The previous trading week saw volatile movements of major currency pairs, which showed dynamics in both ways: positive and negative. As the European Ministers of Finance discussed the future results of the stress-tests in Brussels on Monday, the concerns over the reflection of the current situation in the results are growing. At the same time expectations over the negative US fundamentals resulted in a growth of the safe heaven currencies, and the US dollar rate strengthened against its competitors during the morning trading. Market participants expected the decrease of the US retail sales prices.
The European banks’ stress-test results were expected to be released on Friday. More and more concerns over these results overwhelmed the market. Some of the released information already showed the possibility that the results could be actually negative. In reaction to this, the EUR/USD pair dropped below the $1,2600 mark on Monday and set its minimum at the level of $1.2548. The pound showed a negative dynamics as well. The Standard &Poor’s credit agency decided to leave its negative forecast for the credit rating for Great Britain unchanged. And the GBP/USD rate dropped below the $1,5000 level. But after the release of the UK GDP growth for 0.3%, the sterling rate increased and reached the $1.5084 maximums.
The Australian dollar dropped against its major competitors on Monday, since its former rally was considered overrated. The investors’ concerns over the slow-down of the world economy rehabilitation rate influenced the high-risk currencies growth.
Due to the decision of the Moody’s rating agency to downgrade the Portugal rating to A1 with a stable forecast, the euro rate was hit by the negative investors’ sentiments on Tuesday. At the same time the European Union warned Finland, Bulgaria, Cyprus and Denmark to reduce their budget deficits. The negative expectations for the German and European ZEW Survey (Economic sentiment) for July added the negative influence on the euro. The speculations regarding the European stress-tests’ results showed growing concern. Therefore, the EUR/USD pair dropped to the range of $1,2530.
The safe heaven currencies grew as the government of China announced of its intentions to reduce the speculative real estate investments. As a result, the US dollar strengthened against its competitors.
Nevertheless, during the second part of the day on Tuesday, the investors’ interests shifted and the US dollar rate switched to the negative dynamics. At the same time the euro was supported by the positive corporate US reports and the successful Greek bond auction.
The successful Greek bond auction continued to have a positive impact on the euro dynamics on Wednesday as well. Nevertheless, the released European fundamentals during the European session pressured the euro temporarily. The Euro-zone industrial production annualized grew for only 9.4% when the forecasted growth showed the 11.4% increase. The EUR/USD pair traded in the range of $1,2690-$1,2730.
According to the released data, the quarterly report of Intel showed unexpectedly high profits. The net profits of the corporation amounted to $2,9 billion. As a result, the demand for the safe-heaven currencies dropped and the greenback decreased against the major competitors. At the same time the released US retail sales and the import price indices dropped.
On the same day the pound reached its 2-month maximum against the US dollar at the level of $1.5290 as the released UK jobless claims unexpectedly dropped in June for 20,800 thousand.
On Wednesday the oil rate decreased to $76.85 per barrel. And the gold prices also dropped to $1,208.40 level per troy ounce.
According to the expectations, the Bank of Japan left the principal rate unchanged at the level of 0,1% on Thursday. In addition, the released statement of the Bank of Japan referred to its intentions to continue with the soft monetary policy. The Japanese yen rate grew as the concerns over the slow-down of the US economy rehabilitation rate increased. And the USD/JPY pair dropped below the Y88,00 level.
On Thursday the EUR/USD pair traded in the range of $1,2710-$1,2765. As investors turned away from the safe-haven currencies, the euro extended its growth and advanced to its two-month maximum of $1.2834. One o of the reasons was the successful Spanish debt auction results.
The minutes of the FRS meeting, which was released on Wednesday, continued to pressure the US dollar rate on Thursday. According to the published protocol, the FRS decreased the GDP forecasted growth rate and mentioned the existing risk growth in the US economy. Another negative impact on the investors’ attitudes came from the release of China’s second quarter GDP report, which dropped to 10.3% against the previous level of 11.9%. In addition, we should mention, that the USD producer price index dropped, the USD Empire manufacturing index decreased considerably and the US Philadelphia Fed. index dropped as well.
The GBP/USD rate managed to reach the $1,5280 maximums on Thursday. Following the shift in the market participants’ risk sentiments and the euro growth during the European session, the sterling increased to $1.5355 mark.
On the same day the Australian dollar rate dropped due to the released fundamentals. The consumer inflation expectation decreased to 3.3% from the previous level of 3.4%. Therefore, the expectations for the further principal interest rate increase in Australia dropped.
