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UFXBank Forex Outlook:Euro Hits 5-month High

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar fell against all major currencies after Federal Reserve Chairman Ben S. Bernanke said that damage from the financial crisis has left the U.S. economy growing at a slower pace than policy makers want, even though the central bank’s more than $1 trillion in bond purchases have reduced interest rates.  The NASDAQ and Dow Jones strengthened by 2.33% and 1.86% respectively, crude oil jumped by 2.0%, closing at $76.50 a barrel. Gold (XAU) rose to a new record during the session (above $1300), and in the end, strengthened by 0.1% to close at $1298 an ounce. No economic data is expected today.

EURO (EUR) – The Euro touched a five month high against the Dollar last Friday, as German business confidence unexpectedly rose to the highest level in more than three years in September (106.8 vs. 106.3 forecast). In addition to this, Bernanke’s declarations increased investor appetite for higher yielding assets. The momentum of the EUR/USD is still strongly bullish for the euro, and as long as it’s above 1.3350 levels, a long position is preferred. The next resistance line on the daily chart is 1.3700, and the 10 moving average also supports an uptrend. Overall, EUR/USD traded with a low of 1.3286 and with a high of 1.3495. Today, ECB President Trichet will speak.

EUR/USD – Last: 1.3462

Resistance

1.3500

Support

1.3440

1.3285

1.3160

British Pound (GBP) – The Pound rallied against the Dollar in Forex Trading, closing the week at a 6 week high, as concerns over the Bank of England's economic outlook were overshadowed by Friday's soft U.S. economic data. The main resistance of the GBP/USD on the daily chart is 1.6000 and the momentum is bullish as long as the price is above 1.5750. Overall, GBP/USD traded with a low of 1.5641 and with a high of 1.5844.  No economic data is expected today.

GBP/USD - Last: 1.5819

Resistance

1.5845

Support

1.5730

1.5600

1.5500

Japanese Yen (JPY) –The Yen strengthened against the Dollar after worse than expected data from US was released on Friday. Among the data were New Home Sales which came out at 288K vs. 292K forecast, Durable Goods Orders that came out at -1.3% vs. -0.9% forecast, and Bernanke’s statements regarding the economy, all of which drove investors towards the yen instead of the dollar. The USD/JPY has been fluctuating around 84.50 over the last three days, and support on the one hour chart is at 84.20. If the pair moves below the support line, the trend will continue to decline. Overall, USD/JPY traded with a low of 84.11 and with a high of 85.39. No economic data is expected today.

USD/JPY-Last: 84.24

Resistance

84.70

85.25

86.00

Support

84.10

Canadian dollar (CAD) – The Canadian Dollar gained for the first time in three days versus the Dollar as reports showing higher than forecast German business confidence and U.S. durable goods orders, spurred investor appetite for assets linked to growth. The momentum of the USD/CAD is still negative for the US Dollar, and as long as the USD/CAD is below 1.0400 levels, a short position is preferred. The next support on the daily chart is located at 1.0200. Overall, USD/CAD traded with a low of 1.0225 and with a high of 1.0355. No economic data is expected today.

USD/CAD - Last: 1.0251

Resistance

1.0280

1.0350

1.0380

Support

1.0225

1.0195