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By XE Market Analysis April 25, 2014 7:41 am
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    XE Market Analysis: North America - Apr 25, 2014

    The USD was softer in quiet, relatively low volume trade. News that S&P downgraded its rating of Russia and an Interfax report that Moscow is ready for "unbiased and constructive" talks with the U.S. didn't cast much impact in the main currencies. EUR-USD firmed to a two-day peak of 1.3848, stalling shy of the week's peak at 1.3854. USD-JPY dipped and matched Thursday's low of 102.08. Cable made a two-day peak of 1.6830, and EUR-GBP was modestly lower as sterling posted modest gains following above-forecast official U.K. retail sales data for March, which came in at +4.2% y/y. AUD-USD was moderately firmer, around 0.9290. Both Australian and New Zealand markets were closed today for the ANZAC Day public holiday.

    [EUR, USD]
    EUR-USD firmed to a two-day peak of 1.3848, stalling shy of the week's peak at 1.3854. The move was driven by a generally softer dollar on this occasion, rather than specific euro strength. Despite the recent perkiness, we continue to favour the downside in EUR-USD as the ECB is desirous of a weaker euro and with disinflation likely to persist in the Eurozone. Technically, the rally from last's July 1.2042 low to the early March peak of 1.3966 is waning, as indicated by momentum indicators (particularly apparent on the weekly chart, where there is a strong divergence between underlying momentum and price trend). Resistance is marked at 1.3850-55, support at 1.3785 and 1.3765.

    [USD, JPY]
    USD-JPY dipped and matched Thursday's low of 102.08 amid generally softer dollar environment. Overall, the pair is lacking direction amid a broad sideways range, roughly contained within 100.00-105.00, which has been in place since early January. This stasis may persist for some time, though technical analysts will be marking this as a potential topping formation after the steep rally from levels around 75.0 that was seen during the second part of last year.

    [GBP, USD]
    Sterling firmed on retail sales data out of the U.K., which unexpectedly rose in the m/m figure for March. The official data today follows yesterday's more timely April CBI survey that pointed to a strong increase in activity, and more generally the numbers add to the recent trend of above-forecast U.K. releases. Cable is presently sitting just under 1.6820 after capping out at 1.6830. EUR-GBP is modestly lower at 0.8230 bid. Overall, a pretty tight range and we may not see the recent high at 1.6842 challenged before the weekend. Apr-18's low of 1.6774 is a key support as this also marks the downside point of the prevailing consolidation that is evident on the daily chart. We still target 1.7000 as we see the pace of U.K. recovery holding strong into Q3.

    [USD, CHF]
    EUR-CHF has settled around 1.2200 again, having recovered from the one-month low of 1.2142 that was seen last on Monday. The cycle low of 1.2104 was left untested. While situation in the Ukraine remains a concern, and this is a potentially supportive factor for the CHF, the threat of SNB intervention into its 1.2000 limit peg is helping to deter franc buying. SNB's Jordan repeated today that the central bank remains committed to defending the currency cap.

    [USD, CAD]
    USD-CAD has settled above 1.1000 after recovering from the three-month low of 1.0858 that was seen on Apr-9. The failure to make weekly close under 1.0900-10 was disappointing to CAD bulls following the recent drop. We would advise caution to CAD bullish views as the Fed vs BoC stance should remain broadly supportive of USD-CAD. Resistance is pegged at 1.1059-60 (50-day moving average) and 1.1100 (former pivot level). Support is marked at 1.0985 (20-day moving average) and 1.0942 (Apr-14 low).

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