We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The risk rally continued in a big way this week and #Euro bulls have remained in-charge against the US Dollar and Japanese #Yen. Get your market update from @JStanleyFX here: https://t.co/o7vPmczvMJ https://t.co/GX2YTXz83u
  • The price of #gold may continue to exhibit a bullish behavior in June as the pullback from the yearly high ($1765) reverses ahead of the May low ($1670). Get your Gold market update from @DavidJSong here: https://t.co/OeaYtCpcIo https://t.co/UQVPIVCTCP
  • The $USD breakdown has taken the index into confluence support at the objective yearly open. Get your USD technical analysis from @MBForex here: https://t.co/A16XEv6n4d https://t.co/GzEp3gCAe5
  • US equities continue to run higher with the Nasdaq 100 setting a fresh all-time-high, not even three months after giving back almost a third of its value in about a month. Get your #Nasdaq technical analysis from @JStanleyFX here: https://t.co/1LI54uvI8x https://t.co/e9FvSLqfaA
  • The US Dollar may be at risk to losses against some of its #ASEAN counterparts. USD/SGD, USD/PHP, USD/MYR and USD/IDR have recently broken to the downside. Will losses continue? Find out from @ddubrovskyFX here: https://t.co/0RTlj6maTT https://t.co/UyQ4i0AihI
  • The British Pound technical outlook still seems to favor the downside. GBP/CAD may pressure key rising support from August as GBP/AUD could prolong its downtrend. GBP/CHF may fall. Get your $GBP market update from @ddubrovskyFX here: https://t.co/hBOpDKXmfW https://t.co/AJlT2YKeCu
  • USD/JPY is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. Get your $USDJPY technical analysis from @MBForex here: https://t.co/93D7AyhHtG https://t.co/KQcLLrkMP3
  • AUD/USD has had the most impressive show of trend over the past couple of months with the pair gaining almost 1500 pips from the March low. Get your $AUDUSD technical analysis from @JStanleyFX here: https://t.co/vLz4Rpln3u https://t.co/AOwnJja5V8
  • Has the #Euro been saved? Find out from @CVecchioFX here: https://t.co/eiXfOTyGa6 https://t.co/AyRiYpb4cN
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/ygwjGNvS61
Euro Continues To Search For Support, Sterling Still Eyeing 1.5600

Euro Continues To Search For Support, Sterling Still Eyeing 1.5600

2012-05-25 14:20:00
David Song, Strategist
Share:

Talking Points

  • Euro: Continues To Search For Support, ECB Says Policy Has Reached Limit
  • British Pound: Remains Oversold, BoE Under Pressure For More Easing
  • U.S. Dollar: Index Continues To Hit Fresh Highs, RSI Holds In Overbought Territory

Euro: Continues To Search For Support, ECB Says Policy Has Reached Limit

The EURUSD slipped to a fresh yearly low of 1.2495 amid the weakening outlook for Europe, and the pair may continue to search for support in the week ahead as European policy makers make an attempt to buy more time. It seems as though hopes for a euro-area bond are starting to fizzle amid the ongoing rift within the EU, and fears surrounding the European banking system may put additional pressure on the European Central Bank to expand its balance sheet further as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support.

In response, ECB board member Jens Weidmann argued that the central bank ‘reached the limit of our mandate’ amid the marked expansion in the balance sheet, and went onto say that the non-standard measures ‘have helped save time but don’t solve the structural causes of this crisis’ according to an interview with the Le Monde newspaper. As ECB President Mario Draghi maintains a neutral tone for monetary policy, it seems as though the Governing Council will preserve its current policy in June, but the central bank may have little choice but to increase its efforts to stimulate the economy as the region continues to face a risk for a prolonged recession. Although the EURUSD remains oversold, we may see the exchange rate weaken further as the downward trend in the relative strength index appears to be gathering pace. In turn, the single currency should continue to give back the rebound from 2010, and we will continue to look for fresh yearly lows in the EURUSD until the oscillator pushes back above 70.

British Pound: Remains Oversold, BoE Under Pressure For More Easing

The British Pound was little changed on Friday, with the GBPUSD holding within Thursday’s range, but the sterling may additional headwinds in the days ahead as market participants see the Bank of England carrying its easing cycle into the second-half of the year. In response, former Monetary Policy Committee member DeAnne Julius argued that lower borrowing costs in the U.K. ‘might have a short-lived announcement effect’ according to an interview with the Financial Times, and said that expanding the scope of the Asset Purchase Facility to include private-sector debt is more ‘sensible’ to shore up the ailing economy as it reduces the reliance for bank financing. As the BoE comes under increased pressure to ease policy further, we may see a growing split within the MPC, and the central bank may sound increasingly dovish going into the second-half of the year as it sees a renewed risk of undershooting the 2% target for inflation. As the relative strength index on the GBPUSD dips into oversold territory, we may see the pound-dollar continue to give back the advance from earlier this year, and we will wait for the RSI to push back above 30 to see a short-term correction take shape. Until then, we may see the pair make another run at 1.5600 as currency traders scale back their appetite for risk, but the economic development on tap for the following week may increase the appeal of the sterling as the economic recovery in the U.K. gradually gathers pace.

U.S. Dollar: Index Continues To Hit Fresh Highs, RSI Holds In Overbought Territory

The greenback remains largely mixed on Friday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) coming off of a fresh 2012 high (10,225), and the reserve currency may continue to consolidate throughout the North American trade as market participation thins ahead of the holiday weekend. Indeed, the rally in the greenback continues to defy market expectations as the RSI on the dollar index remains in overbought territory, but the reserve currency may track higher in the coming days as the ongoing improvement in the world’s largest economy dampens expectations for more easing. Although the preliminary GDP report is expected to show a slower rate of growth during the first-quarter, the U.S. Non-Farm Payrolls report certainly highlights the biggest event risk for the following week as we’re expecting to see a 150K rise in employment.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David's e-mail distribution list, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Will the EUR/USD Resume the Downward Trend From 2011? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

FX Upcoming

Currency

GMT

EDT

Release

Expected

Prior

CNY

1:30

21:30

Industrial Profits (YTD) (YoY) (APR)

-1.3%

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.