November 2014

 

Technical Analysis
The EUR/USD has been on a downward trend since 1.40 was roughly reached in May. The level of 1.2850 worked as a support in September, and later, became a resistance as the pair tested said level and dipped to 1.2350. In the mid time, 1.25 was reached.
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This level served as a support, following a Fibonacci retracement of 23.6 since the USD rally started. The pair seems to be testing now 1.2570 as a resistance, with a strong short term support at 1.2350. The Fibonacci retracements have been providing solid short positions over this period. A breakout through the barrier of 1.26 may suggest a short term correction up to 1.2760 and 1.2850. On the other hand, if the support is breached, the 1.23 level should be tested, following 1.20 and 1.18.

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Fundamental Analysis

Dollar is bullish as the US economy expanded by 3.9% at an annual rate in the third quarter of 2014, up from an initial estimate of 3.5 percent, outperforming most countries in the developed world.
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American employers added more 228,000 workers in November and the unemployment rate will hold at 5.8 percent, the lowest since 2008. A strong job creation, low interest rates, low levels of household debt, high labour productivity growth and robust technological progress shows that US growth is relatively strong. On the other side, Europe remains a major doubt on the global economy. Euro zone economy is expected to remain stagnant in the short-to-medium term, with the ECB ready to act fast with sovereign bond buying to increase liquidity and stimulate higher consumption and inflation spurring economic growth.

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SPOTLIGHT: Swiss Referendum on Gold

On Sunday, November 30, Swiss people voted on whether the national bank should increase their gold stocks. If so, gold stocks would have been frozen on the new level (20%, almost three times as high as the current 8%). But the majority of Swiss people voted “no” as polls showed on Sunday.
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The gold market is interesting for currency traders to watch as gold is denominated in USD. Hence there is an inverse link between the two, which however is not always met. Another close relationship used to exist between the EUR and gold before the debt crisis in Europe. Besides the referendum on gold, the Swiss people also voted on a restriction on immigrants accepted in Switzerland and limited tax benefits to rich foreigners. Both referendums were voted against.

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