Euor fell heavily but pound gained -jan 05.

Euro fell heavily as resistance at 1.3800 gave way and some negative news emerged. ECB Member’s indicated that they supported cutting rates if inflation continues to drop. Looking ahead for December German PMI is forecast at 46.4 vs. 45.1 previously and Euro Zone is seen at 42 vs. 42.5. The Sterling gained against the USD as support below 1.45 and then tracked Oil as it rallied in New York. The Crosses supported with large gains in GBP/JPY and heavy EUR/GBP selling the main contributors. The market is looking to Thursday’s BoE meeting as the next major market event for the pound. Looking ahead for December Services PMI are forecast at 39 vs. 40.1 previously and December Inflation is expected at 1.8% vs. 2.1% previously.

Technical Outlook:
EURO R1: 1.3780 S1:1.3420
R2: 1.3800 S2:1.3400
chart pattern indicates the currency to give bearish note for the day. Trading range for the day is expected between 1.3450-1.3750 levels for the day. Stochastic is seen trending down giving bearish signals and currency is also trading below the moving averages supporting the bear note.

GBP R1: 1.4750 S1: 1. 4520
R2: 1.4780 S2: 1. 4500
chart pattern shows the currency to remain mixed for the day. Trading range is expected between 1.4530-1.4730 levels for the day. Currency is seen trading on the moving average and parabolic is also supporting the bear note but momentum is seen flat giving caution.