Dollar Reached 6 Months High Against The Euro
Dollar rose against the basket of currencies on Tuesday reaching 6 months high against the euro boosted by a jump in U.S. consumer confidence and higher expectations of eurozone interest rate cuts due to speculations for a possible recession in the region. The view for the approaching problems in Europe was backed by the disappointing economic data from Germany. The Ifo business climate index for August fell more than expected to 94.8, which is its lowest level in three years. The GDP of the country contracted in the second quarter by 0.5% for the first time since 2004, while the Gfk consumer sentiment hit a fiveyear low with its reading of 1.5%. After the news the euro fell against the dollar to $1.4570. In contrast, US Consumer confidence for August surprisingly rose to 56.9, at 53.0 consensus. The S&P/ Case-Schiller 20 City home price index declined less than the estimates by 15.9%. During the day the minutes from FOMC meeting were released, suggesting the bank will likely to hold the rates during this year, but despite that the interest spreads between the dollar and the other currencies is expected to narrow, which makes the US currency more attractive. The sterling also fell to the levels of $1.8331, while the greenback advanced slightly against the yen to 109.61 yen.
EUR/USD
The euro failed to break the support level at 1.4650, which keeps the short term picture unchanged and the consolidation in a narrow range between the levels 1.4650 and 1.4980, which are respectively 50% and 38.2% retracement of the 1.3262-1.6035 rise, continues. Probably the lack of clearly defined direction would maintain in the following days. Despite that, the risk for a new drop is still in effect as the main goal would be the key support level at 1.4320, which is 61.8% retracement of the mentioned rise. A break of that level could open a potential for a new steep decline, and a long lasting positioning below that level could even lead to a trend reversal in the mid term. On the upside above 1.4980, resistance is seen around the level 1.5250, which coincides with the 200 SMA, followed by 1.5440.
EUR/USD (chart, table)
USD/JPY
The short term picture remains unchanged as the yen continues to consolidate in a narrow range around the level 109.90, which is 50% retracement of the 124.12-95.75. Probably the neutral trading will be over soon and in the next days we can expect a resume of the upward movement with a main goal – the resistance at 113.30, which is 61.8% retracement of the mentioned drop. A decisive break of that level would affirm the forming in the moment positive mid term trend. On the downside support is seen at 108.20, which coincides with the 26 SMA, followed by 106.60, which is 38.2% Fibo retracement coinciding with 200 SMA and 104.90.USD/JPY (chart, table)
GBP/USD
The sterling continue to hold positions around the level at 1.8400, which for the moment shows support to the downward movement and keeps the pair into a neutral position. Despite that the mid term trend remains negative and the downward movement is likely to continue but before a new steep decline we could witness a short narrow range consolidation. The next main goal is the support at 1.8080, followed by 1.8000. On the upside, first resistance is seen at the level 1.8790, followed by the key 1.9120, which is 23.6% retracement of the 2.1159-1.8512 and 1.9315.
GBP/USD (chart, table)
*****
To view the original document, please click on the link below:
http://reports.aiidatapro.com/BBB/Bulbrokers/27.08.2008_FX_daily_review.pdf
*****
Copyright: 2007 STS Finance AD. All rights reserved.
For further Information please contact STS Finance, 1 Chervena Stena Str. , 1421 Sofia
Phone: + 359 2 963 11 38, fax: +359 2 963 09 36, e-mail: research@finance.sts.bg, web site: http://www.finance.sts.bg
*****
AII Data Processing does not endorse in any way, the views, opinions or recommendations expressed above. The use of the Information is subject to the terms and conditions as published by the original source, which you have to read and accept in full prior to the execution of any actions taken in reliance on Information contained herein.
 | SeeNews SeeNews is a business and financial news and information provider which brings its visitors and customers access to detailed coverage on the fast-growing companies, economies and markets of ten Southeast European nations. |
Search for: news |
Search for: index |
Search for: currencies |
Search for: chart |
27.08.2008 FX daily review.pdf, 605 Kb
