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Forex Analysis − Currency Trading Strategies

Thu, Aug 13 2009, 08:11 GMT
by Anna Coulling

Master The Markets  |  View company's profile

Forex Technical Analysis - Overnight Asia

Today's forex analysis in Asia, saw the euro rose against the yen and the dollar in Asia Thursday as firm Asian share markets spurred demand for the riskier euro. Overnight comments by the Federal Reserve also led to a more optimistic economic outlook among traders, nudging them to take more risks and buy the single currency. The euro's near term direction is slightly upward, with regional share markets were broadly higher. As of 0530 GMT Japan's benchmark Nikkei 225 Stock Average index was up 1.0%, while stock markets in South Korea, India and Australia also gained. Some Japanese banks sold the dollar for the yen due to redemptions of dollar denominated bonds.

The Euro tested USD1.4100 before bouncing hard on USD weakness in the US session, shrugging off the FOMC report to finish above USD1.4200. June Industrial Production fell -0.6% vs. 0.3% forecast. The euro vs yen had a wild day trading in a 3 yen range on the change in risk appetite, whilst the euro pound remained supported on GBP weakness.

The British pound was propped up by a weaker US dollar despite bearish sentiment in the UK. The Bank of England said inflation will stay below its 2 percent target as the UK economy undergoes a "slow and protracted" recovery. UK Central bank Governor Mervyn King said it is "more likely than not" that inflation will slow below 1 percent this year and unemployment reached a 14-year high. Thus, UK interest rates are expected to remain on hold for a while.

The Australian dollar reversed course Thursday, rallying as risk appetite regained lost ground while long-dated bond futures were sold. Spurring the risk buying mood in Asia was a relatively optimistic outlook from the U.S. Federal Reserve, which didn't extend it's bond buying program and said the economy's contraction is slowing.

Forex Technical Analysis - European Trading

The euro is marginally higher against the dollar, yen and UK pound this morning as short term Asian investors buy on higher risk tolerance. The euro vs dollar reported offers placed between USD1.4265/70 able to contain the early rally driven by the GDP figures, with the underlying tone remaining firm. The currency rate currently trades around USD1.4257 after touching fresh intraday highs at USD1.4268 (50% USD1.4448/1.4086). Above USD1.4270 may open a move on toward USD1.4280/85.

For the UK Pound offers are seen placed above USD1.6585 through to USD1.6600, a break here could open a move on toward USD1.6615/20 ahead of stronger level at USD1.6650. Support is now seen placed at USD1.6550, a break below USD1.6540 to open a deeper move back toward USD1.6510/00.  Attention now turns to U.S. retail sales data at 1230 GMT and second quarter earnings from Wal Mart Stores Inc. later in the day to gauge whether consumption is recovering in the U.S. The euro could rise toward JPY138.00 against the Japanese yen,  and USD1.4300 against the US dollar, if those figures come in better than expected, adding to the positive outlook for the U.S. economy.

European stock markets are expected to open higher Thursday, as investors react with optimism to the latest comments from the Federal Reserve about the strength of the U.S. economy, the world's largest.

You can keep up to date with all the latest forex analysis and  fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

Published on  Thu, Aug 13 2009, 08:13 GMT

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