EUR/USD has continued its downward trend
EUR/USD
has continued its downward trend after posting a high of a little above the
1.3250 figure at 1.3254 in yesterday’s session. Since early European opening it
has retraced back down to the 1.32 level ahead of German PMI figures and since
the release of that figure it has dropped around another 40 pips or so. The
German PMI figure was expected to show a rise from 50.2 to 51.0 however the
figure read a disappointing contractionary 48.1. Services PMI also disappointed
as it posted a drop to 51.8 instead of the expected rise to 53.0 from
52.8.
As
suggested in my last report the floor seems to be at 1.30 with a toppish level
in the late 1.32’s. We keep trading in this range and only when we see a clear
break above 1.33 or a strong move below 1.30 will we have a clear direction on
the pair.
Cable
has followed the EUR/USD move lower after initially shrugging off the dovish
comments after the BoE minutes yesterday and recovered lost ground and tested
the 1.59 level in the American session. We’re now pushing to the downside on
this pair and as stated previously I expect a loss of the 1.58 levels with a
push lower into the 1.57s with the 1.55 level targeted soon. I don’t expect
GBP/USD to break through the 1.60 level as I expect dollar strength this year
with GBP/USD eyeing the 1.50 level rather than anything above 1.60. If you’re a
buyer of USD, and it’s only a suggestion, I’d put orders in at the 1.5850/1.59
figure and look to take advantage of any uptick in the US or overnight Asian
sessions. It’s very straightforward to place a market order and it’s cost free
to do. Please contact to discuss utilising this trading tool.
And
what of our beloved GBP/EUR pair? We’re again dancing with our partner 1.20 and
they’re now holding hands. We have had Retail Sales (MoM) (Feb) out and
also Retail Sales (YoY) (Feb) out of the UK this morning. The (MoM) figure was
expected in at -0.4% with the (YoY) figure expected in at 2.5% and came in at
-0.8% and 1.0% respectively. Do I think the ‘pair’ will be dancing into the
early hours tomorrow and watching the sun come up? Unlikely. I don’t see a
sustained base above the 1.20 figure and I’d expect a move back into the lower
1.19’s delaying the notion of a romance for the time being. I don’t think we’ll
see much upward movement on this pair until we see EUR/USD under 1.30 and well
under this figure at that.
You’ll
all have your own views on yesterday’s UK budget so I won’t go into too much
detail. With any Budget, dependent on your circumstances, you’ll view it as
either positive or negative. I do think the Chancellor was right to continue
with tough austerity measures as its crucial to retain bond market confidence
and the UK’s current AAA credit rating. I’m sure many of you will disagree with
this viewpoint.
The
Retail Sales figures were the main data release out of the UK this morning and
Cable has taken a hit with it pushing back into the 1.57’s level on the back of
disappointing figures.
We
don’t have any market moving data out today with the Industrial New Orders out
of the EMU and Initial and continuing jobless claims out of the US being the
main figures across the Atlantic. We also have Fed’s Bernanke speaking at
16.45pm (UK time) so this may provide further volatility for the USD.
All eyes will look to the Bank of England today » « The EUR rose sharply against the USD yesterday