Good morning from Hamburg and welcome to the FX Report. “We’ll see the recession coming to an end probably this year.” said Fed chairman Ben Bernanke in an interview on Sunday. “The country will begin recover next year and it will pick up steam over time” he added.
Market review
The EUR climbed against the USD after ECB Executive Board member Juergen Stark said there would be limited room for further interest-rate cuts. The European currency reached its highest level against the JPY this year after Asian stocks extended a global rally, which brought investors to buy higher-yielding assets. The EUR/USD rose from 1.2968 to 1.3018 after it touched its highest level since February 10th at 1.3070 yesterday. The JPY decreased to 127.84 from 127.32 against the EUR yesterday, after touching a low at 128.73, which was the lowest level since December 29th 2008. It also fell to 98.32 from 98.18 against the USD and decreased the sixth day in a row against the NZD to 52.24 from 52.02.
Gains in the EUR may be limited before a German report today that according to economists will show investor confidence declines for the first time in five months. The EUR has fallen 3.8% against the GBP this quarter, which is its biggest quarterly loss in five years, while Germany’s economy is in its worst recession since the World War II. Today the EUR/GBP fell a bit to 0.9214 from 0.9229 after it touched a week-low of 0.9146 yesterday.
EUR/CAD
The EUR gained against the CAD after it broke through the resistance level around 1.62 at the beginning of March. Now the market has reached the resistance line at 1.66. The market seems to be overbought while it’s still trading on the upper Bollinger band. That all could be a sign for a return towards the support level around 1.62.
GBP/USD
Since the beginning of February, the GBP/USD has been trading inside a bearish trend channel. It’s the fourth time that the market has touched the upper line of the channel. Also the MACD seems to be on the way to cross the red signal line. According to this we could expect that the market will fall towards the lower line of the channel.
