Good morning from Hamburg and welcome to our Daily FX Report. We hope you have enjoyed the weekend and start rested into the new trading week. Also this week comes up with important economic data’s and decision, for e.g. the BoJ rate decision on Friday. We wish you a successful trading day.
Market review
In the first Tokyo trading hours the EUR declined to a two-week low versus the JPY and fell against the USD as Asian stocks slumped and reduced the demand for higher-yielding assets. The EUR was additionally bonded by speculation the European Central Bank will cut its key interest rate again. Notwithstanding yesterday, Axel Weber, ECB council member and the head of Germany’s Bundesbank, said in a Financial Times interview, “If the situation doesn’t get significantly worse, then in my view the package of measures is sufficient.” He also said that the ECB doesn’t see the risk of a broad credit crunch or deflation in the 16-nation euro-zone and predicted that the inflation rate will have a “1 before the comma” by the end of the year. The JPY rose to the strongest level in eight weeks against the USD on concern the recession in the world’s biggest economy will be prolonged.
On Friday the CHF decreased already versus the EUR amid speculation the Swiss National Bank will intervened again and sell the CHF to curb its advance. New Zealand’s service industry contracted for the 13th month as sales slowed, a report showed today.
EUR/JPY
The currency pair has been trading close to a bearish trend-line since the beginning of the last week. During the May 13th and 15th the EUR/JPY showed a flag-tradingformation, which may suggest an impending trend reversal. Though for now it remains to be seen if the support at 127.31 may sustainable cross. The RSI adumbrate an oversold market and may support the bulls.
EUR/GBP
The EUR/GBP went in the last three weeks up and down, it seems like an absolutely trendless market. At the moment the currency pair is arranged in a downward trend and fell below its support level at 0.8883. This approved terrain is down to its next support at 0.8850 rather 0.8827. Only the RSI Indicator may be strong enough to struggle against the downward trend.
