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Overall, the market traded relatively flat during the Asian session, but saw extreme volatility during the European session. This happened after the S&P downgraded the outlook of the U.K. economy, which caused the dollar to strengthen across the board. Most likely, this will influence the currency market over the upcoming period.
The Euro (Eur/Usd) traded relatively flat during the Asian session, but saw increased movement during the European session. During the London open, the euro had a small attempt to break above the Wednesday’s high, but the move was easily reversed after the S&P’s announcment.
The Pound (Gbp/Usd) formed a triangle pattern on the lower time frames, which was broken just a few minutes ahead the 4:30 releases, when the pound plunged almost 200 pips in response to sources reporting that S&P downgraded the economic outlook of the U.K. economy. Prior to today’s trading session, the pound touched the highest value seen since November.
The Aussie (Aud/Usd) also traded in a triangle pattern during the intra-day session, which was also broken in a strong move to the downside. This comes, after the aussie formed a doji-star pattern on the daily chart yesterday.
The Cad (Usd/Cad) spent most of the overnight session testing the 1.3665 support area, where the cad bottomed the previous day of trading. The cad looked ready to break below the support level during the overnight session, but the pair moved higher as the dollar strengthened across the board. Yesterday, the cad broke below a six-month support area.
The Swissy (Usd/Chf) had a 30 pip range during the overnight session, trading within the same range as in the late U.S. session. Moreover, the swissy maintained the same range during the overnight session, when the rest of the majors were posting severe declines against with the dollar. On the daily chart, the swissy is trading below all the important daily simple moving averages, near the lowest value since January.
The Yen (Usd/Yen) moved decisively during the overnight session plunging 50 pips in the Asian session, extending the declines seen in the previous day of trading, but retracing most of the moves back as the market was heading towards the London open. Currently, the yen is trading at 2-month low.
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