The EUR/USD opened around 1.4820 in Sydney, surged to a high of 1.4852 in late NY trading, as trader and model fund stops were tripped above 1.4825 and subsequently consolidated below in Asia, slipping to 1.4814 on EUR/JPY selling.
This selling was initially inspired by Japanese profit taking in the cross, compounded by the weak performance of the Asian equity markets, despite the late recovery on Wall Street; the Nikkei is down 1.29%. The cross fell from 163.38 to test 162.46, as the Asian equity markets focused on the lower 08 U.S. growth forecasts in the FOMC report, the drop in U.S. building permits and continued sub prime fears. Initial support comes in at 1.4770/80, the hourly range low in NY and resistance at this morning's 1.4850/55 high.
The strong up trend in the EUR/USD remains on track for a test of 1.5000 in coming sessions, as EU officials accept the inflationary benefits of the strong currency over the negative impact on competitiveness. Dealers also report order books stacked with small topside stops, as investors try to pick the top of this trend, while bids remain below 1.4600, thus a 1.5000 test looks viable.
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