EUR/USD: The market has finally taken out the key October lows at 1.3145 to confirm a lower top by 1.3550 and open the next downside extension towards the 2011 lows from January at 1.2870. Daily studies are however looking a little stretched and at this point we could see some corrective action before the market resumes its downward trajectory. Look for any rallies to be well capped in the 1.3300 area from where the next lower top will be sought out.

source form: dailyfx

An unchanged trading day and small range has left signals once again without any strong directional bias. Intraday trading is being highlighted by a continued loss of positive momentum at levels above 115.00 since Friday. However overall momentum for the week is still improving and prices are supported by a trend of rising lows. Against this background this morning’s forecast is for sentiment to remain cautiously bullish above 114.72. Targets are for gains through 115.38 to attract renewed investors’ enthusiasm to target 116.00 then 116.30.

Exact risk to this forecast is not clear but most likely selling through 114.72, yesterday afternoon’s low, would be a bearish signal that once again investors’ enthusiasm has stalled above 115.00 and a further deterioration is likely to 114.55, the week’s low, then 113.97, a 50% pullback to the gains since last week’s low (111.95 – 116.00).

source from: tradingfloor

source:  forexyard.com

The European currency’s strength was in line with other global currencies that took advantage of renewed risk appetite that suggested U.S. interest rates will stay low for some time; particularly after last week’s soft U.S. jobs data

source:  forexyard.com

The European currency fell 0.4% to $1.4911 vs. the U.S dollar on speculation the German economy could face a double-dip recession in late 2010 or early 2011 as extra public spending are withdrawn. The EUR currency also slid to a more than 2 week low against the Japanese yen, although later rebounding to 132.58 yen. However it was still down 0.9% for the day in volatile trading with almost 2 yen separating the day’s high and low.

The British pound depreciated for the first time in 5 days against the EUR, weakening 1% to 89.50 pence. The Pound also dropped vs. the U.S dollar 0.7% to $1.6644 today.
The Sterling fell for a 3rd day versus the U.S dollar after the Daily Telegraph said U.K. lenders are in a worse state than those elsewhere, citing the world’s largest credit-checking company. Analysts said that there are ongoing concerns about the state of the banking sector in the U.K., and that is weighing on Sterling.

source:  forexyard.com

The European currency also gained strength against the U.S dollar on speculation the Federal Reserve will keep its stimulus measures in place and ensure Interest Rates remain low. The EUR advanced on speculation that the economic recovery remains in place spurred investors to buy higher-yielding assets. The currency was trading at $1.4981, up from $1.4851 late Friday . At the same time, against the Yen the Euro-Zone currency rose to Y133.21 from Y132.26.

The European currency could garner further support as provisional purchasing managers’ indices on the Euro-Zone manufacturing and services sector sectors released at 0858 GMT showed a further improvement in the economic activity.

Market players will be watching for ECB President Jean-Claude Trichet speech, due at 13:00 GMT. The president of the European Central Bank has moved the EUR/USD in many occasions. Recently he has advocated a strong dollar. Trichet has said before that he would make sure extraordinary liquidity measures would be phased out in a timely and gradual fashion. The market remains highly sensitive to any Trichet’s comments on liquidity, his speech will move the market either way.

source:  forexyard.com