Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our Daily FX Report. Yesterday, invited by the Republican Party, Israeli Prime Minister Benjamin Netanyahu gave a rousing speech to U.S. Congress, addressed to avoid Iran from obtaining a nuclear bomb. The Obama administration, on the other hand, is making a strong and credible case that the deal it is pursuing with Iran would delay its nuclear program. Without a deal, Iran would revert to building up its stockpile of nuclear uranium, while the international community would lose the ability to monitor and track Iran's activities. After bad experiences (Iraq, Afghanistan) in the past, U.S. doesn’t want to think about a new military action in the region, considering Iran a much more powerful opponent, and will try to get a deal no matter who may disagree, Netanyahu included.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
The dollar moved lower against most of its rivals on Tuesday after strong economic data released in Europe and the U.K. implied that economic growth in the rest of the world is beginning to catch up to the U.S. The euro climbed +0.06% against the dollar to $1.1175, while the pound gained +0.08% to $1.5363. The dollar also drifted slightly lower -0.11% against the yen, trading at ¥119.70. Retail sales in Germany started the year strong, showing 5.3% annualized growth in February, much better than 2.6% growth that most economists had expected. Tuesday’s retail-sales report is the latest in a string of economic reports to show surprisingly strong growth in the Eurozone. The Canadian dollar rose 0.3% to 1.2496 per U.S dollar, the most in two weeks, after a report showed the economy grew at faster rate than expected with policy makers meeting on Wednesday to consider further monetary stimulus. This Bank of Canada meeting follows the decision in January to reduce interest rates as plunging crude oil prices placed a drag in the economy. This rate cut buys time to see how the economy responds. Brazilian real led a global currency declines as signs of conflict between President Dilma Roussef and lawmakers indicated that she may struggle to win support for efforts to reduce deficits. The real slid 1.2% to 2.9316 per U.S. dollar, the weakest level since September 2004. The China’s Yuan extended declines today to the lowest level in more than two years against the dollar, showing that the growth in China and the strengthening in U.S. economy have combined to push the yuan 2% weaker versus the dollar in the past 12 months.
Daily Technical Analysis
EURAUD (Daily)
A difficult technical analysis the one we bring today as the EURAUD is a currency pair that rarely shows a clear trend, and behaves with constant changes of direction. At the moment, and since middle of last December, the trend is bearish and close to a important support placed around 1.4220. If this level is crossed, it might be easy to see the pair touching the next support around 1.4050. Over the current level, the 1.4600 seems the first objective for an eventual bounce.
Support & Resistance (Daily)
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