FX News – December 20: Weak EU Data Drags Down EUR/USD

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The combination of the beginning of the Fed's QE program and weak European data sent the EUR/USD pair tumbling down in yesterday's trading.

Prior to the opening of today's Asian session, the pair dropped to a low of 1.3634 before making a slight recovery by several pips.

The USD was largely unaffected by the fairly weak US data released earlier this week. For one, weekly jobless claims rose from 10,000 to 379,000, rather than dropping by 32,000 as analysts expected. In addition, existing home sales fell by 4.3% in November, which was worse than expected. Then the index of leading economic indicators rose by 0.8% in December, which was better than the forecasted growth by 0.7%.

Upcoming events, meanwhile, are the German Consumer Confidence Survey, German PPI, European Union Consumer Confidence, and US GDP, Personal Consumption Expenditure, and the nomination vote for Janet Yellen.

The EUR/USD pair is currently trading at 1.3646, with initial resistance seen at 1.3681, followed by 1.3715. Meanwhile, initial support is at 1.3624, followed by 1.3590.

The AUD/USD pair took a beating yesterday after the Fed announced the start of QE tapering. This brought the pair below the 0.8900 level. However, it started on a positive note in today's Asian session, opening at 0.8861 before reaching today's high so far at 0.8887.

The pair is currently trading at 0.8878, with initial resistance seen at 0.8895, followed by 0.8917. Meanwhile, initial support is at 0.8840, followed by 0.8818.

Japanese Monetary Policy Statement Later Today

Japan will announce its interest rate decision and monetary policy statement in half an hour, and everyone expects the Bank of Japan (BoJ) not to make any major changes in its policy. Its current program involves a monthly purchase of government bonds worth Y70 billion. This is in line with Governor Kuroda's statement last week that the Japanese economy is heading towards the right direction, meaning that the BoJ is happy with the current trend.

By FX Strategy Team, Published on 20th of December 2013
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