The Dollar's victory... for a while
FXstreet.com (San Francisco) - The US Dollar has been the winner for second day this week enjoying a risk aversion environment. The EURUSD has finished the day with 0.73% declines to trade below the 1.2900 zone at 1.2880 just before reaching lowest levels since October 1st at 1.2860. The GBPUSD trades now at 1.6000, 0.18% declines so far today but the cable posted fresh 1-month low at 1.5975. USDJPY closed almost flat at 78.27 with Saxo Bank's analyst John Hardy stating "the USDJPY's downside momentum is dead."
Despite market has seen a bit of risk return late in the day, the pairs, stocks and overall sentiment closed with negative mood on the back of uncertainty in the US earning season, European Marx Brothers version and concern over global growth after yesterday's IFM global report.
The Dow Jones Industrial Average shed 110.12 points, or 0.8% to close at 13,473.53. The Nasdaq Composite dropped 47.33 points, or 1.5% to 3,065.02. The S&P 500 lost 14.40 points, or 1% to 1,441.48.
In the European side, Eurozone finance ministers' meeting continues while German Chancellor Merkel flying to meet Greek Prime Minister Samaras in Athens. Later on the day, Reuters published a draft conclusions of an EU summit to take place next week saying that the EU leaders will endorse idea of eurozone budget, which would be separate from the long-term budget of the wider European Union, Reuters reported on Friday, citing draft conclusions of an EU summit to take place next week.
But Euro remained pressured and fell to 9-day lows reaching 1.2858 before bouncing slightly higher. Market was waiting developments from stocks as catalyst in the short term. EURUSD recovery is limited at 1.2880 right now. Watch for a positive outcome from earning reports "sparking some risk appetite and a recovery of EURUSD up to 1.2930, where the first line of sellers will appear," says Valeria Bednarik from FXstreet.com, as short-term approach. "If above 1.2970 comes as next strong resistance level. On the other hand, a break 1.2840 will confirm the negative bias for the pair with scope then to test area, 38.2% retracement of the latest bullish daily run."
From a wider view, EURUSD keeps looking for a signal to break out its recent range, contained by 1.2803 on the downside and capped by September's double-top at 1.3171. A quiet week in North America should probably leave the pair moving at the rhythm of European developments and headlines, making the outlook unclear.
Near-term speaking, a break above 1.3070 should pave the way to a retest of 1.3171, while loss of 1.2880 should quickly take the pair back to the bottom-side of its range around 1.2800 with not much in the way.
The Sterling has broken down the 1.6000 key level against the US Dollar and after falling around 65 pips from 1.6040 marked in the European session, the GBPUSD has traded 1.5975 as fresh lowest level since September 10. IN the short term, next support lies at 1.5960 (low Sep.10) then 1.5923 (low Sep.7) and 1.5905 (MA55d). On the upside, a breakout of 1.6130 (MA10d) would open the door to 1.6142 (hourly high Oct.8) then 1.6163 (MA21d) and 1.6218 (high Oct.5).
In the USDJPY's field Joh Hardy, Saxo Bank's Head of FX Strategy, is categoric: the "USDJPY's downside momentum is dead." USDJPY has been trading in a micro-range between 78.20 and 78.25 in the last hours of the American session but "Technically speaking, USDJPY's downside momentum is dead, with upside interesting on a follow up rally through 79.00," comments Hardy.
"USDJPY failed to fall as much as the low yield environment suggested it should have over the summer as the market feared BoJ intervention when USDJPY was working its way back toward the cycle lows, but more recently, yields suggest that the USDJPY risk is more to the upside," Hardy points. "A stronger signal is probably needed in bond markets, or from the BoJ/MoF before we get USDJPY to sustain anything above 79.00," the Saxo analyst concludes.
Despite market has seen a bit of risk return late in the day, the pairs, stocks and overall sentiment closed with negative mood on the back of uncertainty in the US earning season, European Marx Brothers version and concern over global growth after yesterday's IFM global report.
The Dow Jones Industrial Average shed 110.12 points, or 0.8% to close at 13,473.53. The Nasdaq Composite dropped 47.33 points, or 1.5% to 3,065.02. The S&P 500 lost 14.40 points, or 1% to 1,441.48.
In the European side, Eurozone finance ministers' meeting continues while German Chancellor Merkel flying to meet Greek Prime Minister Samaras in Athens. Later on the day, Reuters published a draft conclusions of an EU summit to take place next week saying that the EU leaders will endorse idea of eurozone budget, which would be separate from the long-term budget of the wider European Union, Reuters reported on Friday, citing draft conclusions of an EU summit to take place next week.
But Euro remained pressured and fell to 9-day lows reaching 1.2858 before bouncing slightly higher. Market was waiting developments from stocks as catalyst in the short term. EURUSD recovery is limited at 1.2880 right now. Watch for a positive outcome from earning reports "sparking some risk appetite and a recovery of EURUSD up to 1.2930, where the first line of sellers will appear," says Valeria Bednarik from FXstreet.com, as short-term approach. "If above 1.2970 comes as next strong resistance level. On the other hand, a break 1.2840 will confirm the negative bias for the pair with scope then to test area, 38.2% retracement of the latest bullish daily run."
From a wider view, EURUSD keeps looking for a signal to break out its recent range, contained by 1.2803 on the downside and capped by September's double-top at 1.3171. A quiet week in North America should probably leave the pair moving at the rhythm of European developments and headlines, making the outlook unclear.
Near-term speaking, a break above 1.3070 should pave the way to a retest of 1.3171, while loss of 1.2880 should quickly take the pair back to the bottom-side of its range around 1.2800 with not much in the way.
The Sterling has broken down the 1.6000 key level against the US Dollar and after falling around 65 pips from 1.6040 marked in the European session, the GBPUSD has traded 1.5975 as fresh lowest level since September 10. IN the short term, next support lies at 1.5960 (low Sep.10) then 1.5923 (low Sep.7) and 1.5905 (MA55d). On the upside, a breakout of 1.6130 (MA10d) would open the door to 1.6142 (hourly high Oct.8) then 1.6163 (MA21d) and 1.6218 (high Oct.5).
In the USDJPY's field Joh Hardy, Saxo Bank's Head of FX Strategy, is categoric: the "USDJPY's downside momentum is dead." USDJPY has been trading in a micro-range between 78.20 and 78.25 in the last hours of the American session but "Technically speaking, USDJPY's downside momentum is dead, with upside interesting on a follow up rally through 79.00," comments Hardy.
"USDJPY failed to fall as much as the low yield environment suggested it should have over the summer as the market feared BoJ intervention when USDJPY was working its way back toward the cycle lows, but more recently, yields suggest that the USDJPY risk is more to the upside," Hardy points. "A stronger signal is probably needed in bond markets, or from the BoJ/MoF before we get USDJPY to sustain anything above 79.00," the Saxo analyst concludes.
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