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USD strengthens as markets open following president’s holiday. All eyes on the Bank of Japan interest rate announcement. US Core CPI and Eurozone Current Account released. CURRENCY TRADING SUMMARY – 21 FEBRUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) following a slow start to the week due to a public holiday, on Tuesday the US markets experienced a quiet day of trading on the back of little key data release. The dollar was mixed against all other majors recovering from a six-week low against the Euro. In US share markets, the NASDAQ rose by 16.73 points (0.67%) whilst the Dow Jones also rose by 19.07 points (0.15%). Crude oil dropped slightly by US$0.96 a barrel to US$58.90. Looking ahead, in what will be a very quiet week for the US; key events risks surround todays release of Core CPI data with expectations at 0.20% higher than the previous 0.10%. In other news, FOMC minutes of the Jan 31 meeting will be made public with investors paying key attention to any indication of future Interest rate decisions.
- The Euro (EUR) surrendered gains as US investors returned following a long weekend. Overall, the Euro traded within a range of a low 1.3130 and a high 1.3190 before closing the day at 1.3144 in the New York session. Looking ahead plenty of interest will surround the Eurozone with the release of the Current Account. Markets are expecting a better figure than the previous - 2 bln coming in at - 1 bln.
- The Japanese Yen (JPY) fell for the third day against the Dollar and Euro on Tuesday as investors conceded that an interest rate hike by the Bank of Japan is unlikely to curb the selling of the Japanese currency. Overall, the USDJPY traded within a range of a low 119.55 and a high of 120.35 before closing at 119.96 in the New York session. Looking ahead the much anticipated BoJ interest rate announcement is scheduled for today. While investors are divided on whether the BoJ will lift borrowing costs to a decade-high of 0.5 percent on Wednesday, they increasingly agree the yen will remain popular to fund the carry trade.
- The Sterling (GBP) strengthened slightly following the previous day’s six week lows, largely on the back of strong housing data. Coming after a run of relatively soft housing market data, the numbers reignited expectations for another BoE rate hike in coming months, perhaps even as soon as March. Overall, the GBP traded with a range of a low 1.9480 and high of 1.9577 before closing at 1.9552. Looking ahead the BoE MPC minutes is released today with attention on any indications of future rate decisions.
- The Australian Dollar (AUD) had little data, a cause for sideways trading. Overall, the AUD traded in a range of a low 0.7851 and a high of 0.7874 before closing at 0.7862. Looking ahead with little data all week, the RBA Governor Stevens inaugural speech to parliament may cause some interest.
- Gold (XAU) dropped by US$11.10 an ounce to US$661.70, on the back of weaker oil prices and a stronger USD.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3024 | 1.3093 | 1.3150 | 1.3196 | 1.3298 | | USD/JPY | 118.92 | 119.53 | 120.35 | 120.79 | 120.97 | | GBP/USD | 1.9402 | 1.9430 | 1.9560 | 1.9679 | 1.9751 | | AUD/USD | 0.7787 | 0.7824 | 0.7880 | 0.7940 | 0.7982 | | XAU/USD | 648.08 | 656.17 | 660.85 | 673.50 | 676.35 |
Initial support at 1.3093 (Feb 16 low) followed by 1.3024 (Feb 14 low). Initial resistance is now located at 1.3196 (76.4% retracement of 1.3298 to 1.2865 decline) followed by 1.3298 (Jan 2 reaction high). Initial support is located at 119.53 (Feb 20 low) followed by 118.98 (Feb 16 low). Initial resistance is now at 120.79 (Feb 15 high) followed by 120.97 (61.8% retracement of the 122.20 to 118.98 decline) Initial support at 1.9430 (Feb 19 low) followed by 1.9402 (Feb 13 low). Initial resistance is now at 1.9679 (Feb 15 high) followed by 1.9751 (61.8% of 1.9917-1.9482, 1.9749 id Feb 2 high). - Australian Dollar – 0.7880
Initial support at 0.7824 (Feb 15 low) followed by 0.7787 (Feb 14 low). Initial resistance is now at 0.7940 (Jan 23 reaction high) followed by 0.7982 (Jan 3 trend high). Initial support at 656.17 (Feb 20 low) followed by 648.08 (Feb 8 low). Initial resistance is now at 673.50 (Feb 19 trend high) followed by 676.35 (Jul 17 reaction high) Forex trading involves substantial risk of loss, and may not be suitable for everyone. 
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| This article provides an overview of the factors affecting the the leading currency pair: Euro-Dollar exchange, commonly expressed as EUR/USD. The Euro to Dollar exchange rate is the
price at which the world demand for US Dollar equals the world supply for Euro. Regardless of geographical origin, a rise in the world demand for Euros leads to an appreciation of the Euro. |
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Technical analysis is built on three essential principles:
1. Market action discounts everything This means that the actual price is a reflection of everything that is known to the market that could affect it, for example,
supply and demand, political factors and market sentiment. The pure technical analyst is only concerned with price movements, not with the reasons for any changes.
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