FOREX TRADING

Good morning from Hamburg and welcome! The financial situation in Europe seems to be the most significant for the FOREX market at the moment. After having Greece’s financial debt, a lot of investors are speculating who might be the next struck country.

We wish you a nice start in the new trading week!

Markets review

The EUR fell for the first time in four days versus the USD and the JPY after Euro-zone finance ministers agreed to a 3 year deal of €110 billion bailout for Greece. The commission, the EU’s executive arm, estimates that Greece’s gross domestic product will shrink about 4 percent this year and by almost half that amount in 2011, before growing in 2012. ‘The Greek banking system is actually quite well capitalized,’ Poul Thomsen, the IMF European Department Deputy director, said in Athens. ‘But clearly, with this dramatic program, the contraction in nominal GDP, we do expect to see an increase in non-performing loans.’ The package for Greece foresees the budget deficit failing to 8.1 percent of GDP this year from 13.6 percent in 2009.

The AUD gained versus most major currencies on speculation that the Reserve Bank of Australia may raise the benchmark interest rate tomorrow and house prices gained in the past quarter more than estimated. Gains in the currency were limited on concerns about the impact of plans to raise taxes on mining company profits to 40%. According to a survey the Reserve Bank of Australia may increase its overnight cash rate target to 4.50 percent. The AUD pulled back from its record low since February versus the NZD after China, who is the biggest trading partner of Australia, increased bank reserve rations yesterday for a third time this year.

The EUR/USD pulled back from its constant three-day gain and reached a low at 1.3205 while the EUR/JPY fell over 100 pips. The European currency reached a low at 123.96 versus the JPY after it had gained the past three days touching a high at 125.94 on Friday. The bearish EUR dipped versus the GBP as well while it came down to 0.8668. The AUD/NZD gained to 1.2690 after it touched a low at 1.2641, which was its lowest level since February 11th. The EUR/AUD fell to 1.4301 while the strong AUD gained over 80 pips versus the CHF.

Technical analysis

NZD/JPY (Daily)

After breaking the 67.00 resistance level, the NZDJPY has shown further gains by testing the level over the 68.55 resistance level from the beginning of the year. The next resistance that the market could reach would be around 69.70, which is the level from October 2009. If the pair breaks the 68.55, we might expect further gains towards the next possible resistance.

USD/JPY (4 Hour)

Since April 19th, the USD/JPY has been trading along a bullish pitchfork and a horizontal level around 93.70. Today, the pair has broken out of the pitchfork while the MACD indicator has begun to give a sign for a return. If the market breaks the 93.70 support level, the JPY may extend its gains and the pair may fall further.

GBP/CHF (4 Hour)

As you can see, the GBP/CHF has been moving along a bullish Fibonacci fan. After entering back to the fan on April 28th, the pair has come back for the second time after it has touched the middle line. The Stochastic Oscillator may a sign for an oversold market and could be an indicator for further bullish movements.

EUR/CAD (4 Hour)

After breaking through the 1.3415 resistance level, the EUR/CAD has reached the upper level of its bearish Fibonacci fan, which starts around the beginning of March. The weak EUR has pressed the pair down while we have a short sign by the Stochastic Oscillator. This might be a sign for further falls towards the support level around 1.3415.

CAD/JPY (4 Hour)

After touching the upper level of the bullish channel on Friday, the CAD/JPY pulled down and reached the horizontal support level around 92.10. The Relative Vigor Index is still giving a short signal while the pair also touches the lower support of the bullish trend channel. If the currency pair cross both support lines, the CAD may make further losses versus the low-yielding JPY.