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Forex Separation As Europeans Falter

Euro:

The euro appears determined to test the 1.3500 area, which held as support for the last four weeks of trading. A break below this level would signal another round of selling, but the market probably needs more momentum to push lower. The euro-area calendar is clear of any red-flag reports this week, leaving room to absorb the near-term sentiment.

Cable:

Gbp/Usd started the day with a short bias and continued to move lower during the Asian and the European sessions. The pound’s outlook continues to be grim, since the U.K. economy does not show any signs of relief from long-term growth issues. Tuesday, the U.K. trade gap widened to the highest level in almost 17-months even thought the weak pound should have helped the export market.

Aussie:

The aussie gave some signs that it wants to move higher during the first part of the session, but as the European moves progressed, it dropped lower to test 100 day SMA support at 0.9070. There will be a lot of stop orders to absorb at these levels before another move, in either direction can easily be made. The next major level below here is at the 0.9000 area, above is a test of 0.9150.

Cad:

The pair followed the market’s general momentum and advanced up to the 1.0300 area overnight, before reversing quickly to 1.0240. Since early February, the cad has been trading in a downward channel, but the last few days of trading saw a major drop in momentum. This has forced the price action to retrace some of the recent gains. Next target to the upside is in the 1.0400-1.0450 area. A break above these two levels could shift the cad’s trend to long.

Swissy:

The swissy moved higher overnight, as investors saw in the U.S. dollar as a possible safe-heaven. To the upside, the next major resistance area is in the 1.0950 zone, which has been holding the market since June 2009.

Yen:

The low-yielding JPY strengthened across the board in Tuesday trade, helped by the market’s aversion to risk. The link between the Japanese currency and a risk is very old, tried, and very much tested; as seen during the credit crisis. If investors continue to buy the Japanese yen over the next few session, Usd/Jpy will likely re-test the 89.00 area.

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