Forex Current Outlook

Written by Research | 03 March 2010

Market Sentiments focus on EUR/GBP

The British Pound's value weakened vs. the USD for the 6 consecutive day as investor's risk appetite were nowhere to be found. With the exchange rate moving to a low of 1.4770-80 during the overnight trade as some analyst have earlier speculated that it may have found an inital bottom.

Meanwhile, in the U.K. with some growth relief on pulling back on spending the economic demand to stabilize the economy needs both continued fiscal and monetary stimulus as the neighboring nations like Spain, Greece and Portugal deficit problems are still hanging in the air in spite of the support of Germany and France to uplift Greece and at the same time provide some relief for the EUR/USD.

The EUR/USD registered to a fresh yearly low of 1.3434 in risk aversion also went higher and the currency pair looks poised to attempt the lower downward trending channel from the January high 1.4580 as price behavior holds below the 20-Day SMA at 1.3663. U.S. dollar price action was slightly mixed overnight, with the USD/JPY paring the previous day’s advance to reach a low of 88.87, and the USD could face some volatility going into the US trading session.

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The Australian dollar is likely to face increased its trading volatitlity as the central bank's increased hike for the benchmark interest rate to 4.00% this month may prove to give some incentives to conservative investors looking for a higher rate.The rate hike by the Australian Central Bank, the AUD/USD is once again gaining strength working at .9033 with a resistance price levels at .9328-32 on the trendline. Although, the reaction from the recent announcement that traders were in a timid manner as it showed some indeciveness whether to push higher.

As some traders and investors were still reluctant to create new positions as volatility increases while the major markets have moved extensively for the past few weeks. However, the increase in the GDP was a welcome treat that weighed hearvier on a fundamental stand point making the AUD/USD to be more on a steadier tone. Though, this may be the limelight at this time, we just need to see whether thiese reports would sustain investors sentiments as a whole. Fear and lack of follow through by investors have stalled the prices on the EUR/USD and the GBP/USD on the lower side of the charts.

However, the EUR/GBP has continued its directional movement higher currently working at 09060 which is a slight correction from a highe earlier in the Asian session at 0.9098. The irony of the matter is that the chart confiuration on the 4 hourly charts coincedes with the monthly outlook prompting a more positive tone on these levels. The significance of a lower GBP/USD and a slight correction on the EUR/USD currently at 1.3633 showed the traders reaction of certain news on the Bloomberg that EUR/USD trades by major institutions would be asked to reveal through investigations short EURO positions by major firms for some anomalies in the market distribution of information through the internet.

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