The EUR gained 0.6 percent

Good morning from cloudy and cold Hamburg and welcome to our Daily FX Report. Dozens of people, including women and children, were killed fleeing fighting in eastern Ukraine on Monday when their convoy of buses was hit by rocket fire. Ukraine accused pro-Russian rebels of targeting the convoy but the separatist denied responsibility for the attack. Meanwhile the resolution of the circumstances behind the attack may take some more time, it has certainly hardened the situation between both parties and brings in more fuel into the conflict.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

Caused by signs of economic recovery which supported the case for the Fed to normalize policy, the USD held gains versus its major peers on Monday. As a result, the Bloomberg Dollar Spot Index rebounded from a two-week low before the Labor Department releases consumer price-data today and as Federal Reserve Chair Janet Yellen and central bankers prepare to meet at an annual conference. In contrast to the USD, the EUR experienced the biggest loss in almost two weeks before a report this week is expected to show that manufacturing activity in the region cslowed and amid speculation the European Central Bank will expand monetary stimulus.

After Bank of England Governor Mark Carney said that a recovery in wages may prompt policy makers to increase interest rates, the GBP climbed from near a four-month low versus the USD and gained 0.2 percent to reach $1.6727 per GBP. The GBP also strengthened against the EUR and appreciated 0.5 percent to 79.90 pence per EUR. Overall, the GBP has appreciated 8.1 percent in the past year and was the best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The same data reveals that the EUR gained 0.6 percent and the USD rose 0.3 percent.

After producer output prices in New Zealand fell by 0.5 percent in the second quarter of this year, the NZD dropped and depreciated by 0.2 percent versus the USD to 84.58 U.S. cents. The AUD is also expected to depreciate in the near future after the RBA cut its projections for the economy. It now predicts a more moderate growth in gross domestic product and a higher inflation. Yesterday, the CBA, one of the biggest banks in Australia, cut its year-end forecast for the AUD to 94 U.S. cents. The change in sentiment is clearly demonstrating the problems Australia’s economy is currently experiencing.

Daily Technical Analysis

EUR/GBP (4 Hours)

Since the end of July 2014 the currency pair experienced an upward movement among the Fibonacci Fan till it reached the resistance level at 0.8032 GBP per EUR. At the moment, we see a slightly decline which may end when the support level at 0.7968 is reached. In the long run, a further upward movement seems to be likely.

Support & Resistance (4 Hours)