Fell on oil price continue to support the dollar
The US dollar rose to almost to 11 month high against the basket of major currencies on Tuesday, supported by a sharp drop in oil prices and investors’ concerns about the health of other major global economies. The dollar also took support from weakness in highyielding currencies triggered by the Reserve Bank of Australia's interest-rate cut. The euro was down 0.6% as reached levels below 1.4500 for the first time since February. Sterling hit a two and a half-year low to 1.7784 against the dollar before pulling back to 1.7832, which still was down 1.1%. Sterling was also continued to be under pressure after Britain's finance minister said over the weekend that economic challenges were the greatest in 60 years. The dollar was up 0.7 % against the yen, recovered from registered a one-month low of 107.63 the previous day. Earlier on Tuesday, Australia's central bank cut rates by a quarter percentage point to 7.0 %, helping shove the Australian dollar down to its lowest in a year. Although the positive move of US dollar data released in the U.S. was not so positive. July construction spending off 0.6% while the August ISM manufacturing index ticked lower to 49.9 from 50.0 in July.
EUR/USD
The short term picture remains unchanged as the euro continues to lose positions against the dollar as the pair now is targeting the key support level at 1.4320, which is 61.8% retracement of the 1.3262 - 1.6035 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. Median support was seen around 1.4460 level, which is right on mid term trend line. On the upside resistance is seen at 1.4650 and 1.4980, which are 50% and 38.2% Fibo retracement of mentioned movement, followed by the levels around 1.5230, which coincides with the 200- days SMA.
EUR/USD (chart, table)
USD/JPY
The US dollar jumped up from 108.20 levels against the yen, which coincides with the 26- days SMA. Next target by renewing of uptrend will be the resistance at 113.30, which is 61.8% retracement of the 124.12-95.75 drop. There is not rejected the scenario the pair first to test 106.60 level, which is 38.2% Fibo retracement coinciding with 200-days SMA and mid term trend line. A break of that level will consider renewing of down trend and probably sharp drop to levels around 102.45 and lower.USD/JPY (chart, table)
GBP/USD
The sterling continues to lose positions. The short term trend remains extremely negative and the downward movement is continuing even reaching levels below 1.7800. The next main goal is the support at 1.7275, multiple bottoms registered July 2005 and February – April 2006. Median support could see at 1.7600. On the upside, first resistance is seen at the level 1.8080, followed by 1.8500 and 1.9100.GBP/USD (chart, table)
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03.09.2008 FX daily review.pdf, 606 Kb
