Currency Markets Looking At US Earnings Season

The US dollar should not be in the news as much this week as the focus for the American markets shifts to earnings. The dollar remained mostly range bound against the major currencies. The Euro/USD currency pair tested the top of its range of 1.42 at the beginning of the week and the bottom of the range around its support level of 1.3990. With the pair trading around the bottom of the range and technical indicators this pair is worth a look at having a long position.

The US dollar/Swiss Franc currency pair broke down to support of 1.072 early in the week. It bounced off that level and back up to just under 1.09 resistance level and hung around it late in the week. The rebound was in contrast to some of the technical indicators which makes it difficult to determine a short term trend. In addition it was rumored last week that the Swiss National was getting involved in the currency markets again and it is unclear the affect they may have on the Swiss Franc in relation to the US dollar and the Euro. The US Dollar/Swiss Franc currency pair is also having large trading swings around the exponential moving averages but should remain relatively range bound for the next week.

The British Pound/US Dollar currency pair in the beginning of July is trading between 1.63 and 1.67. The currency pair has been stuck in a pretty tight range for around a month. Some of the technical indicators are showing a trend that is moving to the downside and a breakdown of the support level at 1.6330 might be coming in the near future.

The US Dollar/Japanese Yen has been swinging wildly around its exponential moving averages and has had a very wide range over the past one to two weeks of 95.4 to 97. There is pretty clear short term resistance around the 97 level and support levels around 95.3.

The US Dollar/Canadian Dollar is still trading around the highs of its short term, several month range. Over the past 2 weeks the currency pair has bounce off of its near term resistance level of 1.165 two times. It has also hit its near term support level of 1.145 three times. After just bouncing off of the resistance level it should continue downward this week, however oil prices could either accelerate its move to the downside or make the pair rebound and breakout above its highs.

The Australian Dollar/US Dollar broke below short term support 0.7984, then traded straight down to 0.7900. While it rebounded back to 0.7958 the trend still looks bearish and overall downtrend should take it to 0.7785, the next support level. The Australian economy is also very dependant on natural resources like gold which was down nearly 1 percent last week.

Dollar Down On The Week

Last week forex trading was difficult for the US dollar as it showed declines over the world's major currencies. Any effect the surprising increase in personal spending was at least partially offset by savings jumping to it's highest level in 15 years.

The EUR/USD was up on Friday and closed the trading week at around 1.4070. This was a gain on the week for the Euro of a little more than 100 pips and just missed hitting new yearly highs against the US dollar. The trading range for the currency pair remained very wide and a clear trend has yet to emerge. Technical analysis of the currency pair indicates there is some consolidation going on after the last major movement upward. There is a resistance level around 1.4080 and support levels around 1.3925.

The British pound rose against the US dollar for the 3rd week in a row, but like the EUR/USD pair, failed to break out of its recent technical highs. The GBP/USD currency pair had a brief spike trading up to around 1.6536 just after US released its personal spending and personal income and savings data. High volatility makes it difficult to discern short term resistance and support levels, however market traders believe it continue to move in the 1.62 to 1.66 range.

The New Zealand dollar was also outperforming the US dollar hitting three week highs and trading on the week around 0.5165. Part of the news driving the NZD/USD currency pair higher was a 50 basis point interest rate cut by New Zealand's Central Bank, bringing the target interest rate down to 3%.

The USD/JPY closed out the week on Friday at around 95.26 and USD/CAD ended last week at around 1.1524 after bouncing off of a technical resistance level of 1.3 for the 4th time in recent trading. The dollar yen currency pair has been showing lessening volatility and tightening bollinger bands and should continue to trade in a range of 95.00 to 96.50. However watch for a near term breakout to the upside if it goes above the top resistance line. The USD/CAD is having somewhat of a consolodation period but is still bullish and is continuing its consistent rise, with 1.1640 the next resistance level.

The Swiss national bank is rumored to be intervening in the forex market again last week. The bank admitted to getting involved in the markets previously around March 12 of this year. During the London trading session on the 12th they were buying Euros and selling the Swiss Franc and During the New York session they were buying the US dollar and selling francs. All in an attempt to stop the rise of the Swiss currency and stave off deflation. The strategy has not worked very well in the recent past and did not seem to have the intended effect as the Franc gained around 1.3% against both the US Dollar and the EURO after each intervention. It has also been tried on a large scale with the British Pound, legendary investor George Soros' claim to fame was when he believe the central bank actions could not support the price of the currency and made more than a billion dollars in his fund after the government abandoned the strategy. The Japanese central bank has had the most success with this strategy, striving to keep the US Dollar around a 100 Yen.

After all this including a bounce on Wednesday and a jump on Thursday and Friday the pair closed out the week at 1.0825. The CHF/USD currency pair continued trading mostly sideways with no clear trend present. For the next few weeks many analysts expect the pair to trade around 1.078 indicating more sideways price action in what has always been considered the safe haven currency.

Flight To Quality Helps Dollar

The US dollar rose against major currencies on Monday as a negative stock market and falling commodity prices drove investors into the greenback. Technical forex traders are looking breakout over resistance which may be spurred on by positive existing home sales report on Tuesday. Expectations are for a rise of 2.6 percent in May to an annual pace of 4.8 million for 4.68 million.


Tweet this post

Follow Us

Dollar Retreats

The dollar was weaker against the world's largest currencies during the day on Tuesday. A widely anticipated continuation of it's three month pull back, after Russian economic advisers said they may put a portion of its currency reserves into Chinese, Brazilian and Indian issued bonds. More evidence of the worlds willingness to switch to the Euro or other currency as the top reserve currency.


Tweet This Now

US Dollar In Big Trouble

The US dollar was hurting again throughout the trading day on Tuesday. The Euro hit its highest point this year against the greenback. No doubt a large factor was Russia beginning to favor the Euro over the dollar as its reserve currency. The Russian Prime Minister also express interest in talks with leaders from China and Brazil over replacing the US dollar as the worlds reserve currency. In my opinion this would be catastrophic for the dollar as countries keeping USD as their reserve currency is one of only a small number of factors that keep the dollar strong.

Welcome To The Foreign Exchange Market Blog

Welcome to the Foreign Exchange Market Blog on blogger.com. Here you can find frequently updated market news and commentary on economic events with a specific focus on foreign exchange currency markets. I also have blogs with focuses on the stock market options and futures discussion and banking and credit market blogs. I hope you see some useful information that will help us all get through this financial crisis. So please follow this blog and I would love to read your comments and answer your questions.