Tuesday, March 2nd, 2010
Where is the Euro Headed from Here?
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The EUR/USD currency pair recovered modestly during the overnight session, but still remains largely range-bound ahead of definite solutions in Europe and firmer U.S. economic data. Meanwhile, the pair also stands at a critical Fibonacci level that it could break below.
The EUR/USD pair remains largely range-bound, despite a small recovery during the overnight session, as traders await more key economic data in the U.S. and more definite solutions to the crisis affecting Europe. On a technical level, the pair stands at a key Fibonacci retracement level, and the MACD indicator suggests that it could rebound to the 1.4 level.
Here is a video outlining the technical situation in the currency pair:
Note: Click on the video to view it.
Daily Currency Outlook
U.S. Dollar Trading (USD) had a mixed day with strength against the Pound and Euro not being replicated against risk currencies such as CAD and AUD which tracked stock markets higher. February ISM manufacturing slipped to 56.5 vs. 57.5 forecast. In US stocks DJIA +78 points closing at 10400, S&P +11 points closing at 1115 and NASDAQ +35 points closing at 2273. Looking ahead, Weekly Redbook previously at 1.6% m/m.
The Euro (EUR) enjoyed support in Asia on the back of proposed debt bailout of Greece but there was little follow through in Europe when no new information was released. The pair was subsequently pulled lower from heavy Cable Sales. Overall the EUR/USD traded with a low of 1.3459 and a high of 1.3659 before closing at 1.3570. Looking ahead, January PPI is forecast at 0.6% vs. 0.1% m/m previously.
The Japanese Yen (JPY) stayed within Friday’s range with most of the action kept to the crosses with GBP/JPY slumping to 10 month lows near Y132. AUD/JPY outperformed closing above the key Y80 level. Overall the USDJPY traded with a low of 88.71 and a high of 89.50 before closing the day around 89.10 in the New York session. Looking ahead, January Unemployment is forecast at 5.2% vs. 5.1% previously.
The Sterling (GBP) crashed as key supports were broken and buyers capitulated in a stoploss fueled 400 pip fall. GBP/AUD hit 25 year lows below 1.66 and EUR/GBP soared over 0.9000 to touch 0.9150 in major moves across the board. GBP/USD recovered during the US session but the sentiment is still very bearish. Overall the GBP/USD traded with a low of 1.4781 and a high of 1.5206 before closing the day at 1.4990 in the New York session.
The Australian Dollar (AUD) stayed close to the key 0.9000 level on AUD/USD supported on dips by strong Gold and risk appetite. Traders stayed on the sidelines ahead of the RBA meeting today and January Retail Sales. Overall the AUD/USD traded with a low of 0.8933 and a high of 0.9018 before closing the US session at 0.9005. January Retail Sales are forecast at 0.5% vs. -0.7% m/m. Also released, March RBA Meeting forecast to hike 0.25%.
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-- Written by David Breen
