VOLATILITY OF EUR/USD RISES AFTER THE HOLIDAY SEASON

The price of EUR/USD is demonstrating positive dynamics despite hawkish comments by the FOMC in the latest meeting minutes published yesterday. Support for the single currency came from strong manufacturing PMI data in the Eurozone which reached 56.6 in the previous month, better than the forecast and the 55.5 in November. The increase in volatility is also explained by the return of traders to the market after the New Year’s celebrations.

Investors are waiting for the release of important labour market data for the US tomorrow. On the same day traders will be paying close attention to factory orders, trade balance and non-manufacturing PMI in the US for the last month of 2017. Also on Friday, macro data in the Eurozone is due to be published including German retail sales for November and the consumer price index in the Eurozone for December.  

The British pound has shown a strong upward movement against the greenback. The positive for the bulls came from the services PMI in the UK which improved to 54.2 in December against the 53.8 in November.

The USD/JPY has increased due to weaker statistics on the manufacturing PMI in December that declined by 0.2 to 54.0. The focus of traders will be turned to the trade balance in Australia for November at 00:30 GMT tonight.

EUR/USD

The EUR/USD quotes have restored the previously lost positions and are currently testing resistance at 1.2070. Overcoming this level may become the trigger for the price to increase up to 1.2200. The RSI on the 15-minute chart is in the overbought territory, indicating a possible pullback with targets near the SMA100 on the same chart and the psychologically important 1.2000 support line.

GBP/USD

The GBP/USD has rose to 1.3350 and the inclined resistance line. In case of continued growth, the price may reach 1.3600. On the other side, the MACD is below zero which may indicate a possible descending correction soon. The closest targets in this case will be 1.3500 and 1.3400.

USD/JPY

The USD/JPY keeps growing and may soon hit the resistance at 113.00 and the inclined resistance line. The RSI on the 15-minute chart is in the overbought zone, and that may be the basis for the resumption of negative dynamics soon with the fall potential to 112.00. Volatility is likely to remain high till the end of this week.