Good morning and welcome to the Daily FX Report. The FOREX market is still trading volatile, after expectations of a rate cut in the EUR-Zone and the news from Washington yesterday. However, we hope you have a nice day and wish you good and profitable trading signals.
Market review
The EUR/JPY fell the most in two weeks after expectations the ECB will cut interest rates further while the economic recession in Europe deepens, which reduces the demand for the currency. Also the USD fell the most in nine years against the EUR before a European Union report probably shows, that industrial production dropped the most in January. The fall in the USD were mostly caused by the Federal Reserve, after Chairman Ben S. Bernanke said the bank will buy Treasuries, which increases the concern that the Fed is debasing the currency. The USD fell close to its lowest level in three weeks versus the JPY. Yesterday the USD/JPY fell 67 pips and over 200 pips since the day-opening. The USD fell almost 3% against the EUR after it touched a low at 1.3535, which was the lowest level since January 9th. The Fed’s open Market Committee said in its speech yesterday, it will purchase $300 billion of longer-term U.S. government debt and buy furthermore $750 billion of agency mortgage-backed securities. In the Asia trading the USD/CHF fell over 200 pips after it dipped to a low of 1.1377, which was the lowest level since January 28th. The volatile EUR/JPY has already moved over 230 pips today and is currently trading around 128.60.
EUR/AUD
Since October 2008, the EUR/AUD has established a horizontal cotter, where both lines will meet in the middle of April. If the market breaks through one of its cotter lines, that could be a sign for a trend reversal and an indicator of the next trend direction. If it breaks the upper line there are resistance levels at 2.04 and 2.07. If it breaks the lower one there are support lines at 1.91 and 1.86.
USD/JPY
Since the beginning of 2009, the USD/JPY has been trading in a bullish trend channel. After rising close to the psychological important resistance level of 100.00, it pulled back and touched the 95.80 one-yearsupport line. But the movement was always within the limits of the trend duct. If the market doesn’t break through the lower trend line of the channel it could continue its bullish phase towards the important 100.00 resistance line.
