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| Daily Market Review July 7th, 2009 Posted: 07 Jul 2009 02:59 AM PDT
Trading in Asia open in negative sentiment as markets resumed trading. Risk aversion it seems has returned to the table with the Dollar and the Yen advancing against most other currencies. The Sterling which is strongly linked to risk trade fell sharply in first trading hours trading around 1.61 against the Greenback, 153 against the JPY and the EUR/GBP trade broke the strong 0.86 resistance once against. In the EU the Sentix investment confidence publication was lower than expected and only added to the negative sentiment in the Region ahead if the EU GDP data due this week. However as trading advanced towards the US open positive sentiment lifted markets and snapped the bearish momentum which began at the early trading hours. Eventually trading session in the US closed rather mixed with a slight tendency to the positive side and in the FX arena the Greenback and the Yen ended the day flat. But what has seemed as a false start of bearish sentiment could very well be a reversal ahead of a big profit taking wave which could spur the markets and snap the long bullish cycle. It seems that investors are having a difficulty finding more of the so called “green shoots” and consequently risk aversion gradually refloats to the arena. In the coming days data publications surprising for the worse with EU GDP and UK rate decision at the pin point could easily trigger the “real” price adjustment and make the risk currencies such as the Euro, the sterling and the Ausssie look expensive versus the Dollar and the Yen.
Support/Resistance
After the pair topped out at the 1.42 the EUR/USD the pair has been under slight bearish pressure but continued to gain Support around the 1.37-1.38 area which kept the pair rather flat then bearish. At the open of the trade this week the par traded with strong bearish pressure but remained in range and returned earlier losses. Evidently attention should be given to the 1.37-38 support, if this support level continues to hold and withstand the bearish pressure again and again it could signal another bullish cycle for the pair with an attempt to reach the 1.45 area. A close of bellow 1.37 would mark the 1.35 as the next target. GBP/USD
Although the GBP/USD has held up rather well lately the bearish selloff at the early trading hours pushed the pair to a one month low. The pair has later rebounded but continues to signal weakness. The failure to break the 1.68 area alongside the fact that the next meaningful support for the pair is at the 1.58 area could mean the pair will be sensitive to bearish pressure at least for the near term. If the pair would fail to hold under the 1.62 area this could mean another attempt for a break of the 1.68 resistance is gearing up. However the 1.68 level seemed to mark the overbought level for the pair with a substantial amount of sellers which makes the break of the 1.68 more distant for the time being. USD/CAD
The pair which advanced around 6% since mid Jun has encountered a strong resistance around the 1.168-1.17 area. With the oscillators indicating some loss of momentum some profit taking for the pair would definitely not surprise. The pair gained support around the 1.14 area and a break of that support could mean the bearish adjustment if it occurs is more than just profit taking. As the Dollar still remains strong a break of the 1.17 resistance is not a scenario to rule out however this would seem more sustainable after a retest of the 1.14-1.15 support which will provide more momentum which this pair lacks lately. Daily Events
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