Market sentiment on Tuesday remained fragile amid the increasing worries about the Greece’s future and the Ukrainian crisis. Meanwhile, expectations of the US rate hike support the American currency against the counterparts. Recovery on the oil market continues. US will release crude oil inventories data on Wednesday.
EUR/USD hovers around the 1.1300 mark. Eurogroup meeting will be the major event to watch on Wednesday: are the European financial officials ready to compromise? Any progress in the Greek question will render temporary support for the euro, but the overall picture remains negative. Any recoveries will likely be capped by the 1.5000/30 area. Next support lies at 1.1260, but we expect the euro to drift towards 1.1200 in the coming sessions if there is no good news for Greece.
GBP/USD holds above the 1.5200 mark, but the bullish demand is limited. UK released weak December manufacturing production figures on Tuesday ( 0.1% versus 0.3% expected). There are no releases to watch on Wednesday, the market will be focused on the BOE inflation report that comes on Thursday. The inflation and economic forecasts can be lowered. Support for the cable is seen at 1.5033/00. Next bearish target lies at 1.4815.
USD/JPY pushed higher, testing the 119.20 area to the upside. Daily close above this mark would open the way to our next bullish target at 120.00 yen. USD/CHF consolidates below the 200-day MA at 0.9300.
Commodity block currencies remain under slight bearish pressure despite the increased expectations for monetary stimulus in China. AUD/USD remains supported at 0.7760 (short-term bullish trend line). Break lower would open the way to 0.7700. Watch Westpac consumer sentiment and new loans data tomorrow. NZD/USD holds in the 0.7445/7340 sideways range with the risks still skewed to the downside.