euro exchange rates rose from 1.4090 to 1.4265

Foreign Exchange - Pounds Sterling and Euro Exchange Rate Outlook

Yesterday the US dollar rate flip-flopped on the US equity market shaking off the negative influence of the Shanghai Composite rout, causing dollar and yen longs great distress. As Market News puts it, "The overnight slide in Chinese stocks led to anticipation of risk aversion in U.S. action and market players entered into euro, sterling and yen carry shorts accordingly. When U.S. equities trimmed losses in early morning action, currency positions were pared back modestly. Later as stocks rallied further, market players raced to unwind existing dollar long position, with the euro exchange rate and other currencies rising sharply."

From the US open around 8 am ET, the euro exchange rates rose from 1.4090 to 1.4265 by noon. The euro has failed to build on it, though, and is sliding softly downward along a hand-drawn resistance line that lies about 1.4225 at 8 am today. We see ultimate support at the midpoint of yesterday's breakout bar at around 1.4188. The Market News technical analyst puts support at something he names the 9-day resistance line (whatever that is) around 1.4242, or maybe the Fibonacci retracement level 1.4246 (50% of the 1.4447 to 1.4046 move).

We say that technical levels are often powerful if everyone is looking at the same indicators, but right now, we have bigger things on our mind like the US equity market decoupling from the Shanghai and some actual economic data, which was in short supply on Wednesday, allowing the oil inventory report to hold the room.

Dollar/yen got a boost, or rather the yen took a hit, on rising oil and commodity prices and rising global equity prices overnight. The FT has an interesting report, saying "Weekly data showed continued currency inflows into the Japanese equity market, prompting BNP Paribas analysts to argue this suggested the dollar was 'increasingly used as a funding currency taking a position
previously occupied by the yen.'"

In the UK, a dire fiscal condition report had little effect, although sterling dipped from 1.6607 before the news to 1.6449. The pound is especially tricky these days, overreacting to the QE stories but now under-reacting to the deficit news. In one of our long-term model systems, sterling is a sell and in the other, it’s a buy, while in the short-term trading system, it’s a buy but with support at about 1.6430, close to the current quote at 8:10 am of 1.6477.

Pounds to US Dollars = 1.6496
Pounds to Euros = 1.1586
Euro to Pounds = 0.8628
Pounds to Australian Dollars = 1.9848

Bye For Now
Barbara Rockefeller
Foreign Exchange Trading
Forex Trading Reports - Click for a free trial

Buying Euros? Buy Euros at the best euro Rates!
Buying Dollars? Buy US Dollars at the Best Dollar Rates!
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!
Buy Travel Money, Buy Holiday Money, Best exchange rates for Travel Money

Contact IMS Foreign Exchange + 44 207 183 2790