M. Hewson: euro in fase laterale, non cambia il quadro ribassista
Forex Morning Comment a cura di Michael Hewson, analista di CMC Markets.
– Euro in fase laterale, potrebbe registrare un rimbalzo di breve durata fino a $1.3580
anche se la situazione di fondo non muta il quadro ribassista con un primo target
– Principali cross-spot valutari
FOREX MORNING COMMENT
London –29th November 2010
The market’s gaze remains fixed on events playing out in Europe as well as on the Korean peninsula, with European ministers finally agreeing on a €85bn bailout for Ireland, while South Korean forces remain on high alert, performing military drills in response to North Korea’s unpredictable behaviour. The South Korean President also vowed to make North Korea pay for military attacks which has kept the tension levels high.
As the bailout package was agreed the Irish government continued to remain under pressure over its handling of the situation having had their majority cut to two in Thursday’s by election. Certainly the fact that Ireland will have to raise part of the bailout money from its pension reserves to the tune of €17bn has not gone down well, even though the interest rate of 5.8% was at the lower end of expectations and well below current borrowing rates.
Finance leaders have agreed to step back from Angela Merkel’s call for bond investors to share losses with taxpayers from 2013, and look at measures on a case by case basis in an attempt to soothe markets concerns about possible “haircut” scenarios. However with no guarantee that the Irish budget will pass on December 7th and increasing austerity fatigue amongst populations, not only in Ireland, but also the rest of Europe, the next few days will continue to be fraught with difficulty for the European currency.
Particular attention will remain on the yield differentials between German and Portuguese, and especially Spanish bond yields, which hit life time highs on Friday and whether they will continue increasing as investors remain concerned at the ability of European politicians to actually deliver on their promises to support not only the euro, but the indebted peripheral countries. Along with recent US economic data showing signs of improvement and this weeks US employment report due out Friday, the US dollar could well continue to push higher against the single currency, if tensions in Korea escalate and the outlook
for Europe continues to darken.
EURUSD – the single currency has pushed below trend line support at 1.3240/50 still some way short of the 200 day MA at 1.3135 and the 50% retracement level of the 1.1880/1.4280 up move at 1.3080, which is the next support level for the single currency. The fact that the market closed on the cusp of the support zone line suggests there could be a risk of a relief rally, which could well make the euro
susceptible to pullbacks towards resistance around the previous lows of this month around 1.3450 and behind that at 1.3580. However it changes nothing with respect to further declines in the long term and the risks now shift to a longer term test towards 1.2500.
GBPUSD – despite downward momentum looking stretched the pound continues to drop towards the 1.5510 level, which is 38.2% retracement of the entire up move from the May lows at 1.4230 to the 1.6300 highs earlier this month. This remains the target and a break below this level would then target 1.5265 which is 50% retracement of the 1.4230/1.6300 up move. It would be a surprise to break the 1.5510 on the first attempt as cable does have a tendency to squeeze short positions and as such we could see a rally back towards 1.5730.
EURGBP – the stubborn refusal of the single currency to test support just above the 0.8400 level changes nothing with respect to a lower euro. While we stay below trend line resistance from the 0.8940 highs at 0.8570 then the risk remains for a test of the 0.8400 level, which is 61.8% retracement of the 0.8070/0.8940 up move, a break of which re-targets the 0.8100 area.
USDJPY – the dollar finally hit the 84.20 level on Friday last week and this level has capped further gains in Asia this morning. To push on towards the 85.80 level the market needs to hold above 83.55 trend line support from the 9th November lows at 80.55 and/or the 50 day moving average and support around 82.50 to keep the upward momentum intact.Only a break back below 82.70 would have the potential to re-target the 81.80 area.