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Overall, the currency market remained in a risk-aversion mode throughout the European session, as the equity markets moved lower and S&P futures declined at a sustained pace. The market’s risk-aversion phase made the major currencies decline compared to the dollar, but still the yen traded range-bound. The market is expected to remain in a risk-aversion mode throughout the U.S. session, since the release calendar is almost empty and there are not any important meetings scheduled that could turn the market around.
The Euro (Eur/Usd) fell very easily down to the 1.3850 area during the overnight session, but since then the pair appeared powerless to break lower. Moreover, the second part of the European session proved very volatile as the S&P futures were breaking lower, but still the euro was not able to break the intra-day support level. During the European session, a release showed that the German Ifo Business Climate increased for a third consecutive month in June.
The Pound (Gbp/Usd) had a benign Asian session, as has been the case over the last few weeks, but during the European session, the pound plunged 100 pips. The previous week of trading gave the pound the opportunity to consolidate around a a relatively high level, between 1.63-1.65, which may provide a strong base in the future, as and when the pound tries to push to the upside.
The Aussie (Aud/Usd) fell to TheLFB R1 (0.7985) during the Asian session, but since then the pair appeared hesitant to break any lower. Moreover, the aussie failed to break lower even though the other major currencies had a relatively volatile European open, in which they broke below the lows set earlier in the day.
The Cad (Usd/Cad) rose 60 pips during the overnight session, breaking free from the range in which it had traded over the prior 5 days. The cad gains reflect the downside action observed in the crude oil market, where the raw material dropped on Friday the most in the last few months.
The Swissy (Usd/Chf) moved only higher during the overnight session, even though the pair had a 20-pip range during the middle of the Asian session. Shortly after the London open, the swissy started once again to move higher and gained another 50 pips. For now, the swissy is testing the intra-day resistance area that held the pair over the last five days of trading.
The Yen (Usd/Yen) continued to swing around the 96.00 area during the overnight session, completely ignoring what the other major pairs were doing at that time. On the daily chart, the yen is trading in a very volatile zone, limited on the upside by the 200-day moving average, while on the downside by the support trend-line that connects the 01.21 and the 5.22 lows.
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