Good morning from Hamburg and welcome to the report of the day. We start the new week with expectations of euro-zone rate cuts, which could have decisively effects on the FOREX market. Anyway, we wish you a nice start in the new week and successful trading signals.
Market review
The EUR fell for a third day against the USD on speculations the ECB could cut interest rates, as business sentiment in Germany slumped and credit losses broad trough Europe. The GBP touched a 23-year low against the USD on expectations the BoE could lower also interest rates. A BoE policy member said on the weekend “interest rates should be at zero to 0.25% to aid the economy”. The expectations for a rate cut increased recently on worries about a weak economy as well as concerns over the stumbling British banking sector and the bad state of government finances. The EUR/USD fell to 1.2922 from 1.2975, after touching a low of 1.2765, which was the lowest level in more than six weeks. The GBP/USD decreased to 1.3640 from 1.3804 after touching a 23-year low at 1.3503 on January 23rd. The EUR/GBP rose to 94.75 from 94.02.
Before the US home sales announcement the JPY rose towards a seven-year peak against the EUR. The market expects weak data and the world’s biggest economy could contract to the most since 1982, boosting demand for the JPY as a haven. The EUR/JPY fell to 114.89 from 115.33, after touching a low at 113.75. The pair touched a record low at 112.12 on January 21st, which was the lowest level since March 2002.
AUD/USD
Since the beginning of October, the AUD/USD has been trading in a horizontal trend channel. After touching the upper Bollinger band at the beginning of the year, the market pulled down and reached the lower band and the 64.50 support line. If the AUD is strong enough, the pair could go up toward the middle Bollinger band and the 70.84 resistance level.
EUR/CHF
During the past three months, the EUR/CHF has been moving inside the three Bollinger bands. After touching the upper band, the currency pair dropped behind the lower band and stopped the movement in the near of the 1.4715 support level. Afterwards, the market made some zigzag movements. Now the pair is trading on the bearish resistance line and the middle Bollinger band. If the market doesn’t break these lines, it could fall towards the 1.4715 support line.
