Good morning and welcome to Varengold’s Daily FX Report. We hope you enjoyed your weekend and you relaxed, with hopefully just as well sunny weather as like in Hamburg. Anyways, have a nice start into the new week and successful trades.
Market review
After the EUR rose near to its strongest level since the beginning of February versus the USD, the USD recovered in the late Tokyo trading hours as North Korea said it held a nuclear test today. In order of this, the EUR/USD lost its support at the 1.4000 level. Also the JPY strengthened on concern tension between North Korea and Asia will increase, which boosted demand for the relative safety currencies like the USD and JPY. Today economists expect that the German IFO-Report will support the EUR. The report may show that the German business confidence extended its rebound from a 26-year low. “Germany’s IFO survey will show an improvement in business confidence, supporting buying of the euro”, said Mizuho Shimozono in Tokyo at Mizuho Research Institute, a unit of Japan’s second largest bank. The Federal Reserve Board Vice Chairman Donald Kohn said during a conference on Saturday, that the U.S. economy may get a $1 trillion boost in the upcoming years from the central bank’s purchases of government and mortgage debt, along with $175 billion in extra tax revenue.
The EUR/USD is rising for a sixth day. It rose over 3.8% during the past six trading days. It reached a high at 1.4051, which was its highest level since February 1st. The strong EUR rose also against the JPY. It reached a peak at 133.42, the highest level since May 12th.
USD/JPY
Having the currency pair broke through its long-term bullish trend-channel in April, it has been trading in a bearish-flag-formation. After passing the 95.95 resistance, it seems to test the next support at 93.05. The MA Oscillator suggests first signs of a rebound, which may assist the USD/JPY to climb over the 95.95 level again. According to this analysis, the market may reach the 93.05 support and start a recovery afterwards.
CHF/JPY
The CHF/JPY quit its downward trend-channel last week, but failed to climb over its resistance at 87.09 for several times. Finally the market broke the resistance and is trading currently on the 87.09 level while it touches the upper Bollinger band. If it gets back below the 87.09, it may fall towards the lower Bands. If not, it could rise towards the next resistance line at 87.85.
