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Follow on Google News | Another Day, Another New Correction Low For EUR/USD* US Equities continued to hover sideways on Thursday, ending broadly unchanged for a third consecutive session. This morning, also Asian shares trade directionless ahead of the long weekend in the US and parts of Europe.
By: Ron Daulton * According to sources late on Thursday, Bankia will ask for an additional €3B state aid when it presents it restructuring plans today. Bankia is the weak spot in Spain’s fragile banking system * Beijing is outlining a series of steps to prop up growth as evidence gathers that the Chinese economy continued to slow in May, the WSJ reports, saying that a massive stimulus package remains unlikely, but Beijing is instead turning to a patchwork of initiatives across various areas. * Rating agency Moody’s reiterated its negative outlook on France’s top-notch credit rating, saying that after François Hollande’s presidential election victory it needed more time to assess how the country will manage its public finances. * Greece’s leftist SYRIZA party is maintaining its poll lead ahead of the June 17 elections. The poll showed that SYRIZA led with 30%, four points ahead of the conservative New Democracy party. * Iran and world powers agreed yesterday to meet again in Moscow next month for more talks to try to end the long-running dispute over Tehran’s nuclear programme, but parties said their was scant programme to resolve the main sticking points. Brent crude oil prices ($106.32) moved slightly up. * Today, the eco calendar is thin with only University of Michigan consumer confidence in the US. On Monday, US and some European markets are closed Currencies: Another Day, Another New Correction Low For EUR/USD EUR/USD On Thursday, trading in EUR/USD showed again quite some intraday volatility. That said, the losses of the single currency were contained given the flood of negative news from the European economy and the lack of results from the informal EU Summit on Wednesday evening. There were also diffuse rumours on global coordinated action to address stress on financial markets. Nevertheless, at the end of the day, the euro was still changing hands near the recent lows. So, the standing downtrend of the euro remains in place. Intraday, EUR/USD held remarkably strong at the open of the European markets. Sentiment on risk also wasn’t that bad. Asian equities held up reasonably well considering the rather poor Chinese PMI and the outcome of the EU Summit. Were markets hoping for more policy stimulation in China? A similar attitude was seen at the open of the Europe equity markets as investors ignored the lack of result from the Summit. http://forexcapitalmultiplier.com/ However, this relative optimism was aborted as the French PMI’s for May hit the screens. In particular, manufacturing drifted further in contraction territory and this pattern was confirmed by the German PMI’s. Equities nosedived and EUR/USD reached a new correction low at 1.2516 around the publication of the German PMI. However, there were no follow through losses even as the Ifo was reported sharply lower, too. EUR/USD even reversed the PMI losses quite easily. This ‘rebound’ might be partially due to a technical repositioning after the recent steep losses. However, loose rumours/speculation on additional (coordinated?) Today, the calendar is extremely thin on both sides of the Atlantic. So, technical considerations and all kinds of headlines and rumours will continue to set the tone for trading on the currency market. Most investors will probably avoid risk going into a long weekend in the US and in several European countries. So, we put the risk for the euro to stay weak and a drop below the 1.25 mark is more likely than not. Yesterday’s price action at least suggests that the sell-on-upticks pattern is still very well in place. http://forexincomemap.info/ Technicals. Two weeks ago, the EUR/USD pair finally dropped below the key 1.2974 level (mid February low + bottom consolidation range). This break opened the way for a test of the 1.2624 year low. The pair came within striking distance of that level on Friday, but a break didn’t occur. The EUR/USD decline took a breather at the end of last week and early this week. However, the pair was unable to regain any important technical level. On Wednesday, EUR/USD finally cleared the 1.2624 hurdle. The pair is again in oversold territory, but of late this was seldom a good reason to expect a meaningful counter-trend. The June 2010 low (1.1877) is the next high profile level on the technical charts. http://forexdominator.info/ End
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