Economic news
The dollar’s performance against the euro and the yen after the fiscal cliff deal
The first week of the new year started with a last-minute agreement that saw many investors’ hearts trembling on whether the deal would be reached in order to avoid the staggering spending cuts and tax hikes in the amount of $660 billion.
Following the deal announcement, the dollar performed very well against the major currencies. As the Tokyo market reopened on Friday for its first trading day this year, the main focus was on the dollar reaching its highest level against the yen since July 2010.
The yen had its weakest performance in two and a half years, slipping to 87.72 per dollar in the early trading hours on Friday, and was trading at 88.18 USD at the time of writing, down 0.85% from its yesterday’s close.
The Japanese currency continues its downward trend in the last five days and has lost 2.1% against the dollar. This seems to be working well with the country’s newly-elected Prime Minister Shinzo Abe’s plan to depreciate the yen through aggressive monetary policy in order to stimulate exports.
Meanwhile, the euro dipped against the dollar, reaching a three-week low after minutes from the US Federal Reserve’s last meeting revealed that the Fed will continue to buy assets in efforts to back up the fragile US economy. However, some officials are reluctant to such a plan as the balance sheet of $2.9 trillion will be further increased.
What can influence the dollar’s trading price today?
Investors are anticipating the monthly report on the US job market, which is due to be released later in the day. Forecasts indicate that the report will show a figure of 155,000 jobs being created in December. The US unemployment data is also scheduled for today as forecast values are showing a 7.8% unemployment rate. Both reports could affect investors’ sentiment towards the American currency, depending on their actual figures.
Technical analysis
USD/JPY
During yesterday’s session, the dollar traded in the range of 86.80 – 87.30 JPY. This morning the currency pair is trading at 87.55 – 87.85 JPY.
Should the dollar successfully overcome the resistance zone of 87.80 – 88.00, its aim will be reaching and testing the 88.25 – 88.45 zone. If successful, the upward trend will continue to 88.65 – 88.80. If it falls below the support zone of 87.60 – 87.45, the next support zone will be at 87.30 – 87.15. In case of a breakdown, the downward trend will continue to 86.95 – 86.80.
EUR/USD
Yesterday the euro depreciated from 1.3185 to 1.3045 USD. This morning the currency pair is trading at 1.3015 – 1.3040.
If the euro overcomes the resistance zone of 1.3040 – 1.3065, its aim will be reaching and testing the zone 1.3090 – 1.3115. If successful, the upward trend will continue to 1.3135 – 1.3150. If the euro falls below the support zone of 1.3015 – 1.3000, it will find a next support at the 1.2985 – 1.2970 area. In case of a breakdown, the downward trend will continue to 1.2955 – 1.2935.
Source: dfmarkets.co.uk
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