Dow Jones Industrial Average increased 1.7 percent

Good morning from Hamburg and welcome to our latest Daily FX Report. FIFA ethics investigator Michael Garcia resigned on Wednesday in protest at the way his report into allegations of corruption in awarding the 2018 and 2022 World Cup tournaments to Russia and Qatar was handled by the soccer governing body's ethics judge. Former U.S. prosecutor Garcia said in a statement that he had lost confidence in the independence of the ethics committee's adjudicatory chamber after judge Hans-Joachim Eckert issued a 42-page statement in November based on the report.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

The strongest dollar in more than five years is threatening to wreak havoc with the earnings of U.S. companies for a second straight quarter and into 2015. Just this week, Atlanta-based Coca Cola Co., said currency movements will cut its pre-tax profit by 5 to 6 percent next year. Pfizer Inc., the biggest U.S. drugmaker, has said it “expects significant negative sales and earnings impacts from foreign exchange” this quarter. While a rapidly rising dollar can be seen as a sign of confidence in the health of the U.S., it can also make the goods made by American companies less competitive and render hedges designed to protect against steep moves less effective. Traders have sought the dollar as a haven from global market turmoil, as well as prospects that the Federal Reserve is moving closer to raising interest rates after keeping its benchmark near zero since 2008. With the Fed dropping a pledge to keep rates low for a “considerable time” at its Dec. 16-17 policy meeting, traders are more confident than ever that U.S. borrowing costs will rise some time next year. The effects of Fed tightening on the U.S. currency are amplified by the divergence with the euro region and Japan, which are committed to further expanding the money supply. Strategists surveyed by Bloomberg see the dollar advancing against 12 of its 16 most-traded peers next year, including gains of more than 4 percent versus the euro and yen. In one day, the S&P 500 made up about 40 percent of the ground it lost in the seven days since touching a record 2,075.37 on Dec. 5. Yesterday´s gain – it closed at 2,012.89 – boosted the gauge´s 2014 return to 8.9 percent. The S&P 500 was down almost 5 percent in December as of Dec. 16. The Dow Jones Industrial Average increased 1.7 percent.

Daily Technical Analysis

EUR/GBP (Daily)

Since the middle of August this currency pair is experiencing a storng control of the bears as it is falling below an downward Fibonacci fan. It could break through the first resistance line (38.2) twice but couldn’t strengthen its position and dropped back below it. Looking at the Stochastic one can see that it moves towards the 20-line toward the Center line, signaling that losses are possible.

Support & Resistance (Daily)