Traders are Buying Euros, than selling euros get bored than buy euros again

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

The euro dollar, having risen dramatically last Thursday and Friday, was already decelerating by Monday and Tuesday, with the highest high 1.3722 late Tuesday night. From there the euro has retraced almost 25% of the gain from the April 22 low at 1.2883. Some technical traders like these Fibonacci and Gann numbers. The euro made the lowest low (1.3523) late last evening as Asia was coming in and needs to get past it today for the congestion to be considered a correction. For what it’s worth, the 32% retracement level is 1.3404 and the 50% is 1.3305. We like the channel bottom as support and it lies at 1.3434 at noon today.

Sterling in unstable, having broken a support line on the hourly chart early yesterday around 1.5150, with sentiment contaminated by a slew of factors, not least of which is expected skimpy demand for the giant upcoming Gilt issuance. The UK can’t raise rates in the face of the worsening recession, despite evidence inflation is not falling as much as desired, and potentially the Treasury could have another failed auction. Beware pity—the US faces the same thing not too many months down the road.

The yen is also considered a proxy for risk aversion, and has risen from 99.77 last week to 95.07 around 6 am ET today. This is, of course, bad for the export-driven Japanese economy and the Nikkei. Pretty soon we will have to start looking for threats of intervention. We imagine the “line in the sand” is probably 90. Earlier, most analysts would have said 95 was the limit, and the speed of the move to that round-number level is pretty scary.

Pounds to US Dollars = 1.4650
Pounds to Euros = 1.1122
Euro to Pounds = 0.8987
Pounds to Australian Dollars = 2.0643

Bye For Now

Barbara Rockefeller
Foreign Exchange Trading
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