Forex Go!

EUR/USD
Despite finally agreeing on measures to solve the Eurozone debt crisis and more importantly prevent disorganised default by Greece, the euphoric mood was short-lived as investors fretted over the moral hazard implications. As such, even though government bond yield spread of the bailed out nations tightened significantly, speculation that Italy and Spain will soon follow persisted. In turn this leads to believe that the rally by the pair last week was largely on the back of short-covering and that upside potential may be limited in the near-term. Much of the attention this week will remain on the never-ending debt crisis, especially since there are government debt auctions being carried out by the Spanish, Belgian and Italian debt agencies. In terms of technical levels, support levels are seen at the 21DMA line at 1.4283 and then at the 10DMA line at 1.4178. On the other hand, resistance levels are seen at 1.4400/40 and then at 1.4496.
GBP/USD
The pair which benefited from the renewed sense of unity among the Eurozone leaders is expected to remain a by-product of news flow and risk appetite surrounding the peripheral EU states. In addition to that, investors will get to digest the release of the advanced GDP report, which will likely indicate that growth has slowed dramatically. So much so that there is potential for a negative Q/Q reading which will also certainly raise questions over the Coalition plans to reduce the deficit via the draconian spending plans. Finally, technical studies indicate that supports are seen at the 21DMA line at 1.6074 and then at 1.6069. On the other hand, resistance levels are noted at 1.6344 and then at the 61.8% Fibonacci retracement level of the 1.6747-1.5781 move.
USD/JPY
The downward bias is expected to dominate this week as investors continue to speculate whether the recently announced measures by EU leaders is enough to promote stability, and whether lawmakers in the US finally put their differences aside and agree to raise the debt ceiling. Still, the fact that the pair is trading firmly below the psychologically important 80.00 level may raise speculation that the BoJ may intervene to weaken the currency. In terms of technical levels, supports are seen at 78.22/00 and then at the historic low at 76.25. On the other hand, resistance levels are seen at 78.74, 79.03 and then at 79.32, which is also the Tenkan Line.

Similar Posts:

• Talking Forex Daily FX Wrap 20/07/2011
• Talking Forex Daily FX Wrap 23/06/2011
• FBS: the pair NZD/USD has renewed the record maximum (Westpac)
• Daily, Weekly And Monthly Pivot Points – The Importance of Confluence
• EURUSD price action, 22nd January 2011