Carry Trades Overcome Markets

As the dollar inclined yesterday as a result of the major sell-off we witnessed in the markets when the U.S. session opened boosted the greenback, today we are seeing the opposite of that as the currency is losing its strength ahead of Federal Reserve Chairman Ben Bernanke speaking on the state of the economy and the release of the FOMC minutes on why the Feds decided to leave interest rates steady at 2% in their last meeting.

Investors fear that the crisis is becoming spread to Europe, yet the euro is appreciating but gains may be to a certain point since there are anticipations that the European government will not come up with a bailout plan for the financial markets. The EUR/USD is traded at 1.3590 above the support of 1.3550 and below the resistance of 1.3697. The pair recorded a high of 1.3614 and a low of 1.3481.

The expectations of the BoE cutting interest rates are rising further as the financial markets are deepening into crisis. The pound is gaining today as a result of the carry trades we are seeing that is supporting the royal currency gain further in the markets. The GBP/USD is traded at 1.7547 while recording a high of 1.7640 and a low of 1.7410. The momentum indicators on the daily charts are providing us with an upside direction as for the pair we see there is a support at 1.7465 and a resistance at 1.7635.

The yen depreciated in the markets after the Reserve Bank of Australia cut interest rates by the most since 1992, adding further anticipations that more central banks now are slashing interest rates in order to ease the credit crisis. Also as the Asian stocks plummeted, investors turned to carry trades as they started selling lower yielding assets and buying high yielding assets and due further slipped. The USD/JPY could not breach the support of 100.00 as it gained strength to work its way upwards to the resistance of 103.10. The pair is traded at 102.67 while recording a high of 103.27 and a low of 101.28.

Crown Forex

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