The US dollar exchange rate held flat against the euro exchange rate yesterday in a range of 1.2725 to 1.2825 and without direction, but overnight the news that Moody’s may downgrade a slew of European banks because of their exposure to Eastern Europe caused the euro exchange rate to fall off a cliff from 1.2765 to 1.2656 in a single hour. After that the euro exchange rate has crept a bit lower to 1.2600 at the lowest. The euro rate went on the defensive also because of a new rise in risk aversion on falling equity markets worldwide yesterday.
Technically, it was helpful to the dollar exchange rate that the euro failed to match and surpass highs last week, putting in a series of lower highs. Some foreign exchane analysts now say the eurozone’s financial sector woes could take the euro rate down to test the Oct 28 low of 1.2329 in a flash. We note that the channel bottom on the hourly chart by 6 pm this coming Friday is 1.2126. Do not expect such a level at a speedy pace - prices never move in a straight line.
We are not getting the usual opposite effect in dollar to japanese yen, where the US dollar rose to 92.76, breaking last week’s high and possibly marking the beginning of a new move in the yen. Some forex analysts think that Japanese risk aversion has already been satisfied - i.e, everyone who was going to repatriate trading and investment money to yen has already done so. It won’t be long before we start hearing about the “normal” March repatriation flows that supposedly push the yen up as the Japanese fiscal year comes to an end on March 31. This is a myth. We get a rise in the yen in March less often than we get a drop, but a couple of years it was true and in size, so the story lingers. This time we have the dreadful GDP numbers yesterday to contribute drag to any yen rise.
Technically, it was helpful to the dollar exchange rate that the euro failed to match and surpass highs last week, putting in a series of lower highs. Some foreign exchane analysts now say the eurozone’s financial sector woes could take the euro rate down to test the Oct 28 low of 1.2329 in a flash. We note that the channel bottom on the hourly chart by 6 pm this coming Friday is 1.2126. Do not expect such a level at a speedy pace - prices never move in a straight line.
We are not getting the usual opposite effect in dollar to japanese yen, where the US dollar rose to 92.76, breaking last week’s high and possibly marking the beginning of a new move in the yen. Some forex analysts think that Japanese risk aversion has already been satisfied - i.e, everyone who was going to repatriate trading and investment money to yen has already done so. It won’t be long before we start hearing about the “normal” March repatriation flows that supposedly push the yen up as the Japanese fiscal year comes to an end on March 31. This is a myth. We get a rise in the yen in March less often than we get a drop, but a couple of years it was true and in size, so the story lingers. This time we have the dreadful GDP numbers yesterday to contribute drag to any yen rise.
Pounds to US Dollars = 1.4400
Pounds to Euros = 1.1174
Euro to Pounds = 0.8947
Bye For Now
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