Small Bounce but Still Downside Risks

By Easy-Forex | Daily Forex Analysis | Thu, Apr 12, 2012

U.S. Dollar Trading (USD) FED speak Yellen hit the airwaves playing  down speculation the FED will stop supporting the US economy anytime soon. Fed Speak from Lockheart suggested more bond buying was an option from the central bank and this combined with Yellen to reverse US stock market losses for their first gain in 5 sessions. Looking ahead, Weekly Jobless Claims forecast at 355k vs. 357k previously. February Trade balance forecast at -52bn vs. -52.6bn previously.

The Euro (EUR) the EUR/USD tested 1.3150 as Yields in the Eurozone fell in a rare reprieve. ECB members were talking up the ECB support for the Spanish bond market and pleading for more time for the reforms to flow through to the economy. Time will tell how much patience the bond vigilantes will have going forward. The Sterling (GBP) the relief rally played out on the GBP/USD by consolidating above 1.5900. We are very close to 1.6000 and recent 2012 highs so this is causing buyers hesitation. GBP/JPY is slipping but EUR/GBP is pressuring the 0.8240 level and could break at any moment. Looking ahead, February Industrial Production forecast at -0.3% vs. 0.2% previously. 

The Japanese Yen (JPY) USD/JPY moved back above Y81 but is not convincing in it recovery and could test Y80 or Y80.60 in coming sessions if the downside is tested again. The Fed Speak from US officials is not helping the USD/JPY as much of the 2012 move higher is on the back of normalization in US monetary policy faster than first expected. Australian Dollar (AUD) the AUD/USD tracked US stocks higher and we saw a sharp spike to fresh week highs on strong March Jobs numbers. Forecast at +6k we saw a +44k result and the AUD/USD is threatening resistance at 1.0380.

Oil & Gold (XAU) consolidated above the $1653-$1660 and we are looking to grind higher as the US Fed speakers support.Oil surged with positive stocks and weak USD back to $103 with the $100 test going to have to wait as buyers took back control overnight.

Pairs to watch

EUR/USD below 1.3160 targeting 1.3000 test

EUR/GBP Pressure to break lower 0.8200 key support

TECHNICAL COMMENTARY

Currency
Sup 2
Sup 1
Spot
Res 1
Res 2
EUR/USD
1.2950
1.3000
1.3115
1.3110
1.3180
USD/JPY
80.00
80.60
81.00
81.80
82.80
GBP/USD
1.5801
1.5842
1.5915
1.6000
1.6090
AUD/USD
1.0180
1.0230
1.0350
1.0470
1.0558
XAU/USD
1600.00
1630
1660
1663
1697
OIL/USD
100.00
101.00
102.45
103.00
105.00