Overall, the currency market had no clear direction during the Asian session, but the greenback strengthened across the board during the European trading hours. This happened in-line the S&P futures fell at a strong pace overnight, re-testing the support area of the range seen over the last few days of trading. If S&P futures do break below the 925.00 area, the dollar will probably continue to strengthen as investors remain in a risk aversion mode.
The Euro (Eur/Usd) fell as much as 130 pips during the overnight session, breaking below the support area of the previous few days of trading. Moreover, the euro managed to break below TheLFB R1 (1.3925) during the European trading hours, even thought the trading volume was light.
The Pound (Gbp/Usd) formed a small downtrend channel during the overnight session. As such, the pound declined almost 120 pips and tested TheLFB S1 (1.6315), but was unable to break any lower. Over the last few months of trading, the pound was pushed higher as investors believe that the U.K. housing market is stabilizing. The U.K. housing market was seen as responsible for a considerable amount of the pound’s weakness in the previous twelve months of trade.
The Aussie (Aud/Usd) lost approximately 80 pips on Monday morning, as the pair formed a double-top formation last week that indicated indecision in the ability to move higher. The aussie has the highest interest rate backing the pair’s valuation compared to the other major currencies, andbacked by commodity valuations increasing, it posted the strongest gains measured in percentages in the current uptrend.
The Cad (Usd/Cad) had a very light volume session during the Asian and most of the European trading hours, but still the cad was unable to advance 100 pips, and break above the high touched on Friday and test TheLFB R1 (1.1285). The cad’s uptrend is a consequence of the declines seen in the crude oil market, which moved lower again on Monday morning for the second consecutive day.
The Swissy (Usd/Chf) had a small range of trading throughout the Asian session, something that made the pair look hesitant to break above the resistance area of the last three days of trading. However, the swissy managed to move higher during the late European trading hours, reflecting the strength of the dollar recently.
The Yen (Usd/Yen) tested twice the 98.55 area during the overnight session, but so far, failed to break any higher. Additionally, the same resistance area stopped the yen from any further gains on Friday. On the daily chart, the yen is trading just below a resistance trend-line that connects the highs touched on 08.15.2008 and on 06.04.2009.
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