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By XE Market Analysis February 5, 2014 6:47 am
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    XE Market Analysis: North America - Feb 05, 2014

    The USD and other main currencies were in consolidation mode as the risk aversion theme took a breather with the help of positive surprises on the corporate earnings front and amid market expectations for a decent U.S. jobs report this Friday. EUR-USD continued its oscillation around the 1.3500 level and USD-JPY was settled around 101.20 after drifting lower from the Tokyo-session peak of 101.76. Sterling came under some particular pressure following a disappointing services PMI report out of the U.K., which fits the emerging picture of slowing recovery momentum after a period of above trend growth. Cable dove under 1.6300 while EUR-GBP built a base above 0.8300, bringing Tuesday's 0.8326 peak into sight. AUD-USD traded either side of 0.8900 after making a three-week high at 0.8941 during the Sydney session. The Aussie market will be looking to Friday's RBA Statement on Monetary Policy following the less dovish signals from Governor Stevens at 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 has settled above 101.00 with the yen's advance has come 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. Expectations for a decent U.S. payrolls report this Friday have been a factor too. 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]
    Sterling recoiled following the services PMI disappointment out of the U.K., which unexpectedly dipped to 58.3 in January, the lowest since last June and fitting the emerging picture moderating recovery momentum after a period of above-trend growth. The outcome more than offsets yesterday's much strong than expected construction PMI, as construction accounts for only about 7% of GDP. Cable dipped back under 1.6300, reaching a low of 1.6468 before steadying. EUR-GBP, meanwhile, has built further gains above 0.8300, bringing Tuesday's 0.8326 peak into sight. The technical picture seems bearish to us following Cable's double rejection from forays above 1.6600 in late January, and the subsequent breach below both the 20- and 50-day moving averages. We target the 1.6200-1.6220 area, with resistance marked at 1.6344-50.

    [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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