EUR/USD is Trading Sideways

The EUR/USD is trading sideways amid general calm trading.

The downside trend movement continues to control the pair as it nears the resistance level for the descending channel accompanied with overbought signals on momentum indicators.

Those factors support our expectations for an intraday downside move targeting 1.4215 and require 1.4470 to remain intact.

The trading range for today is among the key support at 1.4715 and the key resistance at 1.4570.

The general trend is to the upside as far as 1.4135 remains intact with targets at 1.6000.

Support 1.4300 1.4260 1.4215 1.4175 1.4110

Resistance 1.4395 1.4470 1.4500 1.4570 1.4620

EUR Ended Wednesday Mostly Lower Against The Majors Currencies

Euro Down as ECB Says Loan Growth Slowed Further, Money Supply Contracted

The euro ended Wednesday mostly lower against the majors following a report from the European Central Bank showing that consumer and business loans in the region Euro-zone posted their third straight annual decline in November.

Additionally, M3 money supply, a gauge of future inflation, fell by 0.2 percent in November, marking the first decline since recordkeeping began in January 1981.

All told, the data suggests that the ECB’s liquidity programs have done little to boost credit supply and demand, which limits their ability to normalize monetary policy by raising interest rates in 2010.

From a technical perspective, EURUSD isn’t likely to see significant market movement as trading volumes should remain low ahead of New Year’s Day.

Resistance for the pair looms above at 1.4428 and 1.4506 (R2 and R3 daily pivots), while key support sits at 1.4210 (200 SMA).

Asia Market Session

With Japan out on Holiday and the New Year looming the action in today's Asian session was lacking to say the least.

While most pairs were moving in relatively tight ranges, the EUR/USD and AUD/USD were noticeably higher with gold not trailing too far behind.

Most moves were limited with the probable culprit being a bit of position squaring ahead of the New Year.

There was some noted concern about the unrest that currently unfolding in Iran, but the currency markets were yet to be affected.

However, the consensus is that if things escalate and martial law is declared we could see some quick moves in the dollar, gold and oil. Those moves could be accentuated due to the holiday thinned liquidity.

US Dollar Traded On Flat Session

USD Dollar (USD) – The Dollar traded slightly down on a flat session with low volume. Stocks in the U.S. moved away from intra-day highs but main indexes reached fresh 15-month highs.

The Dow Jones rose 0.26% and the NASDAQ 0.24%.

Gold (XAU) is recovering after finding support at $1,101 an ounce.

Crude oil soars by 0.9% and tested levels above $79 a barrel, reaching the highest price in a month, before closing at 78.77$.

Today, The CB Consumer Confidence is expected at 53 vs. 49.5 previously.

EURO (EUR) – The Euro failed once again to keep above the 1.44 zone and weakened against the Dollar after gaining in the beginning of the trading session.

European stock markets moved to fresh 14-month highs, with Greek stocks trading firmer after the government passed a budget for 2010.

The Euro has to stay above the 1.4420 otherwise the upside momentum will be lost and the pair will fall back to the 1.43 zone.

Overall, EUR/USD traded with a low of 1.4349 and a high of 1.4413. Today, the German CPI is expected at 0.6% vs. -0.1% previously.
EUR/USD - Last: 1.4365

Resistance 1.4445 1.45 1.4575

Support 1.435 1.4305 1.4275

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Commodity Block Currencies

The three most liquid commodity currencies in forex markets are USD/CAD, AUD/USD and NZD/USD. The Canadian dollar is affectionately known as the "loonie", the Australian dollar as the "Aussie" and the New Zealand Dollar as the "kiwi".

These three nations are tremendous exporters of commodities and often trend very strongly in concert with the demand for each their primary export commodity.

For instance, take a look at Figure 3, which shows the relationship between the Canadian dollar and prices of crude oil. Canada is the largest exporter of oil to U.S. and almost 10% of Canada's GDP comprises the energy exploration sector. The USD/CAD trades inversely, so Canadian dollar strength creates a downtrend in the pair.

Although Australia does not have many oil reserves, the country is a very rich source of precious metals and is the second-largest exporter of gold in the world.