• Technical Outlook

The U.S. dollar decline versus most major as optimism returned to the market following headlines suggesting that Italy’s Prime Minister would resign after the new budget law passes parliament approval. Stocks advanced steadily, as we saw Nasdaq gaining 1.20% and the Dow Jones by 0.84%. We had Crude Oil rising by 1.5%, closing at $96.95/Barrel. Gold declined by $0.55, closing at $1,785/ounce.

The Euro gained versus the dollar after Italy’s Prime Minister announced that he would resign once the austerity plan get parliament approval. Analysts think that a new leader could help tame Italy’s debt crisis and are optimistic regarding the outcome of the Prime Minister’s resignation.

If the price for the eur/usd holds above the main pivot of 1.3797, we can expect that it would approach resistance R1-1.3872 and subsequent correction might follow. On the other hand, if price falls below main pivot (1.3797), we can expect it to target our S1 support (1.3749).

The momentum of the eur/usd is still bearish as long as it remains below the 1.3900 resistance level. Overall the eur/usd traded with a low of 1.3723 and with a high of 1.3846. The eur/usd last traded at 1.3835.

The British pound gained versus the dollar and weakened versus the Euro. The trend for the pair would remain bullish if it maintains above the level of 1.6000. The pair is facing many resistance levels between 1.6100-1.6200. Overall the gbp/usd traded with a low of 1.6036 and with a high of 1.6130. The gbp/usd last traded at 1.6100.

The Yen gained versus the U.S. dollar as the effects of the Bank of Japan’s intervention in the currency market last week started to wean. Technically, the usd/jpy broke below the channel it has been trading for the last week and could resume its downturn if it stays below 78.000. The usd/jpy last traded at 77.65.

The Canadian dollar gained versus the U.S. dollar as Housing Starts were better than expected at 208K. The usd/cad selling pressure stands at around 1.0230, sent the pair down. The pair is likely to reach the equality level at 1.0000 again. The usd/cad last traded at 1.0100.

• Fundamental Outlook

The UK trade balance at 9:30 GMT, with analyst expecting an increase in deficit from £7.8B-£8.0B. A medium impact on the British Pounds is expected. Japanese Cabin office would put monthly survey of Core Machinery Orders at around 11:50 GMT. Analysts are expecting a decline from 11% to -7.2%. This would have a medium impact on the Japanese Yen. The German Wholesale Price Index (WPI) at 7:00 GMT is expected to have a slight decline from 0.3% to 0.2%, with a low impact on the Euro.

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