Overall, the majors extended the declines seen in the last few days, as the market remains in risk-aversion mode. The declines seen in the equity markets had a significant effect over the currency market, helping the dollar regain some ground. The European and the U.S. calendars are very light today, as they have been for the past two days of trading, so it is likely that the currency market will focus on news reports surrounding the financials’ health.
The Euro (Eur/Usd) posted significant declines during the overnight session, dropping for a third consecutive day. The euro fell 100 pips overnight, totaling 350 pips lost over the last few days of trading. Currently, the pair trades just above the 100-day simple moving average.
The German trade balance surplus rose to 8.9B in February, among the lowest read in the last few years. The previous number, for the month of January, was revised to 6.8B.
The Pound (Gbp/Usd) headed lower since the new trading day started. The pound fell 90 pips, trading in a downward channel, as it seems the U.K. economic contraction might last longer than forecast. The next important support area for the pound is the 100-day simple moving average, some 80 pips lower.
The Aussie (Aud/Usd) fell 50 pips since the Wednesday trading session started. The pair declined for a third consecutive day, after forming three consecutive doji-star patterns on the daily chart. Additionally, the aussie found the strength during the European session to briefly break below the 0.7050 support level, which has held the pair since the last Thursday.
Home loans in Australia came in at 0.2 percent which was well below the analysts forecast. In seasonally adjusted terms, dwelling finance commitments increased 2.5 percent while owner occupied housing and investment housing came in at 2.8 percent and -1.5 percent respectively.
The Cad (Usd/Cad) rose as much as 100 pips during the early part of the overnight session. However, the pair retraced those gains after bouncing off the 20-day simple moving average and TheLFB R1 (1.2460). Even though the cad moved more than 100 pips overnight, the recorded volume was very low.
The Swissy (Usd/Chf) saw strong momentum during the overnight session, which ultimately helped the pair break above the 20-day simple moving average. The next major resistance level remains the 100-day simple moving average, which rejected a test at the London open.
The Yen (Usd/Yen) continued with the same strong momentum, seen in the Asian session, during the European trading hours. The pair is currently sitting directly on top of the 100-day simple moving average, after declining around 100 pips during the overnight session. The yen’s outlook remains to the downside as long as the equity markets continue to post significant declines.