EUR/usd
eurusd is still squeezed in a narrow price range. Purchases get stronger on the dips below 1.33, but the bears fiercely defend the level of 1.34, actively selling on the moves towards 1.3370. As is usual in such cases, the break through the resistance or support threatens to provoke a powerful movement in one or the other direction. As we mentioned yesterday, the long standstill in an effort to break through 1.34 reduces the chance of an upsurge. The continuous rally in the stock markets confirms this fact. Yet, don't forget an old expression of Keynes: markets can remain irrational longer than investors can remain solvent. In other words, be ready to step into the game any moment. Now the market can either continue to go up due to the optimism about the USA or go down because of the pessimism about Europe and absence of progress in the debt ceiling negotiations. While the US affairs are more or less good at present, Europe is still a region of great concern. By contrast with the improving economic sentiment in Germany, France is still facing difficulties. The French business confidence indicator continued to decline in January, now being at 86. This index has been trading downwards since mid 2011.
GBP/USD
gbpusd is consolidating around its 4-month lows, i.e. around 1.58. The pair is actively purchased, however it may continue to fall if provoked on the part of the euro. However, at this stage the pound looks really promising. Probably, the bulls will try to break through its 200-day MA, which is now passing through 1.59. Yet in a broader perspective the sterling may keep lagging behind other majors.
USD/JPY
The yen's weakening last night was partly a result of threats from North Korea. This small country, isolated from the rest of the world, threatens to launch a nuclear attack on the USA so that humanitarian aid supplies be continued. It's hardly possible, nevertheless the yen bears took this news as a reason to join the game again. This early end of the correction will scarcely give much strength to this impulse in the yen.
USD/CAD
The Canadian dollar was particularly active yesterday. The weakness of the country's economy finally came in view of the Bank of Canada. The Bank kept the rate unchanged, but at the same time gave a more negative forecast for the economy and inflation. The Bank expects that inflation will reach the target level of 2% only in the second half of 2014. It means that until then we shouldn't even think about further increase in the rate. On this comment the Canadian Loonie slumped to the parity, where it is still trading now.
