The NZD rose 0.2 percent to 87.04 U.S. cents

Good morning from almost tropical Hamburg and welcome to our first Daily FX Report for this week. The Middle East conflict between Israel and Palestina reached its peek and led to the bloodiest losses in a nearly two-week military offensive. 100 Palestinians and 13 Israeli soldiers were killed on Sunday. Since the beginning of the conflict many people, also many of them civilians, have already lost their lives. Unfortunately an end of the conflict is still not in sight. Today, John Kerry will travel to Cairo to meet with Egyptian officials about the crisis.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

After Federal Reserve Chair Yellen proclaimed last week that borrowing costs may rise sooner than expected and because investors are still anxious about the turmoil in Ukraine, the USD, which is considered by investors as a safe and sound investment especially during the current crises, was able to gain in value against the EUR and against its other major currency peers. This meant that for the first time since February, the EUR fell below $1.35 which is seen by some dealers as the critical level which defines whether the European Central Bank will be able to stimulate further growth in Europe and to protect an even stronger decline of its currency. The EUR reached $1.3491, which marks the lowest level since February. Overall, the USD was 0.2 percent from a four-week high against major peers before data tomorrow that may show U.S. inflation held at the fastest pace since October 2012. Regarding the JPY, the USD was traded little changed at 101.35 yen.

Due to a faster recovering U.K. economy in contrast to the European economy, the pound gained in value versus the EUR and touched the strongest level in 22 months. The currency pair is now traded at 79.18 pence per EUR and at $1.7089 per GBP. The NZD strengthened against all 16 major couterparts and still profits from the speculation that the nation`s Reserve Bank will raise borrowing costs this week for a fourth-straight meeting. As a result, the NZD rose 0.2 percent to 87.04 U.S. cents. After inflation passed the central bank`s 2 percent target for a second month, the Canadian currency advanced to its strongest level in a week. The currency was able to appreciate versus most of its 16 major peers. The CAD is now traded 1.0733 CAD per USD. One important notice for this trading day is that today (Monday) Japanese markets are closed due to a holiday.

Daily Technical Analysis

EUR/USD (4 Hours)

Since the beginning of July, the bears took control over this currency pair and the EUR depreciated versus the USD. The resistance level at 1.3621 was too strong to initiate a rebound and thus the currency pair further lost in value till it reached the support line at 1.3507. At the moment, the movement is sidewards, but both, the MACD and the Stoch, indicate that further loses are likely in the near future. It remains to be seen whether the support will hold.

Support & Resistance (4 Hours)