EUR/usd
In the second half of the last week the markets suffered a serious correction. Forex first stood aside, but on Friday also joined the general trend. The single currency dropped below 1.27 against the dollar at the end of the week, thus hitting a nine-week low. Then, at the beginning of September, the pair passed this level without a stop. Some believe that this time the pair's return will be equally swift. Some consolidation is possible at 1.26. The 200-day MA, which had served as a strong support in September and October, broke under the pressure of the bears. Partly it was caused by the poor stats from Europe, but mostly it happened due to the risk-aversion in the anticipation of the fiscal cliff in the USA at the beginning of the next year. It has already been said much about it and also will be said in the coming days. So, let's speak about Europe. The ECB's head has recently expressed his concerns over Europe's locomotive, which as he noted is already facing certain problems with growth. Since the rest of Europe hasn't fully recovered yet, it promises to spill over into poor economic statistics at the end of the year. Apparently, further recession is inevitable here. Yet the region already suffered a downturn in the fourth quarter last year and in the second quarter this year. Besides, for the first three months of this year it demonstrated a zero growth. It is surprising that for all that the EU officials should still regard budget consolidation as their prime target. Germany happily reported that it would reach the balanced budget three years earlier than was estimated before. And this is despite the fact that employment has been on the decline for the last three months and that the Ministry's officials already forecasted recession for the end of the year several months ago. There is a feeling that for Europe it is of higher importance to obtain positive budget figures by means of spending cuts rather than to maintain growth. It is a mystery why they didn't stick to this idea so persistently in early 2000s. And now it looks as though Europe chose the wrong time and wrong direction for the move. No doubt, all this is no good for the euro.
GBP/USD
The break through the technical level of support played a low-down trick with the pound. On Friday we pointed out that gbpusd often bounced off 1.5960 to get back to 1.60. But on Friday the bulls surrendered. For the most part it was due to the sensitiveness of the pound to the moods in the stock exchanges. Since the latter felt really bad, the pound also suffered. It slipped through the support of 1.5960 and soon hit 1.5940. It seemed that below 1.5915 (the low of October 23) the pair already couldn't be stopped from falling. Shortly afterwards the bears tried to push the cable below 1.59. And here the end of the week came to the rescue. The pair closed at 1.5893. Anyway, it is a bad sign. Most likely, in the near future the pair will test its 200-day MA at 1.5850. The bears' stakes got higher when the euro surrendered its 200-day MA.
USD/JPY
The dollar enjoys such a good demand that it is growing even against the yen. Yet, it would be better to call it a correction move after the drop. usdjpy withstood the bears' attack, slowing down the decline at 79.0. Since the end of the previous week the pair has been purchased; the purchases have already driven it to 79.50. The Japanese GDP has shrunk as much as expected. In the third quarter the economy lost about 0.9% (3.5% in the annual terms). Against 3Q 2011 the growth makes 0.1%; a quarter before the figure made 3.3%. Things are going bad in the Land of the Rising Sun. The politicians should continue to put pressure on the price of the yen.
