Markets are closed in the US today. Therefore, trading volumes are expected to be lower than usual to start up the new week. Nonetheless, we could see a lot of volatility occur this week. Already we are seeing the dollar begin the week higher. Two points are causing this move. First after last Friday's equity selloff, Forex traders are worried that the economic recovery may take longer than expected and therefore safe haven buying of the dollar may continue. Also, traders continue to be jittery about the prospects of the Eurozone. Several major newspapers ran articles about impending sovereign debt downgrades about Eurozone countries. Also, with the EURUSD closing below 1.4400 last week, there is little substantial support for the EURUSD from moving back below 1.4300.
We hate to keep iterating the same news, but the euro continues to be hampered by ongoing credit concerns of Eurozone nations. As such, selling pressure is expected to continue in the euro until market sentiment favors towards the actions being taken by Eurozone countries. Nonetheless, at Go Forex, we point out that both the US and UK suffered through similar sovereign debt issues being scrutinized by Forex traders and the media, and these issues have been swept aside as secondary worries. Therefore, the current negative sentiment could provide a possible entry point for long term holders with a favorable long term opinion of the eurozone.
EURUSD Support/Resistance 1.4215/1.44415
After a substantial move higher the last few weeks, the pound may meander today, as Forex traders await Tuesday's CPI numbers. Technical wise, traders are watching last week's high of 1.6355. If the GBPUSD trades above this area, before the CPI is released, it could be vulnerable to move lower, as traders exit positions before the news announcement.
GBPUSD Support/Resistance 1.6200/1.6355