Alpesh Patel's NewsletterPro - Euro and Pound hold above critical support levels but for how long?

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© Alpesh Patel

Friday was a quiet day for the currency market even though we expected important news from the UK with the Retail Sales release. The release was expected to surprise to the upside on the back of the recent improvements in the UK economy, however the figures showed a 1.5% decline in January.

The Pound received these numbers without a big sell-off and the UK currency remained above the 1.6600 level which at this point is the key support. Any further news will prove critical for the Pound because if the 1.6600 support gets broken then further losses should be expected. News from the UK economy are not expected until Wednesday when the Q4 GDP is scheduled for release so until then the GBP/USD will mostly be affected by Dollar’s flows.

The Euro continued climbing higher against the Dollar even though there were no economic news to attract new buyers. The peace deal in Ukraine after an extended period of political turmoil has eased tensions in the European region and the news allowed the European currency to remain above the 1.3700 mark. This is Euro’s important support area and even though the technical outlook of the currency hints towards lower levels as long as 1.3700 holds new highs shouldn’t surprise us. Today we expect the release of the IFO Survey and Euro-zone’s inflation data and especially the latter can be a potential market mover.

The Dollar remained on the downside and the recent string of discouraging figures out of the US economy continued with housing market data showing once again how severe weather conditions have taken their toll to the domestic economy. The US currency has been under pressure lately but Fed officials continue to support their tapering agenda and appear confident that the recent disappointing figures are only temporary and mostly attributed to the bad weather hence the released figures will soon bounce higher.

German IFO Survey and Euro-zone inflation data for today

The Economic Calendar today only holds a couple of economic releases but both of them are quite important. The German IFO Survey is scheduled for release early in the morning and the survey acts as a measure of confidence in the Euro-area’s current and future outlook. The report is expected to remain in line with previous releases but we feel there’s room for a surprise to the downside.

An hour later, the Euro-zone’s Consumer Price Index will be released and with the inflation being on the forefront of Europe’s fiscal concerns the report is eagerly anticipated. Europe is battling its way out of recession and the fact that inflation remains stubbornly low troubles the ECB and a discouraging release here will definitely be reflected on the currency’s outlook.

Economic Calendar









German IFO – Current Assessment






German IFO – Expectations






Euro-zone CPI – Core






Euro-zone CPI









FTSE 100


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