The CAD expanded its gains against the USD and approaches the parity level

Good morning from beautiful Hamburg with spring like weather and welcome to the Varengold Daily FX Report. It still seems that Europe’s officials can’t agree upon a rescue package for Greece and thus the FOREX market seems to react very sensitive of every new related report. However, we wish you a nice and successful trading day.

Market Review – Fundamental Perspective

Yesterday the EUR/USD fell from a five-week high having a spokesman for the German Chancellor Angela Merkel’s party said that Greece should go to the International Monetary Fund if it needs help and damped speculation that the European Union may adopt a rescue package for Greece. Due to the fact that Standard & Poor’s decided to left Greece credit ratings unchanged the expectations for price swings in the EUR/USD declined to a 19-month low. The one-month volatility, used to price options, showed that traders expect movements of only 9.08 percent, the lowest level since August 2008. After the EUR rose versus the JPY initially as the Bank of Japan extended a loan program to combat the national deflation the currency pair rebounded during the course of the day related to the most discussed topic, Greece. The GBP rose against the USD from 1.5243 at its opening to 1.5382 at the highest level as a U.S. report showed that the wholesale price declined in February more than expected. The 0.6 percent decrease was the biggest since July 2009 adding signs that the U.S. inflation pressure is cooling down and may assist the Fed for its low-borrowing-cost policy.

The CAD expanded its gains against the USD and approaches the parity level. The USD/CAD weakened to 1.0071, the lowest level in almost 20 months on concern that a Canadian report may show tomorrow that the consumer price index increased 0.3 percent in February.

The higher yielding assets AUD and NZD started friendly into the Asian session today as gains in stocks and especially in continuing gains in commodities. Furthermore the AUD profits from so called “carry trades”. The benchmark interest rate is 4 percent in Australia and compared with the counterparts in the U.S. rather Japan which are around 0.1 percent it seems very worthwhile for some traders.

Daily Technical Analysis - Our Focus Currencies for Today

EUR/USD (Daily)

After the EUR/USD traded close to a bearish trend-line from December till March it recovered and is still trading close to a young bullish trend-line. After the currency pair crossed the bearish trend it touched its next resistance around 1.3797 but failed to cross it. As you can see, the stochastic indicator touched the same high level as two times before which heralded strong bearish movements in the past.

Intraday Support & Resistance (Daily)

EUR/JPY (4 Hour)

After the EUR/JPY reached its resistance at 125.06 yesterday for the second time this week it rebounded and fell near to its bullish trend-line. This trend-line runs close to the 50% Fibonacci Fan and seems to have enough power to support the bulls. The low level of the stochastic indicator may also suggest upcoming bullish movements.

Intraday Support & Resistance (H4)

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