Friday saw increased growth of the investors’ willingness to take risks. The meeting between the German Chancellor, Angela Merkel and the Prime Minister of China, Wen Jiabao, rendered significant support to the euro. Wen Jiabao expressed his confidence that Europe would overcome all the difficulties and that «Europe would be always one of the major investment markets for the foreign currency reserves of China». Following this positive lead, the EUR/USD pair reached its maximum above the $1.3000 level. At the same time the released data from the US was rather negative. In particular, the profit reports of the «Bank of America Corp.» and «General Electric Co.» turned out to be below the expectations. In addition, the consumer prices index for June decreased for 0,1%, the University of Michigan confidence indicator dropped in July for the level of 66.5, when the forecasted level was at the 74.0 mark. The net long-term TIC flows also decreased.
By the end of the trading week the GBP/USD pair consolidated at the level of $1.5300, and the USD/JPY rate reached its 7-months minimum at Y86.25.
Weekly technical analysis
EURUSD
The pair is aiming to the second level of Fibonacci retracement of 38.2% at 1.3113. The next aim at Moving Average (200) at 1.3229 if the pair breaks and closes above 1.3113. If the pair rolls back at 1.2701 support maybe found.
Resistance: 1.3028, 1.3229, 1.3433
Support: 1.2863, 1.2701, 1.2569
GBPUSD
The pair has tested resistance at 1.5484 and tolled back to 1.5252. If this support will not be broken the pair will rise to 1.5484 and 1.5672 (channel line). If the pair breaks 1.5252, the pair will decline to 1.5058.
Resistance: 1.5484, 1.5672, 1.5854
Support: 1.5252, 1.5058, 1.4853
USDCHF
If the pair breaks 1.0380 the pair will decline to 1.0275. Resistance at 1.0821.
Resistance: 1.0514, 1.0618, 1.0726
Support: 1.0380, 1.0275, 1.0150
USDJPY
The local minimum can be found at 85.16.
Resistance: 87.01, 90.04, 91.25
Support: 85.16, 84.26, 83.33
AUDUSD
The pair has risen to Moving Averages (100 and 200). If the pair closes above 0.8724 the pair will rise up to 0.8903. If the pair closes below 0.8724 the pair will decline to 0.8576.
Resistance: 0.8724, 0.8903, 0.9028
Support: 0.8576, 0.8424, 0.8272
The European banks’ stress-test results were expected to be released on Friday. More and more concerns over these results overwhelmed the market. Some of the released information already showed the possibility that the results could be actually negative. In reaction to this, the EUR/USD pair dropped below the $1,2600 mark on Monday and set its minimum at the level of $1.2548. The pound showed a negative dynamics as well. The Standard &Poor’s credit agency decided to leave its negative forecast for the credit rating for Great Britain unchanged. And the GBP/USD rate dropped below the $1,5000 level. But after the release of the UK GDP growth for 0.3%, the sterling rate increased and reached the $1.5084 maximums.
The Australian dollar dropped against its major competitors on Monday, since its former rally was considered overrated. The investors’ concerns over the slow-down of the world economy rehabilitation rate influenced the high-risk currencies growth.
Due to the decision of the Moody’s rating agency to downgrade the Portugal rating to A1 with a stable forecast, the euro rate was hit by the negative investors’ sentiments on Tuesday. At the same time the European Union warned Finland, Bulgaria, Cyprus and Denmark to reduce their budget deficits. The negative expectations for the German and European ZEW Survey (Economic sentiment) for July added the negative influence on the euro. The speculations regarding the European stress-tests’ results showed growing concern. Therefore, the EUR/USD pair dropped to the range of $1,2530.
The safe heaven currencies grew as the government of China announced of its intentions to reduce the speculative real estate investments. As a result, the US dollar strengthened against its competitors.
Nevertheless, during the second part of the day on Tuesday, the investors’ interests shifted and the US dollar rate switched to the negative dynamics. At the same time the euro was supported by the positive corporate US reports and the successful Greek bond auction.
The successful Greek bond auction continued to have a positive impact on the euro dynamics on Wednesday as well. Nevertheless, the released European fundamentals during the European session pressured the euro temporarily. The Euro-zone industrial production annualized grew for only 9.4% when the forecasted growth showed the 11.4% increase. The EUR/USD pair traded in the range of $1,2690-$1,2730.
