Market review for 21 – 25. 02, 2011
Previous trading week started rather slow, since on Monday the US financial markets were closed due to the President’s Day celebration. EUR/USD pair started trading with maximums of $1.3715. The pair traded around the levels of $1.3710 after the release of the strong Euro-zone fundamentals. In particular, the German IFO – Business climate index turned out to be at the level of 111.2 amid expectations of 110.3. Save-heaven assets received substantial support on Monday as a result of the Middle East and African instability. In particular, the problems in Libya are raising world concerns. According to the released information, the civil war can start in the country. Demonstrations were taking place in Tunisia, Bahrain, Djibouti, Morocco and Iran. Instability at the Middle East region also reinforced concerns regarding possible interruptions of the oil supply. Oil rate stabilized around the $91.47 level per barrel. Maximums were reached at the $92.00 mark. Gold was trading above the maximum level of $1400 price per ounce.
On Tuesday the devastating earthquake, that happened in New-Zealand, pressured the national currency rate and decreased the market participants’ willingness to take risks. On the same day the EUR/USD pair traded around the $1.3600 level. Minimums were reached at the $1.3524 mark. The euro managed to rehabilitate after the statement of the ECB representative Yves Mersh, who mentioned that ECB would soon move on to tightening of the monetary policies. The US dollar rate was supported by the political problems in Middle East, as a save-heaven currency. During the last couple of weeks the ruling regimes of Egypt and Tunisia were overthrown. Swiss Frank continued to strengthen as well, being supported as a save-heaven currency.
After the announcement that the credit agency “Moody’s Investors Service” reduced the credit rating of Japan from stable to negative, the Japanese yen rate dropped. Yen was overall supported on Tuesday as a save-heaven currency. The USD/JPY pair traded in the range of Y82.80 – Y83.23.
Continuing riots in Libya reinforced concerns over the oil supply, and the oil prices grew and reached their 2-year maximums. Oil traded at the level of $93.97 rate per barrel.
On Wednesday the EUR/USD pair strengthened at the $1.3700 maximums during the Asian session, the European session brought euro to the level of $1.3740. The sterling also demonstrated growth. The GBP/USD pair reached maximums at the level of $1.6273. The pound was supported by the release of the minutes of the Bank of England.
The New-Zealand dollar started to rehabilitate on Wednesday. Rating agency “Moody’s Investor Service” stated that the earthquake that took place in New-Zealand would not affect the credit rating of the country. Political instability in the Middle East region kept oil prices at their maximums. Wednesday prices range was at the $95.97 level per barrel.
On the same day during the American session the EUR/USD hit even higher and reached the $1,3786 maximum. And Swiss Frank reached its historical maximum against the US dollar, as a save-heaven currency.
The EUR/USD pair reached highs of $1.3780 level on Thursday during the Asian trading session, as speculations over the possibility of increasing the principal rate on the next ECB meeting, grew. Market participants were influenced by the expectations of the strong German fundamentals. After the rating agency “Moody’s” reduced the credit rating of Cyprus, the EUR/USD pair dropped to the support $1,3700 level. Euro reached maximums during the European session at the level of $1.3808.
In spite of the fact that greenback was a save-heaven currency, on Thursday the US dollar demonstrated weakness against all counterparts, except for the pound. Sterling also demonstrated growth during the Asian session, following the euro. The GBP/USD pair reached the $1.6250 maximums. After the release of the disappointing UK data, the pound dropped sharply. The CBI reported sales decreased to the level of 6 compared to the forecasted 28. As a result, the GBP/USD dropped to $1,6150.
Traders were seeking safety in the global economy uncertainty. Tension in the Middle East region escalated, and according to the reports, an army attacked anti government protesters in Libya, where at least 300 people have been killed in the last 10 days. Japanese yen continued to play a role of the save-heaven currency. The USD/JPY pair stabilized around the Y81.75 range.
Instability in Libya continued to reinforce concerns over the oil supply. Oil prices consolidated above the $100 level per barrel. Maximums were reached at the $119 mark per barrel.
On Friday unexpectedly negative release of the US fundamentals brought the EUR/USD pair to the minimums of $1,3740. The US GDP level turned out to be below the expectations of the experts. Therefore, market participants decided to move out of the risky assets.
Weekly technical analysis for 28.02 – 04.03 (10/2011)
The pair is aiming to upper border of the triangle at 1.41130, the pair will rise if 1.37441 is broken.
Resistance: 1.37441, 1.41130, 1.44835
Support: 1.33427, 1.2800, 1.25667
The pair is aiming to Fibonacci retracement 38.2% at 1.64274 and Moving Average (200) at 1.65789, it will be possible if the pair stays above 1.59962.
Resistance: 1.64274, 1.68504, 1.72652
Support: 1.59962, 1.52523, 1.48532
The pair has broken support 0.93264 and aiming to 0.91074.
Resistance: 0.93264, 0.96525, 0.99031
Support: 0.91074, 0.88022, 0.85633
The pair is trying to close below triangle’s median. The pair may return to triangle’s median for testing 81.972 and after that the pair may continue declining to 80.244.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126
The pair is trying to rise to 1.02170.
Resistance: 1.01873, 1.03847, 1.05810
Support: 1.00031, 0.97889, 0.94048