Further Volatility ahead
24/03/08
last week’s currency trading review
The Dollar began the week with the Federal Reserve cutting its discount rate by 0.25% in an emergency attempt ensuring one of the most volatile weeks in FX trading in recent times. The Central Bank members further moved to cutting the bench mark borrowing rate by 0.75% on the 18th of March, in an attempt to ease market concerns of further distress, which aided a shallow rebound for the greenback, with confidence prompting a flow to USD assets.
The Euro fell from record highs on Monday of 1.5902 in a sharp sell off in what was otherwise a thin week in trading. Overall the Euro closed last week at 1.5335 having opened at 1.5665.
The Japanese Yen was the best performed currency in an extremely volatile week. The currency traded at 12 ½ month low of 95.70 on news of JP Morgan purchasing Bear Stearns at $2 a share on Monday prompting risk aversion. The Japanese Yen closed last week at 99.30 having opened at 103.09.
The GBP eased further with the dilemma facing the BoE of slowing growth and rising inflation. The BoE minutes confirmed a 7 – 2 vote to hold rates in recent meetings, although citing liquidity problems the primary concern facing the
The AUD had the RBA minutes released to be relatively dovish when compared to recent releases. The Aussie dollar fell sharply throughout the week, touching a 5-week low amid profit taking and a dumping in commodities including gold and oil. The Aussie Dollar closed last week at 0.9144 having opened at 0.9360.
The forex trading week preview
In the States although the USD did rally last week, ongoing talk of a recession and credit concerns ensure the sentiment around the dollar remains bearish. Durable Goods and New Home Sales out on Wednesday, whilst several Fed officials are scheduled to speak throughout the week. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone highlights include the German IFO out on Wednesday, accompanying the data will be ECB president Trichet talking at a European Parliament economic panel. In the
In
In
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.5345 | 1.5523 | 1.5435 | 1.5832 | 1.5904 |
| USD/JPY | 96.86 | 97.68 | 100.75 | 100.45 | 101.16 |
| GBP/USD | 1.9722 | 1.9875 | 1.9875 | 2.0152 | 2.0275 |
| AUD/USD | 0.9122 | 0.9128 | 0.9095 | 0.9449 | 0.9473 |
| XAU/USD | 900.00 | 907.00 | 917.60 | 1012.33 | 1032.50 |
·Euro – 1.5410
Initial support at 1.5613 (Mar 19 low) followed by 1.5523 (Mar 13 low). Initial resistance is now located at 1.5832 (Mar 18 high) followed by 1.5904 (Mar 17 trend high).
·Yen – 99.70
Initial support is located at 97.68 (Mar 19 low) followed by 96.86 (Mar 18 low). Initial resistance is now at 100.45 (Mar 19 high) followed by 101.16 (Mar 14 high)
·Pound – 1.9790
Initial support at 1.9875 (Former resistance Feb 27) followed by 1.9722 (Mar 5 low). Initial resistance is now at 2.0152 (Mar 19 high) followed by 2.0275 (Mar 18 high)
·Australian Dollar – 0.8995
Initial support a 0.9167 (Mar 18 low) followed by 0.9128 (Mar 17 low). Initial resistance is now at 0.9449 (Mar 17 high) followed by 0.9473 (Mar 13 high)
·Gold – 916.00
Initial support at 938.55 (Mar 19 low) followed by 900 (Psychological round number). Initial resistance is now at 1012.33 (Mar 18 high) followed by 1032.5 (Mar 17 high)
