Good morning and welcome to the Varengold Daily FX Report. Today we will report you about a weak USD and a weak EUR, caused by positive as well as negative economic data. Nevertheless we wish you a nice Tuesday and good luck in trading.
Market review
The EUR/USD reached almost the highest level since a month after the Federal Reserve reported that they are planning to deliver results of stress tests on U.S. banks to executives today. It may show that circa 10 companies need additional capital to endure a deeper recession. Yesterday financial shares jumped the most in almost a month on optimism about the tests. According to some investors, banks are formulating plans for filling their capital requirements. After gains in stocks the weak USD fell against all major currencies and touched its low at 1.3438 against the EUR. That was the lowest price since April 6th. The USD/JPY fell for a second day to 98.63 after it opened the week at 99.32. It fell almost 0.7% in two days. Yesterday the GBP/USD rose for the fourth day in a row and reached the psychological important and technical resistance at 1.50.
Long-term gains in EUR/USD might be limited on speculation the ECB could cut interest rates repeatedly to a record low. The EUR dropped already versus 15 of the 16 most-active currencies after the European Commission said yesterday that the Euro-Zone economy will shrink 4% this year. This is a contraction twice as deep as expected three months ago. The EUR/JPY declined for the first time since the last six day. It fell to 1.3202 after it touched a low at 131.86.
EUR/CAD
During the past two months the EUR/CAD has been moving inside a bearish trendchannel. The Market has already crossed the simple moving average and is trading close to its lowest level at 1.5656 since February. Additionally the MA Oscillator analysis signals an oversold market. If the market doesn’t break the 1.5656 support line, it may start a recovery phase.
AUD/JPY
Since the end of January the AUD/JPY has started to trade inside an upward trendchannel. It’s the second time that the market is touching the resistance level of 73.50. After the first touch, the pair tried vainly to cross over the resistance line. Anyway, the market pulled back and if the AUD is strong enough and crosses the 73.50 resistance level with the second attempt, it may perform further gains inside the bullish trend channel.
