Euro dropped 1.4 percent against the dollar

Good morning from beautiful Hamburg and welcome to our last Daily FX Report for this week. The United States is preparing to sanction Chinese companies connected to the cyber theft of U.S. intellectual property as early as next week, the Financial Times reported on Thursday. The FT cited three U.S. officials as saying the sanctions probably would come next week in advance of Chinese President Xi Jinping's visit later in the month. Suspicions that Chinese hackers were behind a series of data breaches in the United States have been an irritant in relations between the United States and China.

Anyway, we wish you a successful trading day and a relaxing weekend!

Market Review – Fundamental Perspective

Global manufacturing and service sector activity expanded in August at the same pace as in July, with both the U.S. and euro zone doing better than Asia, according to purchasing manager surveys. Business activity in the euro zone accelerated at its fastest pace in more than four years in August, according to surveys that highlighted a divergence between laggard France and the other big economies in the currency bloc. While generally upbeat, the set of surveys still point only to modest third-quarter economic growth of about 0.4 percent in July-September, according to Markit. Activity in Japan's services sector expanded at the fastest pace in almost two years in August, easing concerns about economic growth after disappointing industrial production and household spending data for July. The Markit/Nikkei Japan Services PMI which rose to 53.7, the highest since October 2013, from 51.2 in July. Nervousness ahead of the U.S. Labor Department's monthly jobs report on Friday and what it may mean for the Federal Reserve's interest rate outlook caused stock investors to trim gains in late trade. The U.S. central bank, which meets on Sept. 16-17, has said it will raise rates when it sees a sustained economic recovery. While the U.S. labor market has strengthened, inflation remains below the Fed's 2 percent target. The euro fell, surrendering most of the solid gains it notched against the dollar since China devalued its yuan currency last month.
During Draghi's news conference, the euro dropped 1.4 percent against the dollar to touch a two-week low of $1.1108. It was last off 0.90 percent at $1.1122. The euro zone currency had earlier this week touched a high of $1.1332 as investors spooked by China's market turmoil moved heavily into the euro and yen.

Daily Technical Analysis

EUR/CAD (Daily)

The European currency was strong over 2 years but at the level around 1.550 the bears took the control. As against the most important currencies the euro began its fall and almost the whole 2014 it depreciated against the CAD. Not even the suppor level at 1.3369 could stop the fall, but the level around 1.3064. Recently the bulls broke through the resistance around 1.4504. The Momentum is undeceisive pointing out for a possible downward movement.

Support & Resistance (Daily)