UFXBank Forex News: Euro Falls in Week of Risk Aversion | Learn Forex | GoLearnForex.com

UFXBank Forex News: Euro Falls in Week of Risk Aversion

Written by article default Monday, 16 May 2011 07:18

USD Dollar (USD) – The dollar strengthened in forex trading versus most of the major currencies due to a weakening of risk appetite. In addition, U.S. Treasury Secretary Timothy F. Geithner said at the beginning of the week that a default arising from failing to raise the debt limit could cause “irrevocable damage” to the economy, risk a “double-dip” recession, and increase unemployment. His words motivate investors to buy the US Dollar against most currencies since it is considered as a safe haven in times of uncertainty. The Stock Markets declined as the Dow Jones fell by 0.79% and the NASDAQ lost 1.21%. Crude Oil traded unchanged and closed at $98.80 a barrel.  Gold (XAU) jumped by 1.00% and closed at $1,492 an ounce after testing a strong resistance level at $1,515 on Friday. The Michigan Consumer Sentiment Index moved up to 72.4 in May compared to 69.8 in April. Today, Fed Chairman Bernanke Speaks and is expected to make a speech. TIC Long-Term Purchases are expected to rise to 57.7B vs. 26.9B previously. The Empire State Manufacturing Index is expected to decline to 20.70 vs. 21.70 previously.

Euro (EUR) – The euro declined against the U.S Dollar after hitting a 6-week low at 1.4065. With lingering concerns about what happens with Greece yet to be decided by EU members, traders do not want to hold the Euro. Greek finances seem unsustainable, and the risk of restructuring could lead to losses in the European banking sector and a sell-off of the Euro. The pair is testing its support at 1.4000. Trading below this support level will keep the momentum negative for the pair, but if the pair doesn’t break below this support level, it might strengthen to 1.4200. Overall, EUR/USD traded with a low of 1.4062 and with a high of 1.4338. Today, the CPI is expected to rise by 2.80% as it did previously. Core CPI y/y is expected to rise by 1.50% vs. 1.30% previously.

EUR/USD – Last: 1.4090

British Pound (GBP) – The Pound fell against the greenback for second straight week due to a week of risk aversion and a slump in commodities. The trend for the pair is bearish if the pair maintains its resistance level of 1.6250. Overall, GBP/USD traded with a low of 1.6146 and with a high of 1.6516. Today no economic data is expected.

GBP/USD - Last: 1.6185

Japanese Yen (JPY) – The dollar trade unchanged against the yen after the pair didn't succeed to break its strong support of 80.30. In addition, Bank of Japan Governor, Shirakawa was signaling that his biggest worry is inflation. But, the strengthening of the US Dollar around the globe lowered the Yen’s gains. The trend for the pair will be bullish if the pair manages to break its resistance of 81.00 and it may bring the pair to 81.80. Today, no economic data is expected.

USD/JPY-Last: 80.80

Australian dollar (AUD) – The Australian Dollar declined against its U.S. counterpart as investors sought safety. It also fell after the People’s Bank of China raised the banks’ reserve requirements on May 12 for the fifth time this year in order to cool inflation, spurring concern that global growth may slow. The trend for the pair is still bearish. Today, Monetary Policy Meeting Minutes are expected to be released.

AUD/USD - Last: 1.0530