Forex Market Technical and Fundamental Recap
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Today's Forex Analysis summary
The EUR USD was under pressure from the start today. Yesterday’s loss following bullish news regarding a better than expected U.S. Consumer Confidence Report should have been the first clue that investor sentiment toward a stronger Euro was shifting.
Investors are now selling the EUR USD as they strip out the fear premium that was the catalyst for the recent run-up in the Euro and the sell-off in the U.S. Dollar. Last week traders bought the Euro as fear was spreading that the U.S. debt rating would be lowered from AAA. This week, the better than expected interest in the current Treasury auction is sending out a signal that the U.S. may maintain its current triple-A status. This news is helping to trigger liquidation in the Euro as traders remove the fear premium.
The GBP USD followed through to the upside as investors continued to flock to the British Pound in anticipation of a speedy recovery in the U.S. economy. As U.S. Treasury yields rose throughout the day, however, the British Pound began to weaken and finished the day near the low.
Better than expected U.S. housing numbers coupled with yesterday’s report of a substantial improvement in U.S. Consumer Confidence is helping to accelerate the USD JPY to the upside. The charts indicate that this rally is getting serious with a main trend top at 96.69 the next upside target. Traders are buying the U.S. Dollar in anticipation of a faster than expected U.S. economic recovery
A weaker stock market and soaring U.S. Treasury yields helped the USD CAD put in a daily closing price reversal on Wednesday. The low at 1.1097 came close to the major 50% support at 1.1057. Look for a follow-through rally tomorrow to signal a short-term bottom, but gains may be limited if crude oil continues to rally.
Four lows between 1.08108 and 1.08097 were enough to tell USD CHF traders that this pair was not going to go any lower. Shorts finally threw in the towel and allowed this market to move in the direction of least resistance to the upside. Fundamentally, financial markets tension is leading investors back to the U.S. Dollar as a safe-haven investment.
With money flowing to the U.S. Dollar because of diminishing trader appetite for risk look for short-term weakness to develop in the Australian Dollar. On Wednesday, the AUD USD posted a daily technical reversal top at .7890. A break through .7748 will confirm the reversal top and set up this pair for a short-term decline.
Lower trader appetite for risk kept downside pressure on the NZD USD throughout the day. This pair looks tired at current levels and never really had the same upside momentum that was taking place in the AUD USD. News that this country’s largest milk producer Fonterra will be lowering prices also weighed on the future of the New Zealand economy. This event gave traders an excuse to take profits. Tomorrow the budget forecast will be released. Traders are nervous as a worse than expected deficit may trigger more negative pressure from credit rating services.
By ForexHound.com the portal for Analysis, Education and exclusive timely market Gann Analysis.
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