US DOLLAR FALLS AGAINST MAJOR CURRENCIES
The EUR/USD price showed a confident increase due to positive news from Germany where the two main parties reached consensus in forming a coalition. As the main economic power in Europe, German politics are closely followed by euro investors. The powerful upward impulse of the pair also came from confirmation of the expected monetary policy tightening in the Eurozone that will support the common currency quotes during the year. Additional stimulus for the rise in prices was the price moving above 1.2070 level, which has become a trigger for short-covering. Trading volumes were low today due to the Martin Luther King holiday in the US. More support for the bulls in EUR/USD came from the trade balance data in the Eurozone, according to which the surplus in November was 22.5 billion which is 0.1 billion more than expected and 3.5 billion better than in October.
The British pound also increased amid depreciation of the US dollar. The bullish impulse was supported by short-covering after the price has crossed the 1.3600 mark. Volatility is likely to remain high during the next few days with the release of important macro data on the UK consumer price index tomorrow, which is likely to influence the sentiment concerning the timing of the next rate hikes by the Bank of England.
The USD/JPY price keeps moving south due to the weak dollar and strong preliminary macro statistics from Japan on machine tools orders, which grew to 48.3% in December compared to 46.8% in the previous month.
The EUR/USD grew after overcoming important resistance at 1.2070. Overcoming 1.2200 is the basis for further price increases with the closest target at 1.2400. The RSI on the 15-minute chart is near the overbought zone and this fact points to a possible price correction that may also be explained by profit taking after the recent rally. The fall potential in this case will be limited to the 1.2070-1.2200 range.
The GBP/USD quotes have changed direction to positive and have broken the important resistance level at 1.3600. Currently the price is close to the next target level at 1.3850 and its overcoming is likely to become the basis for an increase up to 1.4000. The descending price correction is likely to correct down with the first goals at SMA100 on the 15-minute chart and 1.3720.
The USD/JPY price is moving in a bearish trend and may soon test the psychologically important 110.00 mark. After breaking through this level the next goals are likely to be at 109.60 and 108.50. Within the correction, the pair may return to 111.00 and 111.70.