Forex: Wednesday’s review

Yesterday the euro retreated from a seven-week high against the dollar, as the disappointing results of the Spanish bond auction and weak economic data for the euro zone prompted investors to lock in profits.

Note that the optimism associated with the fact that Greece would receive more financial aid from international lenders are pushing up the euro in recent weeks, but after the increased concerns about Spain, the single currency began to lose ground. In addition, from a technical point of view has increased the probability of falling below the level of the pair $ 1.31.

Analysts say that after reaching a new high of $ 1.3125, the rate began to show weakness, and if the pair will consolidate below $ 1.3094, then we will have confirmation of the technical picture, which points to the decline in the euro / dollar in the short term.

Also exerted pressure on the euro retail sales data for October, which fell sharply (by 1.2%), compared to the previous month (-0.2%). At the same time, the annual rate also fell much more than expected (3.6% compared to -0.8% in September).

Recall also that the ECB will announce its decision on the basic interest rate, which is expected to remain unchanged, but the gloomy outlook for the euro zone remains a possibility for further measures to support the economy.

Note also that the limited impact on the U.S. currency was a separate report, which showed that growth in the U.S. service sector grew in November, more than expected in November.

Some strategists say the euro will be reduced, if there are signs that U.S. policy can avoid the so-called "financial cliff", which could boost demand for the dollar.

British pound during the day trading in a narrow range, even though the weak data released  by the service sector, which increased the likelihood that in the 4th quarter, the economy can once again show the decline after the significant growth in the last quarter.

The yen fell above Y82 to the dollar, as the growth in the Chinese and other Asian stock markets prompted market participants to sell the currency of refuge, and buy riskier assets.

The dollar was also supported against the yen from the Bank of Japan, which was caused by the comments of the Deputy Governor Kiyohiko Nishimura that the central bank is ready to "take appropriate and decisive action" if the economy deviates too far from its base scenario.