The highest fall since the 16th of December

Good morning from beautiful Hamburg and welcome to our last Daily FX Report this week. The political pressure on the government in Kiev increased after the European Commissioners announced their boycott of the European soccer championship as a result of the doubtful imprisonment of the opposition politician Julia Timoschenko.

Nevertheless, we wish you much success in trading and a relaxing weekend.

Market Review – Fundamental Perspective

The impending presidential elections in France and Greece this weekend undermined again the investor confidence and increased the downside risks of the EUR. Especially, concerns on the impact of the new governments on the already implemented austerity measures to confine the European debt crisis limited the willingness to buy the 17 nation’s currency. The common currency has traded close to a two-year low versus the GBP as a report showed that region’s manufacturing figures and data of provided data declined the third month in a row. Also the today’s release of the latest PMI numbers did not promise any relief for the EUR, because economists forecasted a level below 50, which will be evaluated as a sign for shrinkage.

In comparison to the European business, the recovery of U.S. economy accelerated and will be documented by the publication of the monthly labor market data today. According to predictions, the Labor Department will announce the addition of 160,000 jobs in April after having added 120,000 the previous month. As a result, the Dollar Index showed an advance of 0.6 percent since the 27th of April and climbed to 79.169. The Index reflected the performance of the USD versus its six most traded currency peers. Therefore, it seems likely that the EUR will keep its weekly 0.7 percent decline against the USD, although the EUR enforced slightly to 1.3158 from 1.3152 yesterday. This will be the highest drop of the EUR within four weeks. While the JPY traded nearly unchanged at 105.46 versus the EUR, the GBP gained to 0.8127 after tumbling to 0.8103 yesterday, the lowest since June 2010. Similar to the EUR, the USD posted only little changes and was at 80.15 JPY. Yesterday, the 17 nation’s currency was able to rise above the March top at 1.6399 NZD and presented an increase of more than 1.4 percent. Today the EUR already declined 0.2 percent and dropped to 1.6417 against the NZD. Also, the AUD delivered a worse performance this week and tumbled 1.9 percent to 1.0276 USD, the highest fall since the 16th of December.

Daily Technical Analysis - Our Focus Currencies for Today

EUR/USD (4 Hours)

Since the 5th of April, the EUR has been rising against the USD inside a bullish equitant channel. At the resistance level around 1.32704, further gains were recently stopped and the market dropped down by breaking out of the channel. As the rate is now trading just above the support level around 1.31352 in combination with a slightly increasing MACD and an oversold market signaling DeMarker, the next target of the pair might be the lower channel line or even the return into the channel.

Intraday Support & Resistance (4 Hours)

EUR/NZD (4 Hours)

As we can see on the chart below, the EUR has been experiencing demand at the support level around 1.58209 and has strengthening inside an upward Andrew’s pitchfork. The bulls gained further momentum and succeeded to cross the support around 1.62904 after having traded below the lower channel line for six days. Currently the rate rebounded at the resistance level around 1.64520 and weakened slightly, while the Stochastic is indicting an overbought market zone. Backed by a high-leveled RSI, a fall to the next support level around 1.62904 is more than likely.

Intraday Support & Resistance (4 Hours)