Economic Downturn Linger on Majors

Credit fears and inflation worries in the world's largest economy continued to mount up as the stock markets yesterday witnessed another plunge. The issue concerning Fannie Mae and Freddie Mac remains of major concerning as the maturity date for their debts is just around the corner where we might see heavy turbulence in the financial markets if they failed to pay them back.

We see the majors had recovered against the markets where they were all in need of a correction as they were heavily oversold but momentum indicators have now adjusted on the daily charts yet still show the majors being oversold on the intraday basis.

The EUR/USD pair is currently attempting to breach the 1.4700 support level as it recorded a low of 1.4690 but so far failed to gather enough bearish momentum to continue the downside trend. Data released from the Euro Zone concerning construction output showed that the sector is deteriorating helping the pair further decline where if the mentioned support was broken this will open the way for the pair to reach the 1.4630 levels but only if the pair closes below the 1.4700 on the daily charts. The pair is currently trading around the 1.4710s after recording a high of 1.4799 earlier today.

As for the Royal currency, after the minutes released today showing a three way vote and that the economy is slowing down at a pace faster than they expected, the pound declined to near the support level at 1.8535 as it recorded a low so far of 1.8539 before rebounding back to the upside to currently trade around the 1.8570s level. Further data from the economy concerning inflation continued to show that inflation still poses a threat as the M4 money supply came in higher than median expectations at 0.9 percent yet less than the previous 1.8 percent gain. On the yearly basis, it was up 11.2 percent from the predicted 10.7 percent rise yet also slightly below the previous reading of 11.4 percent.

Moving on to the Japanese yen, the pair is trapped between the support level at 109.60s and the resistance level at 110.30s as it recorded a high of 110.26 after recording a low earlier in the session at 109.64 before reversing back to the downside to currently trade just below the 110 level. With the lack of US fundamentals on the calendar, movements on the Yen will most likely remain technical for today.

Crown Forex

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