The negotiations on early Friday morning last week

Daily FX Report

Good morning from wonderful Hamburg and welcome to first Daily FX Report in this week. The Spain's football team beat Italy 4:0 and become the first nation to retain soccer’s European Championship title. Spain is now the only one from the continent who win three straight major competitions.

Nevertheless, we wish you a nice and successful start into a new trading week.

Market Review – Fundamental Perspective

The negotiations on early Friday morning last week, German Chancellor Angela Merkel agreed to allow Europe permanent bailout fund called the European Stability Mechanism to send capital directly to banks anywhere in the euro area to help them. This compromise could save the euro area. Germany and the other governments of the euro area will accept and assume liability for rescuing banks an option that Merkel had sworn not to consider. In return, as part of broader banking union, governments will cede to European authorities, probably including the European Central Bank, the power to oversee, punish banks. The agreement also eases austerity measures and allows for direct bond purchases to reduce the borrowing costs of struggling governments as Italy and Spain. The euro leader also agreed to drop a requirement that taxpayers get preferred creditor status on emergency loans to Spanish banks. Other steps included agreeing to use rescue funds to stabilize markets in certain conditions. Chancellor Angela Merkel expressed in an interview that there is still pressure on the financial markets, which cannot be refused. She further explained that there existed an interest to find solutions. The task was to adopt the solutions which respected the current procedures and existing rules. The latest measures are addressed to investors to promote a return into markets, after Cyprus as the fifth victim requires financial aids of the rescue screen. In addition, the estimates for the today released economic figures shrank as unemployment will increase to 11.1 percent from 11 percent in May, while manufacturing data dropped, too. Signs for a further interest rate cut by the ECB are growing. Therefore the 17 nation’s currency declined against nearly all of its most traded counterparts. The EUR slid 0.4 percent to 1.2620 versus the USD after having fallen 1.8 percent on the 29th of June. Meanwhile, the JPY advanced also 0.4 percent to 100.68 against the EUR, after establishing the greatest gain since March 2011 on Friday. The USD gained 0.1 percent to 79.77 JPY.

Daily Technical Analysis - Our Focus Currencies for Today

EUR/USD (Daily)

After having failed to stay above the resistance level around 1.32391 on the end of April, the EUR/USD has been declining to its support level around 1.23550, where it experienced demand and showed some slightly recovery. Three days ago, a strong rebound from the support level around 1.24421 pushed the rate up, while the Stochastic Oscillator is set to enter its overbought market zone. Therefore losses to lower levels might be seen.

Intraday Support & Resistance (Daily)


Support Levels around	Resistance Levels around
1.24421	1.28216
1.23550	1.32391
N/A	N/A

CHF/JPY (Daily)

Since the 4th of April, the CHF/JPY currency pair has been trading in a bearish movement below a trend line. After touching the support level around 80.563, the rate shown strength but all attempts to cross the resistance around 84.172 failed so far. Currently, the pair is approaching the resistance a third time as well as its bearish trend line and its upper Bollinger Band. As the RSI is close to indicate a bearish signal, a rebound at resistance level can be expected.

Intraday Support & Resistance (Daily)


Support Levels around	Resistance Levels around
80.563	84.172
N/A	89.591
N/A	N/A

Published On Mon, Jul 2 2012, 07:04 GMT Previous entries

Varengold Bank Research Team

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