US session review: the markets remain mixed

Fed Bank of New York President Dudley said today that policy makers must “forcefully” push against economic headwinds as the U.S. has yet to show “any meaningful pickup” in momentum. Lockhart, the Atlanta Fed president, said U.S. monetary policy should focus on creating a more dynamic economy following a recent slowing in growth.

German Chancellor Angela Merkel’s Christian Democratic bloc won 41.5% of the vote in yesterday’s election. She may form a coalition with the Social Democratic opposition or the Green after her Free Democratic allies failed to take any seats in the lower house of parliament. Negotiations to form German governments usually last from four to six weeks.

EURO

The euro is in correct move amid weak PMI data. Bundesbank has published its monthly bulletin. Buba noted that growth hasn't kept pace in the second quarter. Signs of a dramatic upswing are lacking German economy will improve over the rest of 2013. Sees extraordinarily good consumer climate Company investment confirms solid foundation 

The euro climbed 4% this quarter versus the dollar, poised for its biggest advance since the first three months of 2011. 

Later in EU euro retreated following the disappointing results from the manufacturing sectors in France, Germany and the bloc as a whole.

EUR/USD fell under $1.3500. Strong resistance comes at $1.3600 (Feb 5 and 6 highs) with the stronger resistance is near yearly high on $1.3712. Initial support comes at $1.3420 (channel line from Sep 6). Below support is around Sep 13 lows on $1.3250.

POUND

The pound consolidates within the range since the last week and, likely, will hold in range before a key economic data released. 

GBP/USD trades at $1.6040 (also channel line from Sep 6). Below support comes at $1.5780 (Friday’s lows). Initial resistance is around recent highs on $1.6145. Above the resistance comes at $1.6280 (channel line).

YEN

The greenback fell against the yen as markets assess when the Federal Reserve will reduce the pace of its bond purchases.

USD/JPY retreated to below Y99.00 from Fridaay’s highs on Y99.65. Initial suppport comes at Y98.60/50 (Sep 16 and 6 lows respectively), then - at Y97.80 (Sep 18 lows), extending to Y97.70 (trend line from Jun 13), then - at Y96.80 (Aug 27 lows). Above Fridaay’s highs resistance comes around Y100.00 (Sep 13 highs) and Y100.60 (Sep 11 highs).

Source of information>>

More information>>