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Euro Assault Softens- Yen Retreats
Sun, Feb 28 2010, 23:16 GMT
2/26/2010 07:35 am: EUR/$..1.3580 $/JPY..89.18 GBP/$..1.5202 $/CHF..1.0774 AUD/$..0.8890 $/CAD..1.0584
Asian and European markets were firmer mid-trading day in London in spite of a weaker close in US equity markets yesterday. The Dow Industrials fell more than 180 points early in the session before a late afternoon rally pulled markets back, closing at 10321.03, a loss of .5%. Weekly jobless claims showed the market had shed some 496k jobs last week, surprising analysts who were looking for a fall in the initial claims down to 460k from 473k. With sovereign debt concerns in the Eurozone rekindled, risk aversion trades have weighed heavily on the euro, sending the currency to 9-month lows this week, while boosting yen to yearly highs.
The euro was firmer today as triggered stops and short coverings pushed the single currency back over the 1.36 handle after testing 1.3450 earlier in the session. In line with expectation CPI numbers may have contributed to the euro’s pullback. Nonetheless, the eurozone outlook remains negative due to increased uncertainty as to the future of the single currency. Strong resistance rests at 1.3660 with additional ceilings at 1.3710 followed by 1.3745. A break of the upper bound of the downward channel dating back to Dec 3, currently sitting at 1.3830, could signal a trend reversal for the euro. Demand rests at 1.3540 with support levels appearing at the 1.35 figure followed by 1.3460 and 1.3380.
The yen relinquished some of the gains made this week as investors fled to the lower yielding currency over concerns on the strength of the global recovery, launching the yen to a one year highs vs. the euro. The dollar was firmer against the yen early in the London session, testing the daily pivot at 89.40 before consolidating back down towards 89.20. The yen maintains its wedge formation dating back to the Dec 9th lows after briefly dipping below the lower bound which currently sits at the 89 handle. A downside break leaves room for further advances against the greenback with demand sitting at the S1 monthly pivot at 88.58. Lower, support lies with the 161.8% Fibonacci extension taken from the Jan 8th and Feb 19th highs at 87.90. Further down, demand appears at 87.30 followed by the 87 handle. Resistance levels peek at 89.60 followed by 90.40. Upside potential gains momentum with a break of the 90.70.
Today the US releases data on GDP, existing home sales, and consumer confidence from the University of Michigan. Annualized Q4 GDP is seen to hold steady at 5.7%, with marginal gains expected in homes sales and consumer sentiment. US equity futures point to a positive open after yesterday’s volatile session.