EURO Keeps Fighting Even After Downgrades
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Spain very close to Bankruptcy – Fundamental Analysis
After major actions in New York suffered a severe downturn on Wednesday, the Dow Jones index futures recovered positions, as it was said in the minutes from the beginning of the American trading session on Thursday.
Although rating agency Standard & Poor’s downgraded again the quality of the bonds of Spain, the countries markets are stable, ignoring the possible impact.
It has created a strong buzz in the last few hours that Spain will soon ask its debt bailout soon. The move by Standard & Poor’s on the eve could accelerate that decision.
The dollar, in this context, falls to the major currencies, that nevertheless moves in relatively narrow price ranges, which also provides good opportunities for placement of short-term positions.
The euro exceeded 1.2930 again momentarily, and prepares to seek his next target at 1.3030. The pound, which had been severely weakened in recent days, exceeds 1.60 and takes aim for the rest of the day at 1.6085, but must break with force the area of 1.6050. Now it functions as resistance at its junction with the dollar.
The yen also fell, investors considered that it is risky to take positions in assets. The decline of the yen, along with the strengthening of European currencies, positioned with very bullish trend in the short term pairs EUR/JPY, GBP/JPY among others.
Oil also presents short-term uptrend, pending crude inventories in the United States, which will be released at 10:30 ET.
Meanwhile, stronger data are known; the U.S. trade deficit was in line with expectations, and the Weekly unemployment claims reached their lowest since early 2008. Miracles of electoral processes.
It looks like a good day, then to place against the dollar positions. Fibonacci retracements today will be a great tool to measure price targets of the major pairs, since movements of the last days are in areas of major corrections.
GBP/USD Buy above 1.5950
The British pound is trading above its psychological level of 1.60 the pair found strong support in the second support weekly, as we mentioned in our review on Monday.
Now the pair has a dynamic resistance at 1.6050. If the pair manages to overcome this level it would win quickly positions to 1.6140 (Bearish trend line).
At a fundamental level, the Bank of England is now satisfied with its monetary policy and the Federal Reserve is ready to expand its quantitative easing seemingly limitless sense of its currency. The pair should continue higher. In the medium term we expect it will rise to 1.65. We maintain our bullish outlook above 1.5950.
EUR/USD Technical Pattern
The Euro manages to recover positions from the start of the European session; it is trading currently at 1.2930. It is likely to continue the upward trend for the rest of the day and up to the weekend.
According to our chart we can see that the pair is trading inside a triangle, this is a technical pattern. The break of the edge, top or bottom defines the movement in the medium term for the euro. It is likely the rate continues its move for the next few days in this way.
Therefore, we recommend buying at a current euro price, or if there is a decline to 1.29 it could be bought with objectives to the upper channel of the triangle 1.3030.
Andrew E Martinho, Senior Account Manager
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