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USD recovers with a better than expected existing home sales figure. Japanese land prices rise for the first time in 16 years. New home sales released out of the US. CURRENCY TRADING SUMMARY – 26 MARCH 07 (23:30GMT)
- U.S. Dollar Trading (USD) strengthened on Fridays trading against a bulk of majors. Following a better than expected number in existing-home sales, was seen as reducing chances of a cut in interest rates by mid year. The Figure which was forecasted to be released at 6.31 Mil came in at an unexpected 6.69 Mil (a rise of 3.9%, the biggest rise since a March 2004). In US share markets, the NASDAQ fell by 2.81 points (-0.11%) whilst the Dow Jones rose by 19.87 points (0.16%). Crude Oil rose by US$0.53 a barrel to end at US$62.22. Looking ahead, New Home Sales looks to be the only key data set for release out of the US with plenty of attention being placed on the Housing markets in recent times. Markets are expecting a figure of 990k with the previous coming in at 937k.
- The Euro (EUR) fell against the Dollar, on the back of strong US housing data. Although Current account came in better than expected at 2.7 bln, markets did well to shrug it off. Overall, the Euro traded with a low of 1.3285 and a high of 1.3343 before closing the day at 1.3290 in the New York session.
- The Japanese Yen (JPY) strengthened against the USD following data indicating a first annual rise in Japanese land prices in 16 years before surrendering gains. Finance Minister Koji Omi told a news conference that recent rises in Japanese land prices reflected an economic recovery. The rise was further evidence that the economy is emerging from more than a decade of deflation. Overall, the JPY traded with a range of a low 117.40 and a high of 118.26 before closing the day at 118.05 in the New York session. Looking ahead the BOJ is set to release the Minutes of the Feb 21 meeting in which interest rates were hiked to a decade high of 0.5%.
- The Sterling (GBP) suffered as investors looked to take profits against the USD and the JPY following a week of strength. The GBP ended the week 1% higher on the notion that the BoE may look to raise interest rates this quarter following strong retail sales and CPI. Overall, the GBP traded with a low of 1.9589 and a high of 1.9690 before closing the day at 1.9614 in the New York session.
- The Australian Dollar (AUD) remained steady against USD after reaching decade highs. Overall, The AUD traded in a tight range with a low of 0.8044 and a high of 0.8081 before closing the day at 0.8057 in the New York session.
- The South African Rand (ZAR) weakened slightly against the dollar on Friday but kept to a tight range, consolidating after sharp gains during the week. The Rand closed approximately 0.25 percent weaker than its previous New York session. Investors sought profit-taking following Thursday’s rally, despite a worse than expected current account deficit of 7.8 % for the fourth quarter of 2006.
- Gold (XAU) surrendered it previous day gains on Friday easing by almost 1%, but found support on the back of geopolitical tensions. Gold fell by US$7.00 an ounce to US$657.20
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3187 | 1.3270 | 1.3290 | 1.3412 | 1.3481 | | USD/JPY | 116.51 | 117.16 | 117.95 | 118.32 | 118.50 | | GBP/USD | 1.9431 | 1.9555 | 1.9605 | 1.9728 | 1.9749 | | AUD/USD | 0.7943 | 0.8000 | 0.8060 | 0.8095 | 0.8100 | | XAU/USD | 646.20 | 652.40 | 657.05 | 666.70 | 667.61 | | | | | | |
Initial support at 1.3270 (Mar 20 reaction low) followed by 1.3187 (Former resistance of Mar 7 low). Initial resistance is now located at 1.3412 (1.2865+(0.618 of 1.2483 – 1.3368) followed by 1.3481 (Mar 11, 2005 reaction high) Initial support is located at 117.16 (Mar 21 low) followed by 116.51 (Mar 16 low). Initial resistance is now at 118.32 (Mar 22 high) followed by 118.50 (Mar 12 high) Initial support at 1.9555 (Mar 21 reaction low) followed by 1.9431 (Mar 20 low). Initial resistance is now at 1.9728 (Mar 22 high) followed by 1.9749 (Feb 2 reaction high) - Australian Dollar – 0.8060
Initial support a 0.8000 (Mar 21 low) followed by 0.7943 (Mar 19 low). Initial resistance is now at 0.8095 (Mar 22 trend high) followed by 0.8100 (psychological round number) Initial support at 652.40 (Mar 19 low) followed by 646.20 (Mar 16 low). Initial resistance is now at 666.70 (Mar 22 high) followed by 667.61 (61.8% retracement of the 689.00 to 633.00 decline) 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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