Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from Hamburg and welcome to our Daily FX Report. Yesterday the stock markets ended with strong declines once found new evidences that the negotiations between Greece and the rest of the Eurozone will be long and difficult. According to this, when the market thought the new Creek government would finally give in to find an agreement to its delicate situation, what we have found is a resurgence of Syriza’s electoral program, which totally runs against the solution desired by other members of the Eurozone. Greece’s Finance Minister Yasin Varoufakis will present a proposal on Wednesday that will ask for an 8 billion euro increase in the stock of Treasury Bills while German political leaders have said that they will not extend more assistance to Greece without strings attached.
Anyway, we wish you a successful trading week!
Market Review – Fundamental Perspective
The dollar fell on Monday after a good U.S. employment report released on Friday which pushed the index toward a decade high on February. This short retreatment lifts the New Zealand dollar as the main beneficiary. The New Zealand currency is leading gains this week fetching 74.07 U.S. cents compare 74.12 on Monday, on speculation New Zealand’s central bank will keep rates unchanged amid a global wave of monetary easing. On the other hand, Japan’s currency, was litter changed against U.S. dollar at 118.61, after sliding 0.4% to 118.64 on Monday Regarding the euro, the shared currency tumbled in early European trade after Greek Prime Minister Alex Tsipras pledged to undo several austerity measures that were conditions of Greece’s original bailout, setting his administration up for a confrontation with the country’s lenders. It seems that the market is already taking into consideration the possibility of Greece leaving the Eurozone. Regarding this matter, some analysts’ estimations have increased in recent days this possibility from 25% to 50%, suggesting EURUSD might fall to 0.90 on any Greece exit from euro. However, The EURUSD was finally able to recover ground and bounce slightly 0.03% at $1.1327 Monday, compared with $1.1315 Friday afternoon. The shared currency remained weaker against the yen EURJPY, -0.08% , and flat against the pound EURGBP, -0.01%. Euro area finance ministers will meet on February 11 to break stand off with Greece. Ministers have yet to discuss practical proporsals for Greece and will decide collectively.
Daily Technical Analysis
EUREX.FDX (H4)
Technically the Dax index has broken the main uptrend initiated in 2015, driving the price to the next support around 10600. At this level, the Dax might make a pull back to the mentioned trend line which, if it is finally crossed again, would reduce the possibility of a bearish movement. On the other hand, if the index in not able to cross this line, it would try again to break the support where it is now. If this happen, 10313 is the next important level to be considered, coinciding with the 38.2% of Fibonacci retreatment. Above the current price, 11000 is the important resistance to take into consideration.
Support & Resistance (Daily)
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