Euro Higher Despite Weak Data; U.S. Indices Plunged Again

The greenback gained ground against the three commodity currencies - Australian, Canadian and New Zealand dollar - on Wednesday and early Thursday as the oil continues to depreciate and was traded temporarily below $30 per barrel. The Fed Beige Book released yesterday once again pointed the modest growth in most of the U.S. regions. Even though the labour market is at a healthy pace, wages remained subdued in most of the states. The consumer prices have risen slightly, triggering a discouraging signal for Fed officials to continue the gradual rate hikes.

Euro surged despite the weak industrial production
The euro surged against all the other major currencies despite the disappointing industrial production figures for Eurozone. In November, the industrial production was down by 0.7% worse than forecasts suggestion of being down 0.3% from an increase of 0.8% before, on a monthly basis. The ECB monetary meeting accounts that will be out later in the day will unveil whether the stimulus measures for the central bank started to have a positive impact on the economy.

Currently, the EUR/USD pair is traded in a tight daily range between the support at 1.0730 and the resistance below 1.0900. The daily 50-SMA is acting as a dynamic support level and as long as the prices are traded below it, we will support further declines. The major trend is bearish so we expect the pair to dip towards 1.0730 as a close below 1.0730 would indicate further declines towards the 1.0500 support zone.

BoE Policy Meeting in focus!
The sterling was traded mixed versus the G10 currencies on Wednesday on the absence of macroeconomic British data. However, all the attention will be on the GBP as the BoE policymakers will revise the domestic monetary policy. Even though, no changes are expected on the voting pattern, traders will give emphasis on the monetary policy summary to gauge if the central bank will raise interest rates in 2016, following Fed’s historical rate hike.

The GBP/USD pair continues to be traded in a strong bearish fashion. The downtrend is very strong and for now, there aren't any signs that the prices are going for a rebound. Technically, we expect a drop towards 1.4400 as a close below that support zone would be a signal that the pair is going towards the main daily support level located at 1.4200.

USD/JPY – Technical Outlook
On a daily basis, the USD/JPY pair has rebounded from a major support located at 117.00 and we expect the bulls to continue the push towards the 118.40 resistance. If we see a daily close above that level it would be a confirmation that the prices will continue to rally towards the next major resistance located at 120.00. However, a drop below 116.50 would open the paths towards further declines.

U.S. Indices crushed Tuesday's gains
The U.S. indices performance on Wednesday collapsed Tuesday’s optimism that the U.S. stock market will start to pick-up again. All the yesterday gains have lost and the indices depreciated even further. Nasdaq, after eight consecutive negative trading days, had rose by 1% on Tuesday but lost more than 3.4% of its value on Wednesday. Dow Jones suffered a triple digit loss of 365 points which means it closed 2.2% down of its opening level. The S&P500 tumbled by 2.5% with almost all of the stock sectors to have declined roughly evenly around 2.6%.

Yesterday, the Dow Jones Industrial Average has confirmed its bearish stance and the daily candlestick closed by forming a ‘ross’ hook pattern. This set up is very dovish and we expect the prices to continue depreciating towards the support at 15,880. Moreover, if we see a daily close below that level that would indicate a possible drop towards the psychological support at 15,500.

Economic Indicators
During the morning, Germany will release its real GDP growth. A Eurogroup meeting is scheduled to start. During the European noon, the Bank of England will have its monetary policy meeting and will release its monetary policy summary alongside with the BoE interest rate decision and the asset purchase facility. No changes are expected to the monetary policy and the voting pattern.

A while later, the European Central Bank will publish its meeting accounts. In U.S., the weekly jobless claims will be out as usual.