Consolidation as euro breaks January highs
City Index February 8, 2012 1:00 PM
<p>EUR/USD Range: 1.3241-1.3288 Support: 1.3150 Resistance: 1.335 The euro held onto gains made in the US session yesterday as the market awaits the next development […]</p>
The euro held onto gains made in the US session yesterday as the market awaits the next development or headline in the Greek saga after headlines released late last night inspired confidence that the ‘ECB concessions will contribute to Greek debt reduction and the ECB is willing to exchange Greek bonds with EFSF.’ I have to say I’m not as confident as the market on a deal as Greece’s political elite still can’t agree between themselves whether the Troika’s terms are acceptable and with European heavyweights (Juncker) speculating on a Greek default I wonder if we are being prepared for such an event?’
Range: 1.0782 – 1.0833
The Australian dollar consolidated at the higher end of the range for most of the session as the market contemplates the technical resistance level at 1.0850. I expect the lifestyle currency to track euro and optimistic risk trade today with Japanese retail investors sticking with their yield return on AUD/JPY. Of note new RBA board member Heather Ridout was quoted on Bloomberg pledging to make the over-valued AUD a more prominent issue, referring to herself as a ‘growth girl’.
The JPY slipped to a 12-day low after weaker trade data and cross JPY buying took out the 77.00 resistance level. Even comments from Fed Chairman Ben Bernanke yesterday that 8.3% jobless rate understates labour market weakness wasn’t enough to deter the cross JPY yield hungry market with technical resistance taken out at 102.20 in EURO/JPY and 122.70 broken in GBP/JPY although 84.00 in AUD/JPY remains intact for the moment. With Japanese exporters looking to fade this move I expect 77.30 will be no easy level to break at the first attempt.