Good morning from Hamburg and welcome to Varengold’s Daily FX Report. News from the US could be important for this week, after the US government suggested a take over of the most important financially stricken banks. However we hope you will have a nice week.
Market review
The USD fell to a one-week low against the EUR on expectations the government will take larger stakes in U.S. banks, adding to signs the credit crisis may deepen the U.S. recession. The USD dipped for a third day against the CHF, after the Wall Street Journal reported the government may increase its stake in Citigroup Inc. The EUR/USD rose to 1.2900 after touching a high at 1.2947. The USD/CHF fell to 1.1506 after touching a low at 1.1479. The U.S. government may end up holding as much as 40% of Citigroup’s common stock, while the bank executives prefer to see the stake just about 25 %. The Senate Banking Committee Chairman Christopher Dodd said on February 20th “some banks may have to be taken over for a short time.” Citigroup and the Bank of America Corp., which received $90 billion in U.S. aid in four months, each tumbled as much as 36 % in February on concern, the U.S. may take over the banks. The Dollar Index, which tracks the USD versus the six most-active currencies, dipped for a third day to 86.079, falling 0.5%. Gains in the EUR could be limited by expectations the financial turmoil in Eastern Europe could deepen the recession in the Euro-Zone. The EUR fell against the AUD to 1.9864 from a day and week-opening of 1.9952 after touching a low at 1.9802.
EUR/JPY
Since October the EUR/JPY has been trading under the resistance levels of 130.00, 125.00 and 120.70. In the middle of January the pair started to trade below the 120.70 and it’s now the fourth time that the market is trying to break through this level. According to our MACD analysis the market could breach the 120.70 level towards the 125.00 and 130.00 resistance lines.
EUR/USD
Since the middle of December, the EUR/USD has been moving in a bearish phase inside three Bollinger bands. As you can see the market recovered to the middle Bollinger band and it seems that the market ended the bearish phase. If the Market breaks through the middle Bollinger band, it could rise further towards the upper Bollinger band.
