Daily currency analysis

Consolidation was a dominant theme on Friday following the substantial Euro losses seen over the previous few days and especially on Thursday. The Euro found support close to 1.4450 against the dollar, but was struggling to break back above the 1.4520 resistance level. Sentiment was still being undermined by speculation that the ECB will cut interest rates during the second quarter.
There were no major data releases and the comments from Fed officials will continue to be watched very closely in the short term. Fed Governor Yellen stated on Friday that she was not confident that the US could avoid recession. Remarks from voting members will be watched closely as markets look to assess whether the Fed wants to send a signal over a pause in rate cuts. In this context, the testimony from Fed Chairman Bernanke next Thursday will be very important for market sentiment.
The German trade surplus declined to EUR10.8bn in December from EUR19.5bn the previous month which will cause some concern over export trends as there was a monthly decline in shipments. There was a rebound in German industrial production, although the annual growth rate slowed slightly.