Mike Paterson’s daily Forex brief
Well at last we’ve seen a break out of the recent tight ranges on the back of increased hopes of a deal on Greek debt (yawn) and more dovish comments by US Fed Chairman Bernanke.
The Euro started to take a firmer tone yesterday morning after SNB Chairman Jordan said they would vigorously defend the 1.2000 EURCHF level throwing unlimited resources at any need for intervention. Whilst this wasn’t anything we didn’t expect those traders holding short EURCHF were disappointed by the lack of significant pull-back in the absence of any new floor being set and so we started to see a little short covering to a high so far of 1.2129.
Then in the afternoon we had positive news on Greek debt deal being imminent and Mr Bernanke reiterating his dovish tones, making a point to mention that the market shouldn’t get too excited about the improved jobs data last Friday.
EURUSD rose quickly above 1.3200 and later in NY above the key level of 1.3250 and since then we’ve touched 1.3289. There is talk of a large barrier option to defend at 1.3300 but as is normally the pattern, should this break then we can expect further short-covering.
EURGBP has been dragged a little higher but has found it hard work which suggests either a little GBP strength on this pair or the Euro rally is not sustainable. Resistance is being found at 0.8350 (GBPEUR support 1.1976) which is well below the recent highs above 0.8400 (1.1905).
GBPUSD has made it through 1.5900 but has large technical resistance around 1.5925-35 while strong EURAUD buying has capped the rise in AUDUSD for the moment.
Since the initial euphoria over a Greek deal there has been plenty of rhetoric to dampen down expectations of any such agreement which was touted to be done by tomorrow or Friday, but Germany has now proposed postponing the majority of Greek aid. It would appear that there is less and less concern over Greece dropping out the Eurozone, the initial fear of which was effectively their trump card.
Gold and equity prices seem to be still consolidating and the Euro is holding some ground for the moment so it’s still a coin-flip as to which way this will go over the next couple of days, with the not inconsiderable BOE and ECB interest rate/QE decisions tomorrow to factor in.
Should keep things ticking over nicely…….
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