The week is almost over, with markets trading on a positive note since early yesterday and the Asian session seeing stocks move above 300 points, after the Bank of Japan unveiled its new stimulus plan which is intended to revive their deteriorating economy. Investors across the globe were more positive about the economic outlook today, after better than expected company
earnings and a general feeling that the economic crisis is starting to ease off!
However, this mood could easily change next week, as tomorrow the markets are closed and traders are in an Easter holiday mood.
The EUR/USD failed to break its important resistance level of 1.3330, and retraced all the way down towards 1.31. Traders are taking their profits and exit their positions ahead of a long weekend; hence we are seeing the euro slide despite risk appetite returning to the markets. The next level to watch is 1.31 ahead of 1.3080.
Important economic releases filled the calendar today, with the BOE rate decision top of the list. The outcome was very much as expected, the bank left its rates unchanged after it had cut them heavily in the earlier months, down towards 0%. The pound did not seem to be affected in any way after the news, however towards London's closing we see pound losing against the dollar as traders exit their positions for the long weekend. Traders hate a weekend with open positions praying on their minds, especially as the risk is bigger than ever now, therefore we saw a big retracement of today€™s gains in all related pairs.
With markets being closed tomorrow for Good Friday, it will be interesting to watch for any choppy action, due mainly to thin trading conditions. Let€™s not forget in past years that the absence of market players provides extreme action for dollar related pairs and due to the current fragile market conditions, we may see this happening once again.
Things to watch for the coming days will be 1.3050 ahead of 1.30 for EUR/USD and as the latter level is psychological important level, if it gives way, then the pair looks doomed for another go at 1.25. Also for GBP/USD we have 1.45 as a good support level and that has to hold if another go towards 1.50 has a chance during the coming days.
Let€™s all have a wonderful long weekend and try to forget the current economic turmoil, and have in mind that no matter how gloomy market outlook seems, the best way to go is to avoid long term positions, as things can change on a daily basis, so 'get in and get out' should be our current motto!