Euro Retreats modestly on Profit Taking, Yen Recovers After Heavy Sell-off

"Forex Analysis"The Euro dropped slightly from the previous week peak against the greenback at 1.3478 to recent support around 1.3424. The single currency advanced to 11-month highs as worries softened further due to Draghi saying that the worst of the crisis may be behind us, as well as amid the ECB reported that European banks will repay back 30% of the LTRO loan by January 30. This week there are not any major economic news for the Euro apart from Economic Confidence indicators on Wednesday and PMIs on Friday.

The USDJPY surged to new high at 91.25 on week opening but then drifted lower on profit taking ahead of US durable goods orders today. In addition, the Japanese government lifted growth projection for 2013/14 from 1.7% to 2.5%, raising as well the CPI estimates to 0.5%, based on Prime Minister Shinzo Abe’s aggressive fiscal and monetary policy, strengthening slightly the Yen. The EURJPY also declined from another fresh high this morning at 122.87 towards 121.66, as the Yen strengthened against both the US dollar and the Euro.

The Sterling continued sliding against the US dollar, reaching downside barrier at 1.5714, following previous week weaker than estimated GDP growth data. The GBPUSD lost also on US dollar recent upside, with the US dollar index slightly gaining ground ahead of the Durable Goods Orders and Pending Home Sales later today.

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