Monday, July 18, 2011

Market Morning Review - 18 July 2011

Coming up Today (All Times GMT)
  • USD - Net Foreign Purchases of US Securities (13:00)
  • AUD - RBA Minutes (01:30)
EURUSD

The euro is trading lower against the dollar, a sign that investors remain cautious after the release of the European banks’ stress tests.

Last Friday, eight European institutions have been qualified as undercapitalized in the event of a sovereign default: among them, two Greek commercial banks and five Spanish lenders. It is worth noting that all Italian banks passed the test successfully, a sign of relief for the country after a week of defiance on its public deficit.

Technically, the EURUSD is trading in a bearish channel, eying the $1.4030 support line. Any break above the $1.4110 resistance line could signal a trend reversal, with $.4190 as next target.

EURUSD Support/Resistance: 1.4040/1.4110
EURGBP Support/Resistance: 0.8700/0.8780
EURJPY Support/Resistance: 110.70/112.10

GBPUSD

The pound benefitted last week from the weakness of the US dollar as well as from a sharp selloff in European equities. The drop in the US dollar was the result of a high degree of uncertainties surrounding the trend of US growth, as shown by the Fomc minutes.

Also weighing negatively was the impasse over the US debt ceiling, which could potentially delay payments from the US government in August and put a halt to the recovery.

In this context, the pound has found a strong support around $1.6050 and managed to rally to $1.6190. This move occurred despite a 24,500 increase in the UK claimant count, which was worse than expected.

Technically, the pair is supported by the $1.6060 support, with $1.6150 as next resistance.

GBPUSD Support/Resistance: 1.6060/ 1.6150
GBPJPY Support/Resistance: 126.70 / 127.90

Published: 18 July, 2011