Confused USD

The greenback is currently giving mixed signals in the market as it is not taking a specific trend while later this afternoon we wait for the release of the trade balance concerning the US economy as it is expected that the deficit will narrow.

As for the single currency it is currently seen gaining against the US dollar as the ECB decided to keep rates on hold at 4% yesterday since they already have inflation according to the flash estimate at 3.3% way above the banks target of 2%. Although growth is softening in the EU but it is still moderate and that is why Jean-Claude Trichet took the hawkish tone as it gave the EU economy confidence there is not a projected rate cut anytime soon. The EUR/USD pair managed to break the resistance of 1.5475 while it is currently trading at 1.5467 as it records a high of 1.5488 and a low of 1.5393 so far.

The BoE yesterday also kept their rates steady at 5% while they were afraid to cut interest rates as they already fear high inflation. The UK housing sector continues to deepen as prices keeping falling. Next week we are waiting for the inflation report which could help decide the sterling trend as it is now seen falling versus the greenback. The GBP/USD is currently trading at 1.9540 while recording a high of 1.9569 and a low of 1.9495.

Currently in the market we see a slight case of unwinding carry trades as investors are starting to unwind where they sell high assets and buy low yielding funding currencies. The yen is benefiting from this as it gains in front of the greenback while the USD/JPY pair is currently trading at 102.90 as it records a high of 103.85 and a low of 102.82 which is a solid level for the pair and breaching lower will extend the downside wave.

Crown Forex

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