FOREX Daily Analysis - Currency Trading News 2012-02-01

Wall Street is starting to show more and more signals that a correction is about to come. Yesterday, the major indices open the trading day almost 1% up, but started falling after the release of the disappointing consumer confidence data. In total, January was the best month in the US stock markets since 1997, as they rose 10% during the month.
EUR/USD
The declines in the stock markets supported the USD against the major currencies, and the euro slid against the American dollar yesterday. The Greek problem has not been solved yet and this affects the EUR, which started correcting down since it reached the pick at 1.323 on Friday. The USD's correction will be determined by the employment data flow, which starts today with the ADP Non-Farm Employment Change and end with the official NFP on Friday.
On the technical aspect, the EUR is obviously overbought and the correction down might erase 30%-50% of the recent rally and therefore the Euro might retest 1.30 or even lower.

EUR/GBP
The GBP completed an amazing bullish session against the USD, which started on the middle of the month. This movement started as a "short-squeeze" that turned into a strong rally, in which the pound gained almost 500 pips against the USD. Now it is facing a resistance at 1.57 and might correct down from the current levels.
Both Euro and GBP rose sharply against the USD since the beginning of the month, though the EUR was relatively stronger and therefore the pair EUR/GBP rose as well. However, the general trend of this pair is bearish, so the GBP was likely to get stronger again against the EUR, as it did in the recent couple of days. The GBP broke the support of the channel and if it succeeds in completing the break-down, the price might fall to 0.82.

NZD/CHF
The NZD dollar does not stop strengthening against most of the currencies. Yesterday it looked like that the USD was about to correct against the NZD but the Kiwi made another wide bullish candlestick. On the other hand, the USD found a support against the CHF, and that give the NZD the ability to rise even more against the CHF. The current resistance is at 0.76 and a break-up there will be another step to the heights at 0.78.

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