Good morning from beautiful Hamburg. Barack Obama is the new president of the United States of America. There were more than one million “fans” at his inauguration in Washington yesterday. Obama promised $825 billion to revive the world’s biggest economy. His plan would provide tax cuts of about $275 billion, including a $1000 payroll tax cut for families.
Market review
The EUR/USD recovered from earlier losses on Wednesday, but concerns persisted over losses in the U.K. banking sector and a deepening recession in the euro zone. Geithner, the 9th president of the Federal reserve Bank of New York pledged to “reform” the U.S. government’s $700 billion bailout program, saying “the ultimate costs of this crisis will be greater” if adequate steps are not taken now. The EUR/USD rose to 1.2981 from its earlier low at 1.2845, which was the lowest level since December 9th. The EUR/GBP rose from 0.9262 to 0.9293. The GBP/USD climbed to a short-term high of 1.3968, after touching the lowest level since 2001 at 1.3811. The EUR/JPY rose to 116.72, after touching the 115.30 level, which was the lowest level since October 28th.
The AUD slid 1.5 % to 85.91 against the JPY in Asia trading session. According to a forecast the JPY could strengthen to 84.00 against the USD and to 105.00 against the EUR in three months. Benchmark interest rates are 4.25 % in Australia and 5.00 % in New Zealand, compared with 0.1 % in Japan. Investors could start to make carry trades and borrow the JPY to buy higheryielding assets elsewhere.
EUR/JPY
Since the middle of October the EUR/JPY has been trading in a horizontal trend channel. After touching the 115.00 support line twice the market started to move in a semi circle format up to 130.00 and is now back again on the support level. If the pair doesn’t break the 115.00 support it could show a recovery towards the resistance again.
EUR/GBP
Since the beginning of November the EUR/GBP has been moving in Fibonacci retracement lines. After the pair started to fall at the beginning of the year from its high, it touched the 50% retracement twice and pulled back to the 76.4 % resistance level. If the market crosses the 76.4 % retracement line clearly it could rise further towards the 100 % line.
