We can see that mixed trading and volatility prevailed across the FOREX market, where heavy pessimism is weighing negatively on financial markets over a sovereign debt crisis. Nonetheless, markets are taking a breather with a slight sense of tranquility, which we still see as heavy caution after the G7 pledged to continue to support the global economy easing the fear over the slowing pace of recovery.
The start of this week's trading is actually calm in comparison to the shakiness that haunted the past week. The dollar declined against the basket of six major traded currencies, gauged in the dollar index, where it declined towards 80.07 which is the lowest recorded today, down from the highest at 80.64 set last Friday. The fundamentals on Friday were mixed which intensified the volatility in the market especially after the U.S economy continued to lose jobs while the unemployment rate unexpectedly dropped to 9.7%! The effect was not taken positive as it added to the instability and the peculation over the outlook for the recovery in the U.S and the global economy reflected in strong fluctuations across the currencies market.
The euro today managed to rise slightly versus the dollar following the series of heavy losses which were seen in the past period; the pair dropped for four consecutive weeks and today started an upside correctional move, rising from the lowest set today at 1.3619 to the highest at 1.3713. The pair is currently trading among the support at 1.3600 and the resistance at 1.3740.
As for sterling, the GBPUSD was incapable of mirroring the positive trading of the euro and trading today among the lowest set at 1.5533 and the highest recorded at 1.5625, with a clear bias to the downside; till now the pair was not capable of setting a clear breach to the 1.5545 support burdened by the heavy selling saturation which is preventing the breach confirmation. If the pair managed to confirm this breach it might continue to the downside towards the coming support at 1.5500 and failure in breaching this level will drive the pair towards the nearest resistance at 1.5640.
Moving to the Pacific, the Japanese economic figures today were not at all supportive to the sentiment, to the contrary they supported the bearish sentiment prevailing across the market and supported the slump across Asian indices. The yen managed to advance versus the dollar as the USDJPY pair declined affected by the demand for safety and the risk aversion increasing the appeal of the Japanese currency.
Due to the heavy demand on the yen, the pair head to the downside dropping from the highest set today at 89.56 towards the lowest set till now at 89.12; nevertheless, the pair is generally trading among levels in favor of the dollar compared to Friday's closing, as the pair is currently trading at 89.40 compared to Friday's closing at 89.30. The pair is trading among the support at 88.90 and the resistance at 89.60 without any clear upside signals for the pair.