Euro

The euro rose against the dollar at the trades. This week we expect the November Italy and the euro area industrial production release, forecasts expect reduction in the block as a whole. However, the topic of inflation in the euro area will likely be in the center of our attention.

The pair is below the broken through level of 1.2000-1.2020 that resulted in reduction to the fresh low at the level of 1.1754. Nevertheless, the pair closed the trade with a rebound above the level of 1.1820-1.1840. The pair tested this level in the downward direction but unsuccessful. It suggests its temporary “bottom” achievement and the upward correction development towards 1.2020-1.2040.

The support levels are 1.1800-1.1820, and the resistance levels are 1.1880-1.1900.

MACD is in a negative territory.

Trading recommendations

A growth and an ability to consolidate above 1.2020-1.2040 will ease the downward pressure and will open the way to 1.2090-1.2110. We should not still speak about the downtrend completion within the euro. We should not exclude bears’ attempts to retest the current minimum, the pair entry in the consolidation phase and range trading.

Pound

The pound also rose slightly against the dollar. The inflation release and the UK news will be the main topic this week. We wait for the December consumer price index (CPI) with a decline to + 0.6% y/y vs. 1.0% y/y , the December retail prices index with the slowdown to + 1.6% y/y from + 2.0% y/y in November. The pair GBP/USD the updated the low and tested the support around 1.5020-1.5040. Bears could not take it for the first time and a demand from here led to the pair rebound to the resistance near the 52nd figure. The pound is showing signs of a strong oversold that creates certain difficulties for the promotion downwards.

The support levels: 1.5140-1.5160 and the resistance levels: 1.5220-1.5240.

The MACD indicator is in a negative territory.

Trading recommendations

At this stage, the pound/dollar may start the consolidation phase and to trade between 1.5020-1.5040 and 1.5220-1.5240. The 52nd figure breakthrough will lead to a rise to 1.5380-1.5400. In the absence of fresh bearish factors the fall below 1.5020-1.5040 seems unlikely at this stage.

Yen

The dollar and the yen showed a multidirectional volatility. However, the Japanese yen has fixed its growth. Important news for the Japanese economy will not be so rich this week, one of the most interesting news include the December commodity prices data for Japanese corporations that is expected with decrease, -0.3% m/m and 2.2% y/y vs. -0.2% m/m and 2.7% g/g.

After the fall to the support near 117.95-118.15, the dollar rebounded to the psychological level of 120.00, but it failed to rise upwards to 120.20-120.40 and consolidate above the level. Here intensified sellers returned it to the above mentioned support.

The support levels: 117.95-118.15, and the resistance levels: 119.05-119.25.

The MACD indicator is in a negative territory.

Trading recommendations

The ability to consolidate above this level will preserve growth chances and the level of 120.20-120.40 testing. The loss of the support will significantly weaken the upward pressure and will lead to the fall to 116.95-117.15.