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| Italian Concerns Begin to Weigh on EUR Posted: 09 Nov 2011 04:16 AM PST
Events in Italy came to a head this morning as Italian bonds plummeted and pulled down the EUR in a dramatic price drop. The trigger for the drop in Italian bond prices was the announcement by LCH Clearnet SA, a major clearer of Italian bonds would increase the margin requirements by almost double. Following the announcement yields on Italian government debt reached new highs with the 10-year BTP trading at 7.41%. Spreads of the 10-year BTP/Bund are wider by 14.3% at 568 bp. The EUR is down sharply versus the USD and in the crosses. The EUR/USD has broken below its rising support line from the November low and is quickly approaching this level at 1.3607. A break here would open the door to additional declines to 1.3525. Should the USD hold its gains the daily candlestick will form an outside day down, a bearish technical indicator. Also the EUR/GBP has moved below its rising trend line from the June 2010 low but has managed to retrace some of its losses with the BOE set to meet tomorrow. A close below 0.8550 would increase bearish technical sentiment. A lack of support is apparent on the charts and the pair could eventually slip to the 2011 low at 0.8280. Read more forex trading news on our forex blog. |
| Posted: 09 Nov 2011 03:54 AM PST
A combination of short term USD strength and expectations of additional SNB action may propel the USD/CHF above the approaching resistance. Yesterday SNB Governor Thomas Jordan did his best to back down market expectations of another move by the SNB to raise the floor underneath the EUR/CHF exchange rate. Following Thomas' comments the CHF strengthened accordingly. Thomas suggested that the floor is temporary but the SNB is not likely to back down from its program to weaken the CHF. This is especially true given the deflationary forces that are apparent in the Swiss economy. As such the USD/CHF is currently approaching resistance of 0.9080 off of the October 20th high. A break here and the pair could move towards the October high of 0.9318. Support is back at the 20-day moving average of 0.8870. Read more forex trading news on our forex blog. |
| Posted: 08 Nov 2011 11:29 PM PST
Yesterday saw the first real volatility in the USD/JPY since the MOF intervened. This morning's low coincides with a key technical level. The pair has fallen as low as 77.50, a 50% Fibonacci retracement from the 75.55/79.50 intervention rally and there may be scope for additional moves lower in the pair. A break of the 77.45 support from the mid-October highs cold have the pair testing both its 61% Fibonacci retracement at 77.07 as well as its 55-day moving average at 76.94. The bearish tone could be reversed with a move back above 78.25. Read more forex trading news on our forex blog. |
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