Talking Forex Daily FX Wrap 20/07/2011
EUR/USD
The pair finished the session higher for the second consecutive day and as reported by Predicted Markets, EUR has gained a total of around 1.50 cents. Furthermore, only once in the past 6 weeks has the EUR posted the week’s high after the close on Wednesday’s session. The move higher was largely driven by speculation that policy makers will put forward concrete plans at the EU Summit on Thursday to save the debt ridden Greece and to prevent further contagion. Apart from fretting over the Eurozone sovereign debt crisis, investors will get to digest the release of July Advanced PMIs, while the Spanish debt agency is due to auction April-21 and July-26 bonds. Finally, technical studies indicate that support levels are located at 1.4212, 1.4106 and then at the 21Day Lower Bollinger Level at 1.3958. On the other hand, resistance levels are seen at the 21DMA line at 1.4275, 1.4282 and then at the 55DMA line at 1.4341.
GBP/USD
Despite release of dovish BoE minutes from the most recent monetary policy meeting, the pair finished the session higher following renewed risk appetite as investors speculated that policy makers on both sides of the pond will put their differences aside and provide the much needed clarity on debt problems. By the closing stages of the session the pair was trading firmly above 1.6100 level and as such remains on track to make a test on the 100DMA line at 1.6241 in the coming session. Going forward, Thursday sees the release of the Nationwide Consumer Confidence, as well as Public Finances for the month of June. In terms of technical levels, supports are noted at the 21DMA line at 1.6046, followed by the 21Day Lower Bollinger level at 1.5912. On the other hand, resistance levels are seen at 1.6178 and then at the 61.8% Fibonacci retracement level of the 1.6547-1.5781 move.
USD/JPY
The pair continued to trend lower on Wednesday in spite of renewed optimism over the Eurozone debt crisis and by the closing stages of the session was trading just below the 79.00 level. Of note, DPJ’s Naoshima said that government efforts to counter JPY strength have been “inadequate”. While BoJ’s deputy governor, Yamaguchi, said Japan’s economy will resume moderate recovery in latter half of fiscal 2011/12, however Europe’s debt woes could affect Japan via a fall in stocks, and a rise in JPY. He also said that Japanese output will return to pre-quake levels soon, and base-year revision seen pushing down CPI growth to near zero. Finally, supports are noted at 78.39/00 and then at 77.10. On the other hand, resistance levels are seen at 79.32/61 and then at 79.97.
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