News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
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
Wall Street
Bearish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am ET on DailyFX! https://t.co/lxd5fZnn4H
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/ZJOEtpGUIq https://t.co/tJWOXZCoBw
  • The US Dollar may seesaw as investors navigate what could be a volatile week packed with US GDP data, rising Covid-19 cases, Q3 corporate earnings and more. Get your #currencies update from @ZabelinDimitri here: https://t.co/UNRcd3c9uA https://t.co/BiUiOV4cXC
  • USD/MXN pushes lower towards a critical support level in the midst of continued political uncertainty. Get your #currencies update from @HathornSabin here: https://t.co/HEAzgJJJjg https://t.co/NU9wYbIuni
  • Gold Forecast - via @DailyFX “Gold price outlook still hinges on stimulus deal expectations and corresponding swings in real yields.” What will I have my eyes on in the week ahead? Link to Analysis: https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2020/10/23/gold-forecast-xau-usd-at-the-mercy-of-a-fiscal-stimulus-deal.html $GC_F $XAUUSD $GLD https://t.co/GWEI4d4mMu
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/rxswe1gVL0
  • Talks between the EU and UK restarted today and will continue over the weekend as negotiators from both sides battle against the clock. Get your #currencies update from @nickcawley1 here: https://t.co/ER8IT1yxYO https://t.co/Jeeu2P9mwB
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/W9awqb818J
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/lucvsACxu5
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/yywnE39MLU
Euro Carving Top, Relief Rally To Falter As ECB Leans Toward ZIRP

Euro Carving Top, Relief Rally To Falter As ECB Leans Toward ZIRP

2012-06-14 14:10:00
David Song, Strategist
Share:

Talking Points

  • Euro: Spanish Yield Approaches 7%, ECB Leading Towards ZIRP
  • British Pound: Maintains Range, U.K. To Announce Credit-Easing Measures
  • U.S. Dollar: Carving Short-Term Base, Underlying Inflation Remains Sticky

Euro: Spanish Yield Approaches 7%, ECB Leading Towards ZIRP

The Euro climbed to an overnight high of 1.2588 as German Chancellor Angela Merkel told parliament that addressing the debt crisis will be the ‘central topic’ at the G20 Summit next week, and the EU may continue to look towards the international community for further assistance as they struggle to stem the heightening risk for contagion. Indeed, Spain’s 10-Year yield continued to approach the 7% mark as Moody’s cut the region’s credit rating to Baa3 from A3, while Italy sold EUR 3.0B in three-year notes yielding 5.30%, which compares to the 3.91% offered in May.

At the same time, a report by the Bank of Spain showed commercial banks borrowed a record EUR 287.8B from the European Central Bank in May, and there’s increased speculation that the Governing Council will act in July as the fundamental outlook for the region turns increasingly bleak. It seems as though a growing number of central bank officials are showing their support for a zero-interest rate policy (ZIRP) amid the risk for a prolonged recession, but we may see the ECB implement a range of tools to shore up the ailing economy as European policy makers struggle to restore investor confidence. As the EURUSD maintains the range-bound price action carried over from the previous week, we should see the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50 continue to provide resistance, and the pair may continue to track sideways ahead of the Greek elections amid the risk of a euro-area breakup.

British Pound: Maintains Range, U.K. To Announce Credit-Easing Measures

The British Pound pared the decline from the previous day to maintain the range carried over from the previous week, but the GBPUSD may struggle to make another run at the 1.5600 figure amid speculation for additional monetary support. According to a report by the Financial Times, the Bank of England and the HM Treasury will announce a credit-easing initiative to shore up the ailing economy, while there’s growing speculation the Monetary Policy Committee will continue to carry out its easing cycle in June in order to further shield the U.K. from the debt crisis. However, as BoE officials anticipate to see a more robust recovery later this year, the stickiness in underlying inflation may keep the central bank on the sidelines, and we may see the GBPUSD track sideways ahead of the meeting minutes as investors weigh the outlook for monetary policy. A 7-2 split in the MPC is likely to foster a bearish outlook for the sterling, and we may see the GBPUSD threaten soft support around the 50.0% Fib from the 2009 low to high around 1.5270 as the central bank keeps the door open to expand monetary policy further.

U.S. Dollar: Carving Short-Term Base, Underlying Inflation Remains Sticky

The greenback struggled to hold its ground on Thursday, with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR) falling back to a low of 10,146, and market participants may continue to move away from the reserve currency as they increase their appetite for risk. Nevertheless, we remain bullish against the greenback as the stickiness in underlying inflation limits the Fed’s scope to implement another round of quantitative easing, and the USDOLLAR appears to be carving out a short-term base ahead of the FOMC interest rate decision as the central bank continues to soften its dovish tone for monetary policy.

--- 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

CAD

14:30

10:30

Bank of Canada Publishes Financial System Review

GBP

18:00

14:00

BoE Governor Mervyn King Speaks on U.K. Economy

NZD

22:30

18:30

Business NZ Performance of Manufacturing Index (MAY)

48.0

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

DISCLOSURES