The euro gained versus the basket of currencies
The euro advanced from a six-month low versus the dollar yesterday as council member Axel Weber said discussion about a reduction in interest rates is ``premature'' and crude oil prices increased.
Crude oil prices were also supporting the euro, after futures for October delivery rose 1.8% to $119.50 a barrel yesterday on forecasts Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to 26 percent of U.S. production.
The yen dropped versus the basket of currencies as the boost in U.S. durable goods encouraged investors to resume carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Bookings for U.S. goods made to last several years increased 1.3% in July after a revised gain of the same amount in the previous month, the Commerce Department reported yesterday.
Sterling fell to a two-year low versus the dollar yesterday and dropped against the euro on bets a deepening slump in the nation's housing market will force the Bank of England to cut interest rates. The pound declined as much as 0.6% to $1.8286, the lowest since July 2006. Against the euro, the British currency dropped as much as 0.8% to 80.31 pence, the weakest since June 9.
EUR/USD
The euro rose above 1.47 against the dollar, 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. Today the positive sentiment for the euro remains with first resistance expected among 1.4650- 90. A break of that level could open a potential for a stronger rise, as resistance is seen around the level 1.5250, which coincides with the 200 SMA, followed by 1.5440. On the opposite direction break below 1.46 will meet short –term support at 1.4520, before reaching the key level 1.4320 which is 61.8% retracement of the 1.3360-1.6035 movement.
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 has reached new two year low against the dollar, after it passes below the support at 1.8400. 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)
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28.08.2008 FX daily review.pdf, 604 Kb