According to the released data, the quarterly report of Intel showed unexpectedly high profits. The net profits of the corporation amounted to $2,9 billion. As a result, the demand for the safe-heaven currencies dropped and the greenback decreased against the major competitors. At the same time the released US retail sales and the import price indices dropped.
On the same day the pound reached its 2-month maximum against the US dollar at the level of $1.5290 as the released UK jobless claims unexpectedly dropped in June for 20,800 thousand.
On Wednesday the oil rate decreased to $76.85 per barrel. And the gold prices also dropped to $1,208.40 level per troy ounce.
According to the expectations, the Bank of Japan left the principal rate unchanged at the level of 0,1% on Thursday. In addition, the released statement of the Bank of Japan referred to its intentions to continue with the soft monetary policy. The Japanese yen rate grew as the concerns over the slow-down of the US economy rehabilitation rate increased. And the USD/JPY pair dropped below the Y88,00 level.
On Thursday the EUR/USD pair traded in the range of $1,2710-$1,2765. As investors turned away from the safe-haven currencies, the euro extended its growth and advanced to its two-month maximum of $1.2834. One o of the reasons was the successful Spanish debt auction results.
The minutes of the FRS meeting, which was released on Wednesday, continued to pressure the US dollar rate on Thursday. According to the published protocol, the FRS decreased the GDP forecasted growth rate and mentioned the existing risk growth in the US economy. Another negative impact on the investors’ attitudes came from the release of China’s second quarter GDP report, which dropped to 10.3% against the previous level of 11.9%. In addition, we should mention, that the USD producer price index dropped, the USD Empire manufacturing index decreased considerably and the US Philadelphia Fed. index dropped as well.
The GBP/USD rate managed to reach the $1,5280 maximums on Thursday. Following the shift in the market participants’ risk sentiments and the euro growth during the European session, the sterling increased to $1.5355 mark.
On the same day the Australian dollar rate dropped due to the released fundamentals. The consumer inflation expectation decreased to 3.3% from the previous level of 3.4%. Therefore, the expectations for the further principal interest rate increase in Australia dropped.
Friday saw increased growth of the investors’ willingness to take risks. The meeting between the German Chancellor, Angela Merkel and the Prime Minister of China, Wen Jiabao, rendered significant support to the euro. Wen Jiabao expressed his confidence that Europe would overcome all the difficulties and that «Europe would be always one of the major investment markets for the foreign currency reserves of China». Following this positive lead, the EUR/USD pair reached its maximum above the $1.3000 level. At the same time the released data from the US was rather negative. In particular, the profit reports of the «Bank of America Corp.» and «General Electric Co.» turned out to be below the expectations. In addition, the consumer prices index for June decreased for 0,1%, the University of Michigan confidence indicator dropped in July for the level of 66.5, when the forecasted level was at the 74.0 mark. The net long-term TIC flows also decreased.
By the end of the trading week the GBP/USD pair consolidated at the level of $1.5300, and the USD/JPY rate reached its 7-months minimum at Y86.25.
Weekly technical analysis
EURUSD
The pair is aiming to the second level of Fibonacci retracement of 38.2% at 1.3113. The next aim at Moving Average (200) at 1.3229 if the pair breaks and closes above 1.3113. If the pair rolls back at 1.2701 support maybe found.
Resistance: 1.3028, 1.3229, 1.3433
Support: 1.2863, 1.2701, 1.2569
GBPUSD
The pair has tested resistance at 1.5484 and tolled back to 1.5252. If this support will not be broken the pair will rise to 1.5484 and 1.5672 (channel line). If the pair breaks 1.5252, the pair will decline to 1.5058.
Resistance: 1.5484, 1.5672, 1.5854
Support: 1.5252, 1.5058, 1.4853
USDCHF
If the pair breaks 1.0380 the pair will decline to 1.0275. Resistance at 1.0821.
Resistance: 1.0514, 1.0618, 1.0726
Support: 1.0380, 1.0275, 1.0150
USDJPY
The local minimum can be found at 85.16.
Resistance: 87.01, 90.04, 91.25
Support: 85.16, 84.26, 83.33
AUDUSD
The pair has risen to Moving Averages (100 and 200). If the pair closes above 0.8724 the pair will rise up to 0.8903. If the pair closes below 0.8724 the pair will decline to 0.8576.
Resistance: 0.8724, 0.8903, 0.9028
Support: 0.8576, 0.8424, 0.8272