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By XE Market Analysis February 5, 2014 2:46 am
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    XE Market Analysis: Europe - Feb 05, 2014

    Not a lot of net movement among the main currencies since the London closing on Tuesday, though GBP has managed to hold firm following the strong construction PMI yesterday while the NZD popped higher after a solid employment report out of New Zealand. The risk-off theme took a breather in Asia, following Wall Street's lead, with the MSCI Asia Pacific index showing a 0.5% gain, with corporate earnings both Stateside and in Asia having helped stop the rot. EUR-USD continued its oscillation around the 1.3500 level. USD-JPY was settled around 101.40-45 after seeing a 101.23-101.76 range. AUD-USD dipped backed under 0.8900 after failing to sustain gains above here, leaving a three-week high in place at 0.8941. The Aussie market will be looking to Friday's RBA Statement on Monetary Policy following the less dovish signals from Governor Stevens following Tuesday's policy meeting.

    [EUR, USD]
    EUR-USD has continued its consolidation around 1.3500, oscillating around the 200-day moving average. The big picture technical view still looks bearish. The euro made a close under the 200-day moving average last week for the first time since last July, and projections from a two-month trendline imply a target of 1.3445-1.3450. Resistance comes in at 1.3550 and 1.3574-1.3581 (encompasses the Jan-31 high and the 20-day moving average).

    [USD, JPY]
    USD-JPY settled around 101.40-50 after seeing a 101.23-101.76 range in Tokyo today. The yen's advance came to a halt as the risk-off theme took a breather, following Wall Street's lead, with the MSCI Asia Pacific index showing a 0.5% gain and the Nikkei 225 a 1%+ rebound, with corporate earnings both Stateside and in Asia having helped stop the rot. Big picture USD-JPY support comes in at 100.00-100.36, the latter of which is the 200-day moving average. Initial resistance levels come in at 101.76-102.00, while trend resistance is above here at 102.40. Resistance can also be expected at 102.80-103.00.

    [GBP, USD]
    Cable is consolidating recent losses but the technical picture is bearish following the double rejection from forays above 1.6600 in late January and the subsequent breach of both the 20- and 50-day moving averages. The breach of 1.6395-1.6400 builds the bearish view. We target the 1.6200-1.6220 area. Resistance is marked at 1.6344-50, though stronger resistance is at 1.6400-1.6440, which encompasses a cluster of former daily highs and lows, and the 50-day moving average.

    [USD, CHF]
    EUR-CHF has been flirting with 1.2200 amid the backdrop of risk aversion in global markets, though the early-week steadying in stock markets has lent the cross some support. The Dec-17 cycle low of 1.2167 remains in scope. SNB-speak affirming that a removal of the 1.20 limit would only be considered if inflation was much higher has had little impact, though we don't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000.

    [USD, CAD]
    USD-CAD looks to be in the early stages of forming a topping formation. Last week's run to a five-week peak of 1.1224 came with declining bullish momentum, which is a sign that the underlying trend is weakening. Resistance is marked at 1.1175 and 1.1200, which would look to hold on a daily closing level basis to confirm potential of a topping formation in development. Key support is at 1.1000-1.1030, which encompasses as cluster of recent daily lows and highs.

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