Market review for 28.11 – 2.12, 2011
Previous week showed a confident strengthening of the high-risk currencies.
On Monday after the TV news on France24 channel, the Euro strengthened against its competitors already during the Asian session. The EUR/USD pair jumped to $1.3292 level and then went to its daily high of 1.3396 during the European trading session. The news contained the information about the emergency credit to Italy that was offered by International Monetary Fund (IMF). The credit, whose size can range from 400 to 600 billion Euro might be given with the discounted interest rate on it – from 4% to 5 %. However, when this information was denied by official from the IMF the euro gave up its earlier positions. The attention of the market participants was also focused on the yield’s dynamics of the European countries’ bonds during the auctions that were held in Italy, Belgium and France.
The New Zealand dollar rose versus 16 major currencies after Prime Minister John Key was re-elected for another term.
Euro demonstrated growth on Tuesday as well due to the expectations for the meeting of the EC Ministers of Finances. Investors were looking forward to the set up plan for the expansion of the EFSF opportunities. The Italian Government bond auction, which showed positive results, supported the euro as well.
At the same time according to the released information, the US Consumer confidence index in November showed a sharp increase to 56 points. The Fitch Ratings reduced its US debt rating to a negative level, which pressured the American dollar.
British Pound showed its big move during the European trading session on Tuesday rising to $1.5655 from $1.5495. The Australian and New-Zealand dollars rates’ grew as the optimism for the development of the tax-budget solution for the debt crises in the region reinforced. Demand for the high-yielding assets increased.
The Euro currency had a very significant day on Wednesday. At the beginning and most of the second part of the Asian trading session the Euro was down, influenced by news that the agency Standard & Poor’s downgraded the credit ratings of 15 world banks. The EUR/USD pair hit $1.3256 point, which was its daily low. The situation had dramatically changed after the report of the Bank China, which reduced the reserve requirements for banks. In particular, the Reserve ratio was reduced by 0.50%. The EUR/USD pair sharply moved up and flew to $1.3531 within 30 min of time. The GBP/USD pair has also a spectacular sessions and set new daily high at $1.5775.
As a result of the announced news that the Bank of China lowered the requirements for Bank’s reserves the U.S. dollar and Japanese yen sharply declined against their competitors. Indeed, these good news brought some confidence to investors and increased their demand for the risky assets.
Euro showed limited growth on Thursday and the EUR/USD pair rose to $1.3470 zone. During the European session the Euro currency grew against major currencies against the background of the auctions for government bonds of France and Spain. Past auctions recorded increase in demand for debt securities of European countries. The EUR/USD pair strengthened in the region of $1.3514. The reduced demand for safe assets influenced the US Dollar trading dynamic during both sessions. Also the fact of changed investors’ perspective regarding the condition of the American economy into a positive way, reinforced the Greenback’s decline against its major competitors.
By the end of the trading week the EUR/USD pair could not keep the reached maximums of $1,3550 and fell to $1,3400 due to the weakened investors’ optimism and drop of the US stock markets. The GBP/USD pair decreased to the $1,5600 region.
Weekly technical analysis for 5.12 – 9.12
The pair has declined to 1.33427. If the pair stays below this level the pair will decline to the Moving Average (500) at 1.28800.
Resistance: 1.37441, 1.41130, 1.44835
Support: 1.33427, 1.28800, 1.25667
The pair stays below 1.59962 and may decline to Fibonacci 23% at 1.53340.
Resistance: 1.59962, 1.64274, 1.68504
Support: 1.52523, 1.48532, 1.43344
The pair is trying to stay above 0.91074 this will bring pair to test resistance at 0.93264.
Resistance: 0.93264, 0.96597, 0.99031
Support: 0.91074, 0.88022, 0.85633
The pair is rolling back to 76.535.
Resistance: 80.244, 83.330, 86.836
Support: 76.535, 73.126, 69,117
The pair has risen above resistance 1.01873. If the pair stays above this level the pair will rise to 1.03847. If the pair stays below 1.01873 the pair will decline to 1.00031.
Resistance: 1.01873, 1.03847, 1.05810
Support: 1.00031, 0.97889, 0.94417