Global macro overview for 28/11/2017

In Germany, the Chancellor Merkel's breakdown attempt to form a coalition with the Free Democrats party (FDP) and the Greens resulted in unusual political instability in the country. At the time of writing, the main opposition Social Democrats (SPD) is considering re-forming a 'grand coalition' with Mrs. Merkel's CDU/CSU, a move which had previously been ruled out. SPD leader Martin Schulz said that many rounds of talks will take place in the coming weeks and party members will vote on any final deal. The outcome of the talks remains uncertain.

Meanwhile, consumer and business confidence continued to rise in the Eurozone, reaffirming expectations that the economy is continuing to expand at a robust pace. Domestic inflationary pressures, however, remain subdued. A big surprise in the Eurozone October CPI figures was the fall in the 'core' measure, which excludes food and energy, to 0.9% from 1.1%, with services inflation falling to 1.2% from 1.5%. The November 'flash' CPI that is scheduled for release on Thursday will be closely watched to see whether last month's weakness was temporary. As usual, the Eurozone figures will be preceded by releases in Germany, Spain and France.

Let's now take a look at the EUR/JPY technical picture at the H4 time frame. The market did not manage to make a new local high above the dashed black trend line as the high was established at the level of 133.24. Currently, the price is trading in the middle of the range, testing the technical resistance at the level of 132.47. The key technical support zone is between the levels of 131.15 - 131.47.


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