The EUR rose 0.4 percent to 137.58 JPY

Good morning from a cold and cloudy Hamburg and welcome to our Daily FX Report. On Wednesday the Federal Reserve hinted that a surprisingly strong job market recovery could lead it to raise interest rates earlier than it had been anticipating. The Fed has held benchmark rates near zero since December 2008, but has signaled it would likely begin to move them up some time next year. This decision will depend on further information on the trajectories of economic activity, the labor market and inflation.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

In the second quarter of this year, euro-area growth stagnated in comparison to the quarter before as the region`s biggest economies Germany, France and Italy all failed to expand. Inflation in the euro zone is indeed the weakest in almost five years. Now the balance-of- payments data released this week from the region`s central bank is showing that European investors channeled 167.4 billion euros into overseas equities in the 12 months through June and 178.7 billion euros into offshore debt. These numbers are the largest in terms of financial exodus since August 2008. Moreover, foreign cash has failed to offset these outflows so far. According to the median forecast of more than 50 analysts surveyed by Bloomberg, the EUR will fall to $1.31 by year-end and to $1.28 by the middle of next year. For 2017, analysts even expect a level around $1.20. In contrast to the EUR, the USD is recently experiencing a rally. After the Federal Reserve`s July meeting, which gives investors space for speculation the central bank may increase interest rates sooner than anticipated, the USD strengthened to an 11-month high versus the EUR. It gained 0.5 percent and is now traded at $1.3259 per EUR. It is the strongest level since September 13. The USD also appreciated versus the JPY by 0.8 percent to reach 103.76 JPY per USD. The EUR rose 0.4 percent to 137.58 JPY. Overall, the USD has gained 1.8 percent during the past month what makes the U.S. currency the second-best performer after Norway`s krone of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The EUR has fallen 0.4 percent and the JPY has declined 0.7 percent.
New Zealand`s currency continues its weak performance during this week and declined to a five- month low on speculation economic growth is waning. The currency dropped for a fourth day against the USD and declined below 84 U.S. cents for the first time since March this year.

Daily Technical Analysis

EUR/CHF (Daily)

Since the end of May 2014 the currency pair experienced a downward movement among the lowest line of the Bollinger Bands. After breaking through the resistance level at 1.2162, the EUR sharply declined to reach the support level at 1.2076 where it slightly rebounded. At the moment we see a recovery which, according to the RSI and the Stoch may hold for a while.

Support & Resistance (Daily)