In the middle of the week, the U.S. dollar managed to advance against some of the major currencies, after the market participations collected the profits from Tuesday, when the greenback posted sharp loss.
The disappointment data about the U.S. and Canada trade deficit for December combined with the worries about southern Europe countries financial stability caused additional risk aversion among the traders.
The real fundamental interest for the greenback rested with Fed Chairman Bernanke’s remarks to the House Financial Services Committee. While the central banker would repeat his warning that low rates were necessary for an “extended period,” he also suggested meaningful and hawkish steps were on the way. The highlight from his statement was the suggestion that the Fed may opt to lift the discount rate ‘before long.’ While this is not the Fed Funds rate and Bernanke himself would say this wouldn’t alter their policy outlook; it is nonetheless a tangible step towards tightening. What’s more, he said the bank may use interest rates on excess reserves as a guide rather than the usual benchmark rate for a while.
Early this morning Australia reported that employers added more than three times as many workers as economists had forecast, damping demand for safer investments. The unemployment rate for January fell from 5.5% to 5.3%, which was far from the expectations for 5.6%. As a result the Australian dollar rose with 1.5% against the U.S. dollar to 0.8890. The “kiwi” also received supprt from this data gaining 0.9% against the greenback to 0.6989.
TECHNICAL OVERVIEW
EUR/USD
Тhe short term picture remains negative, despite the bounce above 1.3720, which is 50.0% Fibo retracement of the 1.2329-1.5139 movement. So far the downward movement is limited by the support at 1.3650 and if broken successfully next targets will be the supports at 1.3580 and 1.3410, which is 61.8% Fibo retracement of the mentioned rise. On the upside resistance is seen at 1.4040, followed by 1.4180 and 1.4320, which coincides with the 200-days SMA.
EUR/USD (chart, table)
USD/JPY
The short term picture is negative as the pair remained below the psychological level at 90.00, which coincides with the 50-days SMA. So far the downward movement is limited by the support at 88.50 and if broken successfully next targets will be the supports at 88.00 and 87.30. On the upside, resistance is seen at 91.00, followed by 92.30 and 93.30.
