occasion, but not even a one pip move could be seen in any currency pair.



Technical Outlook

The stalemate seen yesterday will come to an end today when the market will pick up again and the volume will slowly get back to normal. A few days ago we mentioned the horizontal channel that confines the pair and which is still holding. The lower boundary of the channel is the support formed at 1.3170 and it rejected price numerous times proving to be a strong barrier for any down movement. The upper boundary is located at the 1.3290 level of resistance. At the moment our bias is neutral on the pair but we consider that a break of either boundary of the channel is indicative of an extended move in that direction.

Fundamental Outlook

Although some banks are still closed, today there are some releases of economic indicators: for the Euro zone the most important are the Spanish Manufacturing PMI coming out at 08:15 am GMT and the Italian Manufacturing PMI released a half an hour later. Better than expected numbers usually strengthen the currency but the market conditions still cannot be considered normal and surprises can occur. Later, at 3:00 pm GMT the US release the ISM Manufacturing PMI, a high impact diffusion index based on the opinion of about 400 purchasing managers. The forecast is for 50.2 from a previous of 49.5. Higher values then 50.2 can strengthen the US Dollar.



GBP/USD

Just as expected, the pair had no movement yesterday, but the last trading day of 2012 brought a lot of bullish momentum.



Technical Outlook

There is a distinct possibility for the pair to continue its strong move up touching once again the resistance formed at 1.6300. Monday many resistance levels were broken: diagonal resistance created by the down trend line, dynamic resistance created by the 200 Simple Moving Average and horizontal resistance represented by the 1.6175 level. This makes future higher prices very probable. But like we mentioned, the market is still not entirely back to normal so we recommend a lot of caution.

Fundamental Outlook

The only data released by the UK today is the Manufacturing PMI, scheduled for 09:30 am GMT, with a small increase expected: 49.2 from a previous of 49.1. The index is based on about 600 surveyed purchasing managers and it usually has a hefty impact on the market. The US event mentioned earlier will also affect the GBP/USD pair.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.