Profit taking in the currencies markets

By @ibtimes on

The dollar resumed it downward trend today extending its losses against other major currencies, while the euro is moving upwards significantly. Bernanke's comments yesterday that the Fed is ready for more stimulus when needed and Moody's decision to place the US credit rating under review if law makers didn't raise the debt ceiling were main the main factors that pushed the dollar further to the downside.

Although other European countries are still witnessing credit rating downgrades, we see that the euro is not as affected by it as it did before, as investors see that the debt crisis is not a European one, its a crisis that may reach to other countries such as the US (the highest credit rating country since 1917 at AAA).

But also we can't forget the effect of a downgrade for Greece by Fitch making it the lowest credit rating in the world, which had limited effect only for it followed other rating agencies and added nothing new!

The euro rose against the dollar for the second day in a row, from 1.4155 reaching the highest at 1.4281 but also the euro has witnessed some profit taking as cautiousness is dominating the markets and the worrisome of a downgrade to the US credit rating weakened the dollar but on the other hand caused a profit taking for the high yielding assets including the euro.

Despite all of this, the euro is still trading with a tendency towards the positive side against the dollar. If the pair stabilized above the support level at 1.4150 we might see a continued upward trend to test the resistance level around 1.4215 which trading above it might support a new attempt in breaking through the key resistance level at 1.4285.

The pound also rose against the dollar today from the lowest at 1.6093 reaching the highest at 1.6192 and currently trading near 1.6125 which is considered a key technical separator between testing 1.6180 level and maybe 1.6245 or returning to test the support level at 1.6045.

The trading between the dollars against the Japanese yen was volatile today between 78.44 and 79.59, as trading was at the lowest levels since the 17th of March of 2011, although the dollar rose slightly against the yen today, its still trading within its weakest range.

Several US fundamentals will be released today but the most important one is the retail sales where a shrinkage in the sector is expected, whereas the PPI is expected to show the continuous high prices which will cause great volatility in the markets today.

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