The EUR increase 0.8 percent to 1.28143 against the USD

Good morning from cloudy and cold Hamburg and welcome to our last Daily FX Report this week. The European Central Bank President Mario Draghi said that his strategy for fighting against Europe's debt crisis is starting to work.

Nevertheless, we wish you much success in trading and a nice weekend.

Market Review – Fundamental Perspective

President Draghi said, that the European Central Bank's massive supply of cash into the financial system last month is beginning to work. The credit markets and good signs of economic stabilization in the euro area give a rise to optimism. While the substantial downside risks still remain, Draghi pointed to falling yields on Italian and Spanish debt this week. That may reduce the need for further interest rate cuts in the short term for the ECB to step up its government bond purchases. While the euro region is still in danger of sliding into recession after the debt crisis spread to Italy and Spain, driving up borrowing costs and hurting the export markets of stronger economies such as Germany, recent data indicate that the worst may be over. German exports gained in November and business sentiment in France climbed from a two-year low last month. President Draghi said that he expects high demand for the European Central Banks second supply of three-year loans that will be awarded on the 29th of February. The Banks can borrow as much as they like against collateral and the ECB has stretched the pool of assets that can be used for obtaining the funds. The provision of liquidity and the allocation modes for refinancing operations will continue to support the euro-area banks, and thus the financing of the real economy.

Meanwhile, the EUR increase 0.8 percent to 1.28143 against the USD. The currency reached 1.28452 which is the highest level since the 5th of January, after declining to 1.26622 yesterday, the lowest level since September 2010. The EUR rose 0.7 percent to 98.363 versus the JPY. The USD fall 0.1 percent to 76.762 against the JPY and also touched 76.674, the lowest level since the 5th of January.

Daily Technical Analysis - Our Focus Currencies for Today

XAU/USD (1 Hour)

Since the 9th of January the XAU/USD is trading along an upward bullish trend line. Yesterday the currency pair reached its resistance level around 1659.32. The pair rebounded and slightly dropped but the bulls are still in control of the XAU/USD. Although the MACD is assuming a weakening, the Moving Average still shows us further wins. It remains to be seen what happened if the pair touches its support level around 1644.51.

Intraday Support & Resistance (1 Hour)

AUD/CHF (4 Hours)

The AUD/CHF continues to climb inside a bullish trend channel since the 20th of December 2011. Recently the currency pair reached its support level around 0.97216 for the third time and recovered again. The MACD assumed a slightly downward movement, nevertheless we might see further gains if the pair remains in the channel.

Intraday Support & Resistance (4 Hours)