Daily FX Report

Good morning from beautiful Hamburg and welcome to Varengold Bank's Daily FX Report. A U.K. survey stokes fears that the upcoming election may end in a minority government and strained the GBP. However, we wish you a nice and prosperous trading day

Markets review

The GBP declined versus all of its 16 most traded counterparts and dropped against the USD the most in two weeks as a national poll showed that the U.K. may face a minority government after the upper house election this July. The GBP/USD fell 1.1 percent to 1.5034 while the EUR/GBP rose 0.3 percent to 90.83 yesterday. Futures traders at the CME are more bearish than ever on GBP amid concern that the currency's worst annual start in 13 years will continue. The bearish gamblers outnumber the bulls by eight times more than George Soros made $1bln betting against the sterling in 1992. The USD extended its gains versus the GBP during the early Asia trading hours on speculation that the Federal Reserve may eliminate its commitment to key interest rates near zero for an 'extended period' at its meeting today. The EUR/USD declined on Monday as euro-zone officials damped speculation down that the Finance Ministers will adopt a rescue strategy to bail out Greece this week. The euro-zone still hopes that Greece's budget cuts will make a bailout unnecessary.

The CHF climbed against the EUR to its highest level in almost 17 months as a government report showed that the annual producer and import prices declined at the slowest pace in more than a year adding signs that the SNB may stop selling its own currency. The central bank started selling a year ago to contain declining consumer prices and to prevent from a deflation.

The AUD/JPY weakened for a second day on concern the minutes of its central bank's March meeting will signal a slower pace to future interest rate increases after the bank already rose borrowing costs to 4 percent at its gathering.

The demand for NZD/USD was limited on concern a U.S. report may show that the housing starts dropped in February; raising speculation the global recovery is slowing which cuts demand for so called higher-yielding assets

Technical analysis

GBP/USD (2 Hour)

After the GBP broke through its short-term support as shown in our report yesterday, the currency pair declined near to the 1.5000 level. Thus it seems unlikely to cross the overall longterm bearish trend-line rather we maybe have to allow for a continuing bearish movement near to 1.4872 if the support around the 1.5000 level won't be strong enough.

EUR/GBP (2 Hour)

Since the middle of February the EUR/GBP has been trading close to a bullish trend-line and touched already its resistance around 0.9143 twice. Now it remains to be seen if the trend could support the bulls once again to climb over the resistance around 0.9100 otherwise it may fall back near to its support around 0.9046.

EUR/CHF (1 Hour)

The EUR/CHF has been trading in a bearish environment and boosted its downward movement yesterday once more and touched its lowest level around 1.4506 marking a new support level. If the currency could cross the bearish trend-line shown in the picture it could boost the bulls near to the 1.4530 rather 1.4538 resistance. Also the RSI indicator may show an oversold market and could lead the bulls into the market

AUD/JPY (1 Hour)

The AUD/JPY lost the second time the support of its bullish trend-line since the end of February. In considering of an increasing negative DMI we maybe have to allow further bearish movements near to the support level around 82.20 rather 81.60. On the other hand-side if the bulls could cross the resistance around 82.82 it could support to join the mid-term trend-line once again.

NZD/USD (Daily)

After the currency pair confirmed its bearish trend-channel in January the NZD boosted the downward movement and struggles with the support around 0.7000 at the moment. If the MACD indicator could cross the zero level shortly it may assist the bulls to recover. In this case the next resistance levels are located around 0.7095 and 0.7153.

Pivot Points - Daily FX Support and Resistance Levels

Varengold Bank

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