By DailyFX – Further Tightening Suggestions Underpin Euro – Textbook Crows Lead To The Downside

GBPUSD

Dollar Easing Bolsters Sterling Favortism
In light of comments by Federal Reserve… … President William Poole that 1
to 2 more rate increases by the Federal Reserve would be “sensible”,
traders sided with the British Pound in early morning action. Seen
mostly as a technical break to the upside, the move was mildly
exacerbated as leading indicators for the month of December dipped in
the United States. Suggestive of slower growth, the report presented a
sluggish outlook for the U.S. single currency as dollar bulls look to
contend with a widening trade deficit, a halt in interest rates and
slower growth in the coming year. As a result, bullish pound focus will
be emphasized on tomorrow's release of the monthly CBI industrial
trends survey. Bouncing from historic lows in the months of October and
November, the figure is projected to rise again, reflective of an uptick
in manufacturing activity. Ultimately, coupled with a current bottom in
housing prices and stable consumer confidence, higher production
activity will lend to further sentiment that rate cuts will be
unnecessary in the near term.

Technically Speaking
Breaking through recent consolidation, established by 1.7800 and 1.7500
barriers, sterling bulls piled bids on bolstering the onslaught of the
1.7879 high. However, with momentum petering out, a probable
retracement looks to bring the price action to previous
support/resistance levels. First goal eyed by bears, the round 1.7800
figure. Posing previous ceilings, the figure coincides with the 23.6%
fib from the 1.7526-1.7879 advance. Downside capping looks to take
place at the 38.2% fib, site of the hourly spike low 1.7746.
Confirming near term declines is the death cross formation in the
Stochastic.

Rumorville
Bids are looking to take place at key points of retracements as bulls
continue to search for opportunities at 1.7825 and 1.7780/85. Heavier
bidding looks to follow below levels at the 1.7725/30 area.
Comparatively, offers look heavy at 1.7905, the October 17th high, with
even heavier interest at 1.7945, the 61.8% fib from the 1.8500-1.705
decline.

EURUSD

Further Tightening Suggestions Underpin Euro
More jawboning surrounding inflation acceleration strengthened the euro
single currency to break the current consolidation that has been
witnessed over the past two weeks. Earlier in the European trading
session, comments by Chief Economist Otmar Issing fell in line with
previous statements by Lorenzo Bini Smaghi and Christian Noyer, all
voting members of the European Central Bank, that higher oil prices
would ultimately spur price increases in the region. As a result,
Issing additionally suggested that although it was earlier stated that
the recent rate increase would not be the beginning of a series,
continued tightening may be necessary in controlling rampant inflation
in the Euro zone, detrimental to rising growth. With futures traders
siding with a likely narrowing yield spread between U.S. dollar
denominations and euro based assets, sentiment is likely to begin its
much anticipated shift to euro bullishness.

Technically Speaking
Penetrating upside resistance at the 1.2200 figure, the underlying spot
has decidedly taken a direction after two weeks of prototypical
consolidation. With bulls making an over hundred pip move in the
session, the major looks ripe for a downside retracement prior to any
further moves higher. Profit taking and squaring should lead to a first
test of 1.2250 (23.6% fib from the 1.2052-1.2308 advance), after
susceptible breaks of the 10 and 20 hour moving averages. Downside
pressures looks to be capped at 1.2202 (38.2% fib from the
aforementioned advance) with the floor holding steady with a previous
bullish flag holding the fort.

Rumorville
In similar fashion to the British pound bids, bulls look to take
advantage of intraday declines off of the rise. As a result, bids look
to reside at 1.2265 with heavier bidding at 1.2225 and 1.2180.
Comparatively, strong offers are hovering 1.234, the 38.2% fib of the
1.3480-1.1640 decline with capping at 1.2445.

USDCHF

Textbook Crows Lead To The Downside
Consolidating and heading into the Asian session, a textbook three
black crows formation lends to further downside in the major currency.
Hovering the 1.2561 figure, the 10 and 20 hour moving averages pose as
the first level of defense for the Swiss bear with further upside
barriers at the 23.6 percent fib level of the recent decline at 1.2638.
Upside momentum looks to be capped, should the aforementioned barrier be
broken, at the 38.2% fib at 1.2685 as the site serves as previous
consolidation. Breaking though 4-month lows, bears look to continue to
suppress the major to 1.2450 before considering a directional change.

Rumorville
Strong bids look to buoy the underlying in the 1.2520/25 area with
further support at 1.2470/75 and corresponding stops at 1.2450. Last
legs of support hover the 1.2385 figure, the 50% fib from the
1.1480-1.3290 advance. Subsequent offers are seen in rallies at 1.2615
with upside capping at the 1.2670/75 region.

By DailyFX