Happy Valentine's Day Everyone!
EURUSD
Hmmm some nervousness crept into EURUSD given the divergent views from Greece and Ireland.. well what do you expect them to do when they already have thier backs to the wall? They have to give it a go to see how much leeway the can get away with right? This nervousness was discussed before. As soon as it starts I've already said it will send the EURO sliding.
In the last week, credit spreads (difference between interest rates that one country borrows compared to another benchmarked country) between Portugal, Spain with Germany have widened due to the perception that the sovereign debt issue is still very much in play and has allowed EURUSD to slide from the 1.38 to the 1.34 area.
Any bounce from here should see 1.3575 resisting and this could possibly send EURUSD back to test the 1.33 level and if broken we should see 1.30 and beyond. The European heads don't seem to be able to manage their PR well and I don't expect they have anything new to say this time around when they have to start negotiating and putting in place the criteria
So I hope the readers of this blog have had time to get out their positions in EURUSD.
USDJPY
Hmm seems people are beginning to notice the bad news coming out of Japan with their economy contracting. So USDJPY bid . The lowest it went this round was 81.50. Dollar index is recovering well across the board (thanks to Egypt safe haven) and this may take it to test 83.80 (we are very near now). 85 is a huge resistance and if broken we should see USDJPY trading to test 88.
AUDUSD
AUDUSD tested only as high as 1.0150 3x over the last 2 weeks. On the back of Dollar strength, this could be in for some retracements. The Ozzie economy still looking strong and Queensland floods should be behind now. Focus should on on reconstruction and new money pumping in to do that. Copper prices and coal bid, so AUD should be benefitting somewhat.
Still fancy buy on dips as AUD is holding well despite the credit issue in Europe - there is no BIG 'risk-off' play in the market. Does seem market is more like looking at the 99.50, 98.50 and 96.50 levels as support areas to mount attempts above Parity.
Might be in for some consolidation with some risk of downside in the short term to test 98.50 if the situation in Europe deteriorates.
GBPUSD
So now it's out. They have an inflation problem but they fear raising interest rates would send the GBP too high to help their economy. Tough job for BOE as I have said before.
Nonetheless GBPUSD is slowly sliding down after hitting a high of 1.6250. It is already trading just below 1.60 now and it seems a sell on rally trade going on for GBPUSD. If I were long (I am not), I would reduce them. On the charts, there had been a sharp drop from the 1.60 to 1.5750 area in late January. Care.
USDCAD
The looney strengthened on the back of OIl prices due to the Eygptian crisis. Now that that is over, we might see USDCAD hold up from the 98.50 area to retest parity provided oil prices do not jump.
