The U.S. dollar and Swiss franc are likely to hold gains as risk aversion reentered the markets on tensions in Egypt persist and increasing investor demand for safer havens. Unsurprisingly, Fitch downgraded its outlook on Egypt from stable to negative, citing the effect of the unrest on the political and economic outlook. The Euro fell as low as $1.3571, having fallen about 0.2 percent close of $1.3608 on Friday on the news of crisis in Egypt. Reports from German Officials that they are still reluctant to increase the EFSF also added pressure to Euro. The Sterling traded with negative bias below $1.59 mark after Gfk consumer sentiment dropped to a near two-year low in the wake of VAT hike and lackluster growth. The Yen was strong on Friday as the market regained the losses of Thursday due to the S&P downgrade. The Australian Dollar (AUD) came under strong selling pressure due to a 4% gain in Oil and Surging Gold market. Oil futures also surged on the unrest in Egypt, rising 4.3 percent to $89.36 per barrel on fear that prices may continue spiking from current levels.
EUR/USD: The Euro and is currently trading at 1.3600 levels after making a low of 1.3569 due to Egyptian chaos. Looking ahead today, German Retail Sales m/m expected better at 1.9%. Immediate support comes at 1.3565 (H4 55 Daily EMA) followed by 1.3515(Weekly 20 Middle Bollinger) while resistance comes at 1.3655 levels (H4 21 Daily EMA). EURINR (62.46) exporters should cover partially at current levels and importers can cover on dips. EUR/INR is likely to trade in the range of 62.35- 62.70 today. Short term slight Bullish and Medium term Bearish
GBP/USD: The Pound is currently trading at 1.5849 levels after last week's UK GfK consumer confidence slumped from -21 to -29 in Jan. Immediate support comes near 1.5820 (21 Daily EMA) followed by 1.5795(20 Daily Lower Bollinger) while resistance at 1.5945 (100 Weekly EMA) followed by 1.2965 (H4 20 Upper Bollinger). GBPINR (72.83) Exporters should partially cover at current levels and importers can cover below 71 levels. GBPINR is likely to trade in the range of 72.70 - 73.00 levels today. Short term slight Bullish and Medium term Bearish
USD/JPY: USD/JPY is currently trading at 82.08 levels and was strong post last week's S&P downgrade. Manufacturing PMI increased to 51.4 while Prelim Industrial Production m/m increased to 3.1%. Immediate resistance is at 82.50(21 Daily EMA) followed by 82.60(Daily 20 Middle Bollinger) while immediate support is at 81.85 levels (Daily 20 Lower Bollinger). Yen Exporters can cover Feb month's exposure around 81 levels and Yen Importers to cover their exposures near 84 levels. Medium Term: Maintain Bearishness for the pair.
AUD/USD: The Aussie is currently trading near 0.9918 levels and was not supported by the gains in commodities prices. Private Sector Credit m/m declined to 0.2%. Immediate support comes at 0.9874 levels (H4 20 Lower Bollinger) followed by 0.9758 levels (21 Weekly EMA) while immediate resistance is at 0.9942(21 Daily EMA) followed by 1.0020(Daily 20 Upper Bollinger). Exporters are suggested to book Feb month's exposure towards 1.0100 levels, and Importers can cover their exposure on dips. Medium term: Bullish.
Gold: Gold recovered and is trading near $1339 after protests in Egypt as investors increased demand for the safe heaven asset. Overall the yellow metal had traded with a low of $1336 and high of $13457. Support for gold is near 1318 levels (Daily 20 Lower Bollinger) and immediate resistance is at 1353 (100 Daily EMA). As said earlier, Buying on dips is recommended. Medium term: Maintain bullishness.
DOLLAR INDEX: Dollar Index recovered and is currently trading at 78.18 levels. Risk aversion entered due to Egypt news last week showing that the situation is deteriorating. Looking ahead today, Chicago PMI expected at 65.5 while Personal Spending m/m at 0.6%. Immediate Support at 78.03 (H4 21 Daily EMA) followed by 77.53 (H4 20 Upper Bollinger) and resistance is at 78.47 levels (H4 20 Upper Bollinger). Medium Term: Slight Bullish
These views/ forecasts/ suggestions, though proffered with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.