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By XE Market Analysis July 25, 2014 7:55 am
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    XE Market Analysis: North America - Jul 25, 2014

    EUR-USD came under some pressure into the end of the week, after the softer than expected German Ifo reading, which showed geo-political tensions weighing on business confidence. Expectations for an improvement in U.S. durable goods orders this morning has added some pressure a well. The euro touched 1.3442 lows, after again running into resistance at 1.3475. Elsewhere, USD-JPY upside momentum continued following N.Y. gains on Thursday, taking that pairing to two-week highs of 101.93, as Japanese inflation came in firmer than expected. USD-CAD put in highs of the week, touching 1.0768, as oil and gold retreated, and as geopolitically driven risk aversion remains in the forefront. Cable meanwhile, dipped to six-week lows of 1.6961, though support seen into 1.6950. Unwinding of overly-long sterling positions is set to continue.

    [EUR, USD]
    EUR-USD was largely flat in Asian trade, with the pairing again running into resistance into the 1.3475 region. A weaker German Ifo dented sentiment from there, taking the euro to 1.3442 lows, just over Thursday's trend low od 1.3439. Two-way interest is noted from 1.3430 to 1.3400 now, though sizable stops are likely under 1.3400, which represents the November 21 low. To the upside, offers are layered from 1.3475 to 1.3500.

    [USD, JPY]
    USD-JPY added marginally to Thursday's gains, posting a 101.93, two-week high. There was little reaction to the slightly hotter Japan CPI overnight, and generally, the yen remains in a slow-motion trading pattern, inside of well worn ranges. Japanese exporter offers, along with options backed sellers are likely in place into the 102.00 level, which could further slow upside advances. In addition, risk taking appetite is under some pressure this morning, likely to hamper yen gains as well.

    [GBP, USD]
    The pound gained against the euro in the wake of the robust Q2 GDP number, which should output finally exceeding pre-crisis levels. The strength of the recovery will add to the arguments of the hawks at the BoE, which have started to mull the merits of a small rate hike. Cable touched fresh n-month lows of 1.6962, though good support is seen into 1.6950. An overly long sterling market may still have some room to unwind, despite the improving fundamental backdrop, and hawkish BoE stance.

    [USD, CHF]
    EUR-CHF remains entrenched near the 1.2150 mark. The situations in the Mideast and Ukraine are continuing to underpin the Swiss currency's safe-haven premium, though the cross has remained above the Jun-30 low at 1.2133, which was the lowest level seen in three-and-a-half months. Technically, the break of a former uptrend channel support line at 1.2190 opened the way to the mid-1.21s. The cycle low of 1.2104 and 1.2100 are key support levels. We would expect that the threat of SNB intervention into its 1.2000 peg to deter franc buying below 1.2100. SNB's Jordan repeated recently that the central bank remains committed to defending the currency cap.

    [USD, CAD]
    USD-CAD touched 1.0768 highs, its best of the week, though continues to struggle over 1.0760. With risk taking levels remaining wobbly, CAD upside has been difficult this week, though range trade will likely continue into the weekend. The Canadian calendar is empty, so traders will look to U.S. durables, equity markets, and commodity prices for guidance this morning.

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