Good day forex traders.
Welcome to another EUR/USD Daily Review.
Yesterday we saw the EUR/USD sliding further. However it remained attracted to the previous low of 1.2329+/-. The demand for insurance against a weakening the Euro was reported to be the highest in more than 7 years. Investors might be worried that the huge amount of funds used for the aid might lower the currency’s value. Investors were also concerned that the deficit problems might not be fully solved. Sentiments were negative as global stocks and commodities fell in value. Indications were observed with regards to a tightening money market.
The currency pair trades in a rather tight range today. It tested the line of 1.2440 ( I LOVE IT WHEN MY CHART WORKKKKKS ) and have since retreated towards 1.2330.
The equity index S&P 500 struggles to regain a bullish momentum.
Oil holds steady for now and is trading at $75+.
Gold is dropping and is now valued at $1215+. While it is still too early to make any conclusion, we may be seeing early indications of a better risk appetite.
The European Union transferred 18 billion to Greece today. This eased the concerns of investors as the amount will be enough for the 8.5 billion Euro of bonds due tomorrow. Having said so, the EUR/USD has not taken the ride north as technically this loan merely delayed the risk of a default. Further debts are still due in time to come. Furthermore the German ZEW Economic Sentiment came in worst than expected. This possibly dampened the relief from the transfer.
It was reported that German lawmakers may oppose Germany’s participation in the emergency aid program. A former Bank of England policy maker was reported as stating that another Euro Zone bail out package is “inevitably” going to come and the Euro’s parity with the US Dollar may be possible due to the “unstoppable” decline. Investors do not like sovereign issues and these issues indicate that the Euro Zone is far from being out of the blue. This can be seen in the markets too as traders continue to show an apparent preference for US debts for now. It is widely believed that the US economy may not be affected severely by the Euro Crisis. Be on a look out of risk aversion spreading across the markets should adverse developments appear.
Tomorrow brings us important data such as the US Consumer Price Index. You can refer to the economic calender for more information below.
Bullish relief may bring us to test 1.2440/1.2500.
Bearish attacks may see a test of 1.2300/1.220.
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