EUROPEAN session review: Dollar trades mixed

Data released: 

08:48 GMT France Markit Manufacturing PMI (Jan) 49.3 48.8 47.0 

08:53 GMT Germany Markit Manufacturing PMI (Jan) 56.5 56.3 54.3 

08:58 GMT EMU Markit Manufacturing PMI (Jan) 54.0 53.9 52.7 

09:28 GMT UK Markit Manufacturing PMI (Jan) 56.7 57.0 57.2 

The dollar trades mixed: it rose versus euro and pound and fell versus yen. The euro dropped on speculation weakening inflation pressure in the region will prompt the European Central Bank to ease monetary policy. 

EURO 

Euro consolidates around Friday’s low. Data tomorrow is forecast by economists to show December producer prices in the common-currency region fell 0.8% from a year earlier, compared with a November reading of minus 1.2%. 

EUR/USD trades in the narrow range near $1.3500. Below support comes at $1.3400 (Nov 21 lows). Initial resistance comes at $1.3500, then - near $1.3580 and $1.3680. 

POUND 

UK January manufacturing PMI came in lower than expected. The Markit manufacturing PMI fell to 56.7 in January against 57.2 the prior month and 57.0 expected. GBP/USD fell to a fresh 2-week low of $1.6352. 

GBP/USD tested support at $1.6320. Next support comes at $1.6250. Initial resistance comes at $1.6480 (Jan 26 lows) and $1.6520. Strong resistance comes at $1.6660 (Jan 24 high). 

YEN 

The yen declined following its biggest monthly gain in almost two years before Bank of Japan Deputy Governor Kikuo Iwata speaks on Feb. 6 amid prospects the BOJ will persist with monetary stimulus. 

USD/JPY remains vulnerable to the downside following its last week losses. A follow through lower is snow underway suggesting further decline with eyes on the 101.50 level a possibility. Furthe the target is at 100.00 level, its big psycho level. Resistance resides at the 102.80 level where a violation will turn focus to the 104.50 level and then the 105.00 level. 

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