Moody's Investors Service said the U.S. and the UK might lose their top credit rating of AAA as the cost of servicing their debt rises led from the swelling budget deficit, as they have to narrow it down without hurting economic growth.
Both economies have to pull stimulus measures gradually without negatively economic growth. The dollar inclined in the markets as the stock markets declined especially in Asia as there are anticipations that China is putting a lid on lending, and this caused investors to avoid higher yielding assets and seeking lower yielding assets. The Dollar Index, which measures strength of the dollar versus six major currencies, is currently trading at 80.10 recording a high of 80.17 and a low of 79.77.
The euro declined versus the dollar as some of the European finance ministers said that Greece should not be aided and this added fears on the euro triggering a selling wave. The EUR/USD is currently trading at 1.3714 between the support of 1.3645 and the resistance of 1.3800 while recording a high of 1.3775 and a low of 1.3700; momentum indicators on the daily charts show us that the pair is being traded in an oversold area, amid low volume in the market.
Following the comments from Moody's Investors Service, the pound lost ground versus the federal currency as already there is pessimism in the markets that the widened budget deficit in the UK will undermine growth prospects. As a result, the pound depreciated and the GBP/USD is currently trading at 1.5044 above the support of 1.4990 and below the resistance of 1.5135 while recording a high of 1.5206 and a low of 1.5018. Also here we see this pair is trading in an oversold area.
Turning to the dollar yen pair we see that it's declining while trading at 90.68 between the support of 90.35 and the resistance of 91.35; the pair so far recorded a high of 90.79 and a low of 90.54. Over four-hour basis, momentum indicators show us that the pair is trading sideways supporting the neutral overview for now.