The USD fell on Monday for the first time in three sessions

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Markets review

The USD fell on Monday for the first time in three sessions. The oil record high at $120 a barrel sparked the debate about the strength of the US economy. In spite of data showed a growth in the service sector in April for the first time in four month the market was overshadowed by a Federal Reserve survey showing the banking sector remained in hull of a credit crunch. In a note a currency strategist warned of “ongoing downside risk to the US economy,” adding “the housing market has yet to bottom, consumer confidence is at multi-decade lows, employment growth has evaporated and high commodity prices are only exacerbating an already weak economic backdrop.”

With food and energy costs on the rise, ECB President Jean-Claude Trichet warned again on Monday of significant inflation risk. His comment let suggest that the rates would likely stay fixed at 4% when the central bank meets on Thursday. The consumer prices in the euro zone rose by 3,3% in the 12 month to April, below the prior month’s reading but still above the ECB’s target of about 2%. The EUR/USD rose 0,4% to 1,5489

NZD/USD rises to a one-week high at 0,7875, underpinned by demand for its high yield and gains in commodity prices. With a rise of 1,14% the AUD/USD hit a two-week high after data showed the trade deficit narrowing more markedly than expected.

Technical analysis

EUR/CHF

In EUR/CHF we can see an established strong up trend since middle of March. The market tried several times to break out the channel downwards but couldn’t invent a real trend break. At the moment it trades on the upper side of the channel, which let us suspect more long potential.

EUR/USD

Trading in EUR/USD looks very difficult at the moment. There was established a trading range between 1,5400 and 1,5880. There was a break through its resistance line in the middle of April but it was not effective. The small break through the support in May rebounded and we could come back to the upper trend line.

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