Daily FX Report

Good morning from Hamburg and welcome to our Daily FX Report. Today, investors and market observers are eagerly awaiting the latest economic figures from the U.S., the U.K., the European Union and their leading nations like Germany, Italy and France.

However, we wish you a great day and successful trading.

Markets review

After the approval of European finance ministers for further Greek assistance and the consent of the Greek government for significant fiscal measures, the European debt crisis remained a topic among investors, but first positive stimuli reached the capital markets and strengthened the EUR. According to the Bloomberg Correlation Weighted Index the EUR was able to advance 0.7 percent over the last 7 days which was the second-best performance among the tracked currency counterparts. Also the USD showed an increase of at least 0.6 percent, while the JPY declined 2.7 percent. This was primarily blamed on the announcements of the Bank of Japan in recent days. Especially, the expansion of the bond selling program to 375 billion USD and the targeted inflation rate of 1 percent have led to a lowering of the strong JPY. But also the faster ongoing economic recovery of the US business occupied by the stabilizing property market and the positive news from Europe weakened the demand for so-called “haven” currencies.

Therefore, the JPY tumbled 0.3 percent to 79.98 versus the USD, after reaching the highest price at 80.01 within six months. Also the EUR gained 0.24 percent to 105.80 against the JPY from 105.54 the day before as it touched a three-month high around 106.01. The EUR lost slightly against the USD and was at 1.3229 from 1.3234 yesterday.

Growing speculations concerning a cool down of Chinese economic growth, limited gains of the AUD and the NZD. According to the Purchasing Manager Index released by HSBC Holdings Plc, China’s manufacturing figures declined for the fourth month in a row and foster concerns of a declining export demand of world’s fastest-growing major economy. The AUD dropped 0.1 percent to 1.0655 against the USD, while it enforced 0.3 percent to 85.30 versus the JPY. Also the NZD declined 0.1 percent towards the USD and traded at 83.31 U.S. cents. In addition, the NZD gained 0.3 percent to 66.69 JPY, too

Technical analysis

EUR/USD (Daily)

From its high around 1.45303 on the 30th of August, the EUR/USD currency pair has been entering a bearish trend below a Fibonacci fan down to the support level around 1.26210. There the rate experienced demand and increased to the resistance level around 1.33218 among re-entering the lower channel of the fan. Currently, the market is trading in a range between the support level around 1.30252 and the next hurdle around 1.33218. As the Stochastic is reaching the overbought market level, we expect to see a drop back to the support line

AUD/JPY (4 Hours)

Recently, the AUD has strongly been strengthening against the JPY and has been entering a bullish Andrew’s pitchfork since getting an additional boost at the support level around 80.540 on the 30th of January. A first test of the resistance level around 86.075 failed and the pair weakened back to the support around 84.727 and the lower Bollinger band. But a recovery and further gains seems likely. Especially, when we consider that the DeMarker declined below the 30 percent limit.

GBP/AUD (Daily)

Since the 23rd of November, the GBP/AUD currency pair has been trading in a bearish Andrew’s pitchfork after having experienced a final rebound at the strong resistance level around 1.60558. The drop was stopped once by the support level around 1.46194 and there the bulls took control of the rate, pushing it to the next hurdle around 1.49390 and the upper pitchfork line. Although the OsMA indicates further gains, the Momentum turns bearish and therefore we might see a decline to the support level around 1.46194 again.

EUR/NZD (Daily)

As we can see on the chart below the EUR has been decreasing against the NZD inside a bearish Andrew’s pitchfork to the support level around 1.56520 after rebounding from the resistance level around 1.81249. The support level stopped the fall of the currency pair and since then rate has entered a sideways movement between 1.61711 and 1.56520 among breaking out of the pitchfork. A rising MACD and an increasing Commodity Channel Index (CCI) are providing us with bullish signals, why further gains to the next hurdle around 1.61711 seem likely.

XAU/USD (4 Hours)

After gathering new strength at the support level around 1527.37 on the 29th of December, gold has been showing a strong recovery above a bullish Fibonacci fan. But the resistance level around 1763.39 stopped further gains and the rate moved into a sideways trend in a range between the support level around 1712.16 and this resistance. Recently, the pair entered the upper channel of the fan and is now trading along the upper fan line with a breakout towards the close hurdle around 1763.39. With Stochastic and RSI showing an overbought market situation, another return to the support level around 1738.39 and re-entering of the fan is more than likely.