FX.co ★ Fundamental Analysis For January 24, 2013

China’s manufacturing is expanding at the fastest rate in 24 months. The preliminary reading of a Purchasing Managers’ Index was 51.9 in January.

The euro again exceeded 1.33, while the pound touched an 11-month low against the single currency two days ago before strengthening 0.2% yesterday following a report showing a decline in jobless claims. The level of 1.58 is support at the moment.

All this happens in a context of very measured movements in the currency market, where the major pairs act in narrow price ranges, and short-term trends are very uncertain.
The euro, which seemed to fall hopelessly from the area of 1.31 earlier this week, is converting its upward trend. From a technical point of view, a flag continuation of the trend was initiated on January 10, at the level of 1.3037.

The pound does not offer, however, older versions. It maintains a major downtrend, which is just amended by the aforementioned China’s data. But it is still far from 1.5970, current resistance level on which it could find a new uptrend. Recently currencies tied to commodities have been mixed.

The Canadian dollar, which is still looming down with little movement, finally reached parity against the dollar, and 4 hours charts show a figure below the uptrend crossing USD/CAD. Its next resistance is at 1.0025, followed by 1.0050.

The Australian dollar, although it has not been affected by major fundamental data, follows a moderate bearish trend. Its next support, 1.0485, offers good buying opportunities in the short term. Given that it moves into oversold zone, after a sharp drop during the Asian session.

The yen resumed its downward trend, although it will not be easy to break the 90.20 price zone, the maximum time of the month. We could still see a strong bearish USD/JPY in the coming days.
As for the data of the day, we are waiting for Initial Jobless Claims at 8:30 Eastern and weekly oil inventories at 10:30.