Forex Flash: US steps back from the cliff edge – BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that markets look to be breathing a collective sigh of relief as US politicians found a way to avert the full effects of the fiscal cliff.
However, despite the momentary calm, the issues of the debt ceiling and spending cuts are up next on the agenda and have the potential to be much worse in terms of gridlock and consequence. They note that the euro reached $1.33 in Asia and the dollar moved to a high just shy of JPY 87.35 before consolidating in the European morning. They believe that, "this consolidation helped alleviate the short-term over-bought technical condition (on the hourly bar charts), and North American participants seem poised to re-challenge those area."
Elsewhere, Sterling rallied through last years high to reach 1.6380 and pulled back a full cent before finding a bid. Technically, it too can re-test the session highs. Unlike last week, they finish by noting that dollar-bloc currencies are fully participating in risk-on environments.
However, despite the momentary calm, the issues of the debt ceiling and spending cuts are up next on the agenda and have the potential to be much worse in terms of gridlock and consequence. They note that the euro reached $1.33 in Asia and the dollar moved to a high just shy of JPY 87.35 before consolidating in the European morning. They believe that, "this consolidation helped alleviate the short-term over-bought technical condition (on the hourly bar charts), and North American participants seem poised to re-challenge those area."
Elsewhere, Sterling rallied through last years high to reach 1.6380 and pulled back a full cent before finding a bid. Technically, it too can re-test the session highs. Unlike last week, they finish by noting that dollar-bloc currencies are fully participating in risk-on environments.
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