Trend continues...2

Written by JS T Alexander | 12 January 2012

Following EUR-GBP-USDX & cross rates

In between the reports, the currency majors were at pause while waiting for the next batch of news towards the end of the week. 

Stating that the US growth was, “modest to moderate” across most of the US states and while manufacturing maintained its expansion was good. The statement were more or less in line with the recent data and continued to imply that the US domestic recovery remains on track. And with that said, these statements have supported the technical charts for the major pairs particularly the US Dollar Index.

On the other hand, the USDX again continued its advance after coming from a temporary correction with a low at 80.70 and rebounded back to the 81.50 levels and currently at 81.23 as of this writing. The US dollar advance by at least 1.05% against the British Pound. While the weaker than expected trade balance data out of the UK added to the downward pressure for the Sterling Pound falling to a low 1.5278/10 range. And likewise waiting ahead for the BoE interest rate decision expected to remain unchange. A further downward presuure would open extensions at 1.5180 as the 2nd objective in line with the USDX higher than the previous established resistance at 82.05/10 basis point.

This combined market price action has influenced the EURGBP cross rate for that matter. The downward momentum added to support the Cross rate EURGBP relatively with the EURUSD pulling back during the closing of the day. And currently working at 1.2710 with a key support at the 1.2660 extension price levels. The correlation between the major pairs had made the EURGBP cross move back to 0.8296 as of now. By gaining a closer price spread from the 21 day Moving Average of 0.8320. The gains made by the cross would simply be supportive for the Euro as a single currency that such technical price move would make the Euro's downward pressure limited at this point. Plus the efforts being excerted by the summit meeting to resolve the debt crsis on top of the additional downgrades by the rating agencies concerned. these politically motivated moves would be quite supportive, but nevertheless volumes and price momentum should be clearly seen whenever EURGBP cross rate would further its advance although still limited to a gradual increase with some daily corrective moves would be included. Please refer to the previous market view report listed below.

As a matter of Review...as of Jan 05, 2012 As Follows:

" The continuation of the rally for the USD can be seen as it is moving higher with a more influential force on the Swiss Franc or USDCHF working at the present price back to 0.9498. Its attempting to reach its initial target at the 0.9550 (R1) with a possible extension nearing the 0.9650 (R2) - 0.9720/50 (R3)."

" However, there would be no straight directional moves as volume and volatility would only build up towards the third (3rd) trading week of January. Daily Pullbacks are expected nearing the 1st resistance levels with some price adjustments between the USDJPY as it moves contrary with the Yen. As the Japanese Yen moves closer to its intervention levels. We would stay clear of the USDJPY and instead work with a cross related trade this coming weeks ahead with the EURGBP pairs, USDCHF and the Aussie. "  Trend continues...