Date: Tuesday 25 May 2010
The single currency continues to be weighed down by concerns about sovereign debt across the Euro zone, as well as the health of the European banking system
The US dollar, in turn, is also gaining support from concerns about rising tensions in South and North Korea as “sabre rattling” by the North Koreans sends investors defensive.
The UK will be in the spotlight today with the release of a whole range of data the most important of which is the latest revision to Q1 GDP, which should show an increase for Q1 of 0.1% up to a figure of 0.3%.
If the figures come in as expected, on top of the positive response by the markets to yesterday’s announcement of the start of the spending cuts, we should continue to see ten year gilts trade near one year highs, while sterling should remain broadly supported particularly against the Euro, but less so against the dollar.
The Queens Speech at today’s State Opening of Parliament will also be eyed for future key policy announcements with respect to future spending plans.
EURUSD – the failure to hold above the 1.2450/60 break out level, has seen the Euro slip back below 1.2400 and increases the likelihood of a re-test of last weeks lows at around 1.2140 while, a break and close below 1.2135 50% retracement level support would suggest a move towards the 1.1700 level and 2005 lows. A break back above 1.2450/60 re-targets 1.2700.
GBPUSD – the pound has continued to hold up well above the lows between 1.4230/50. This potential triple bottom remains the key obstacle to a test of the next support around 1.4110 which is the 30th March 2009 lows on the way to a test of 1.4000. 1.4000 remains a key support on a monthly close. 1.4500/20 remains the key obstacle to a test of 1.4780 and 1.4850.
EURGBP – the failure to hold above the 0.8620 support yesterday has seen the Euro slip back below the 0.8600 level towards the support at 0.8500.
A break this support at 0.8500 should re-target the lows around 0.8400, and then a break lower towards 0.8250. A move back above 0.8620 would re-target 0.8670 and then trend line resistance at 0.8770.
USDJPY – rallies in the dollar yen continued to be restricted to the 90.70 area on continued risk aversion, while there is also resistance around 91.20 area.
While the current risk off scenario continues to play out, rallies should continue to be restricted, as the yen benefits from its status as a safe haven, and the odds now favour a re-test the 4 month lows around 88.00. Interim support can be found around yesterday’s lows at 89.70.
The US dollar, in turn, is also gaining support from concerns about rising tensions in South and North Korea as “sabre rattling” by the North Koreans sends investors defensive.
The UK will be in the spotlight today with the release of a whole range of data the most important of which is the latest revision to Q1 GDP, which should show an increase for Q1 of 0.1% up to a figure of 0.3%.
If the figures come in as expected, on top of the positive response by the markets to yesterday’s announcement of the start of the spending cuts, we should continue to see ten year gilts trade near one year highs, while sterling should remain broadly supported particularly against the Euro, but less so against the dollar.
The Queens Speech at today’s State Opening of Parliament will also be eyed for future key policy announcements with respect to future spending plans.EURUSD – the failure to hold above the 1.2450/60 break out level, has seen the Euro slip back below 1.2400 and increases the likelihood of a re-test of last weeks lows at around 1.2140 while, a break and close below 1.2135 50% retracement level support would suggest a move towards the 1.1700 level and 2005 lows. A break back above 1.2450/60 re-targets 1.2700.
GBPUSD – the pound has continued to hold up well above the lows between 1.4230/50. This potential triple bottom remains the key obstacle to a test of the next support around 1.4110 which is the 30th March 2009 lows on the way to a test of 1.4000. 1.4000 remains a key support on a monthly close. 1.4500/20 remains the key obstacle to a test of 1.4780 and 1.4850.
EURGBP – the failure to hold above the 0.8620 support yesterday has seen the Euro slip back below the 0.8600 level towards the support at 0.8500.A break this support at 0.8500 should re-target the lows around 0.8400, and then a break lower towards 0.8250. A move back above 0.8620 would re-target 0.8670 and then trend line resistance at 0.8770.
USDJPY – rallies in the dollar yen continued to be restricted to the 90.70 area on continued risk aversion, while there is also resistance around 91.20 area.
While the current risk off scenario continues to play out, rallies should continue to be restricted, as the yen benefits from its status as a safe haven, and the odds now favour a re-test the 4 month lows around 88.00. Interim support can be found around yesterday’s lows at 89.70.
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