Good morning from Germany and welcome to the Daily FX Report. Today we will report about a strong EUR and increase of demand in more risk-full assets, which could be caused by expectations of some coming data during this week. However, good luck in trading.
Market review
The EUR climbed to a nine-month high versus the USD on speculation the Federal Reserve officials will signal today that they plan to let interest rates unchanged. The USD fell versus 11 of the 16 major counterparts while the JPY dipped to the lowest level in almost two weeks against the EUR before a government report may show this week that Japanese consumer confidence climbed for an eight months. These expectations boost demand for higher-yielding assets and increase risk appetite. A further reason for the strong EUR may be a French report, which will show that industrial production of France increased for a third month in July. According to an economist, “the EUR is also benefiting from uncertainty about the U.S. economy. The Euro-Zone is likely to see a hike in interest rates before the U.S. does.”
The EUR/USD is climbing for a fourth day and rose over 140 pips yesterday. It reached a high at 1.4535, which is the highest level since 18th of December 2008. Today, the EUR/JPY climbed for a fifth day and touched its highest level at 134.17, which is the highest peak since the beginning of the current month.
EUR/USD
Since June 2009, the EUR/USD has gained along an upward trend line. Yesterday the market suddenly crossed the second weekly pivot Pivot R2 (W) at 1.4484 including the upward trend line. At the beginning of August the pair has made a similar cross before pulling back under the trend line. This could be a sign for an overbought market and it could recover towards the Pivot R1 at 1.4390.
EUR/CAD
As you can see on the chart the EUR/CAD has been moving in an upward and a horizontal trend channel. After touching the support level around 1.5400 for the third time, the market climbed to the middle Bollinger band and touched the 1.5680 resistance. Unless the resistance won’t cross, it could be a signal for a trend reversal towards the horizontal support level around 1.5400.
