EUROPEAN session review: Dollar fell against european currencies

The dollar continues to slide against other major currencies, as global investors awaited Janet Yellen’s first testimony as new Federal Reserve chair later in the day. 

EURO 

The improved fundamentals in the EU suggest that the euro will yield ground reluctantly and that EUR/USD could struggle to break below the 1.30 level this year. However, a robust EUR will not be welcome at the ECB. If deflationary risks do increase in the EU, Draghi may still be forced to take decisive policy action. In these circumstances, the EUR could still be sent sharply lower. 

EUR/USD testing resistance at $1.3680. Resistance zone extends to $1.3740 (Jan 24 highs).The initial support remains at recent lows on $1.3550 (Feb 2 lows), then - at $1.3480. Below support comes at $1.3400 (Nov 21 lows). 

POUND 

The British Retail Consortium said like-for-like retail sales jumped 3.9% from a year earlier after increasing 0.4% in December. Economists forecast an increase of 0.8%. 

Sterling has strengthened 8.7% in the past 12 months. 

GBP/USD rose to $1.6470 . Now resistance comes at $1.6520. The initial support comes at $1.6300 and $1.6250. Break below $1.6250 widens losses to $1.6200 (channel line from Oct 10). 

YEN 

The yen stays in the previous range. 

USD/JPY rose to Y102.40 with initial resistance remains at yesterday’s highs on Y102.60. Above resistance comes at Jan 31 high on Y102.90/00, then - at Y103.40 (Jan 28 high). Initial support comes at Y101.20 (Feb 6 lows), then - at Y101.00. 

DATA AHEAD 

At 14:30 GMT Philadelphia Fed's Plosser speaks, followed by Fed's Yellen at 15:00 GMT. 

At 15:00 GMT Dec Wholesale Inventories come. 

Australian Fed Westpac Consumer Confidence ends the day at 23:30 GMT along with Japan preliminary Q4 GDP at 23:50 GMT.

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