FOREX TRADING

Good morning and welcome to the first Daily FX Report of June 2010 and we’re curious if the EUR may continue its bearish trend or if the markets will trust Europe’s policy makers again. However, today we expect some interesting economic data from Europe as well as the U.S. and the rate decision in Australia.

We wish you a nice and successful trading day.

Markets review

The EUR started bearish into the June and fell against 14 of its 16 most-traded counterparts, extending its longest monthly decline versus the USD in 10 years; on concern Europe’s efforts to reduce budget deficits will derail the region’s recovery. The 16-nation currency weakened against the GBP for a second day before a report may show today that the unemployment rate in Italy, Europe’s fourth-biggest economy, increased and the index of executive and consumer sentiment in Euro-Zone tumbled. The EUR/CZK tumbled from 25.5055 at its opening to 25.1815 at its closing after parties that pledged to cut spending on the most votes in parliamentary elections ended on May 29th.

The CAD strengthened versus the USD for the second day on speculation that the Bank of Canada will increase the key interest rate today. Furthermore the CAD benefits after a report showed on Monday the economy expanded at the fastest pace in a decade in the first quarter of 2010. Statistics from Canada said that the gross domestic product climbed 6.1 percent in the period from January to March, more than forecasted.

The Reserve Bank of Australia let the key interest rate unchanged at its meeting today. Even before the meeting the AUD weakened for the third day versus the USD on speculation the central bank may signal a slower pace for future increases.

The NZD rose also for the second day against the USD as swaps traders bet New Zealand’s central bank will increase benchmark interest rate from a record low on June 9th.

Technical analysis

EUR/USD (4 Hours)

The bearish trend-line as shown in the report yesterday is still intact and the EUR/USD fell yesterday near to its support level around 1.2246. In considering of the declining negative DMI indicator and that the CCI which already fell below its -100 percent level, it seems that the pressure on the downside is diminishing. On the other hand-side we have to allow further bearish movements if the support around 1.2246 may break

EUR/GBP (1 Hour)

The EUR/GBP is trading in a bearish trend-channel since May 25th except one break out on the downside. Afterwards it seems that around the support at 0.8444 the bulls built a basement and in consideration of the slowly rising Momentum and that the MACD rebounded it may lead into a sideways movement

EUR/CZK (Daily)

As reported the EUR/CZK suffered one of its biggest daily losses ever and fell below the 50.0 percent line of its old Fibonacci fan simultaneously. Nevertheless the RSI indicator may not suggest an oversold market at the moment, so it remains to be seen if the support around the 25.1512 level may be strong enough to stop the downward movement sustainable

USD/CAD (4 Hours)

After the USD recovered since the middle of May the bears take over control again and pulled the USD/CAD close to a bearish trend-line near to its support around the 38.2 Fibonacci retracement line at 1.0391. It remains to be seen if the support around the retracement line may be strong enough to cross the bearish trend-line. The Momentum may also support the bulls touching its 100 percent line.

NZD/USD (1 Hour)

The NZD/USD is continuing trading in its bullish trend-channel as shown in the yesterday’s report. It’s trading near Monday’s Europe opening around the support level at 0.6756 indeed the stochastic indicator staying lower than yesterday and may support the bulls. Could the bears break through the support we may have to allow further losses near to the trend-channel downside.