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Overall, the European session reversed some gains, with none of the major pairs able to sustain a trend set in Asian trade. The major pairs advanced strongly ahead of the London open, and appeared ready to have a day of strong dollar selling ahead of them, up until the European economic releases hit the wires. For now, traders will focus on the U.S. open, when the market might experience a surge in the implied momentum and volume.
The Euro (Eur/Usd) advanced relatively quickly up to TheLFB R1 (1.4125) during the fist part of the overnight session, but since then was unable to break higher, even though it had a small attempt during the London open. During the European session, a release showed that the year-over-year inflation read dropped to -0.1%, the lowest level on record, but higher than expected.
The Pound (Gbp/Usd) had a very strong overnight session on Tuesday. Propelled higher at the London open, the pound rose as much as 200 pips, a new high for the current year, and it reached the highest value since October 2008. However, most of these gains were quickly shed after a release showed that the first quarter GDP contracted 2.4%, more than expected.
The Aussie (Aud/Usd) advanced 60 pips throughout Tuesday’s session, but most of these gains came during the first part of the day. During the Asian session, the pair gave the impression that it is able to push towards the 0.8250 area today, but these moves consolidated after the aussie was unable to move higher through 0.8150.
The Cad (Usd/Cad) looks unable to sustain a decent trend in the near-term, and barely moved 40 pips overnight, following Monday’s trade when the cad traded for most of the time in a 30-pip range. This does not reflect that crude oil saw some very strong moves over the last two days.
The Swissy (Usd/Chf) had a very weak overnight session, moving less than 40 pips. A possible cause for this is the 20-day moving average, which appeared to be an important swing area over the last few weeks of trading, in place at 1.0820. In order for the swissy to break anywhere decisively, it will have to break free from the 1.0750-1.0900 area.
The Yen (Usd/Yen) lost approximately 70 pips during the overnight session, and fell down to TheLFB R1 (95.40), but tried to reverse that as the U.S. futures market gained momentum. On the 4-hour chart, the yen is trading in a down-side channel, which could drive the pair down to test the 95.00 area, the support of the last few days of trading.
During the Asian session, releases showed that consumer spending picked up in Japan for the first time in a year, but also showed that the unemployment rate surged to the highest rate observed over the last five years.
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