Euro fell sharply in the European session with heavy EUR/JPY selling and a Fitch downgrade of Russia the catalyst. Eastern European contagion is becoming a fear going forward and could be a catalyst for further falls. December European Retail Sales remained flat vs. a forecasted fall of -0.3%. Looking ahead for December German Industrial Production is seen -2.5% vs. -6%. Also tonight the ECB meets to discussed but have signaled that no rate cuts is on the cards. Sterling experience another rally at the start of the US session with the market pushing past 1.4500 ahead of the BOE announcement today. Heavy cross buying especially against the EURO underpinned the move higher. Looking ahead for BOE meets tonight and is widely expected to cut by 0.5% to bring the Interest rate to 1.0%.
Technical outlook:
EURO R1: 1.2950 S1:1.2720
R2: 1.2980 S2:1.2700
chart pattern hints towards a bear note . Trading range for the day is expected between 1.2750-1.2940 levels for the day. Momentum is seen trending down and stochastic is also giving a bearish crossover.
GBP R1: 1.4580 S1: 1. 4300
R2: 1.4600 S2: 1. 4290
chart pattern shows a mixed outlook for the day. Trading range is expected between 14310-1.4550 levels for the day. Currency is trading on the moving average and Momentum and stochastic are seen flat but at overbought levels
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