Euro consolidates as the Pound, Yen and Aussie weaken further

Mike Paterson’s Daily Forex Brief

The last 24 hours has seen another volatile day echoing the trend of recent weeks with the Euro consolidating gains and pressure mounting further on the Pound, Yen and Aussie dollar.

After looking a little overbought again the Euro got a fillip from a news report that the ECB are happy with the recent strength of the currency, therefore eliminating/reducing the prospect of further easing on Thursday when they announce their latest interest rate decision.

That was enough in these markets to send the Euro soaring again and we saw EURUSD fly from 1.3500 to highs of 1.3596 dragging higher with it Euro crosses with EURGBP jumping from 0.8598 to 0.8677.

With USDJPY also trading higher yet again the market needed no excuses to pile into EURJPY too and we’ve so far seen a surge to 94.06 and 127.71 respectively.

GBPUSD has resumed its downward trend following a brief rally after yesterday’s Services PMI. Better than expected data saw a flurry higher in the pair but failed to hold 1.5800 and began to retreat. The Euro news gave it the extra slap and the recent consolidation was over. Cue a drop so far to 1.5631 and looking to go lower. Rallies now should be limited with sellers appearing at 1.5670 and 1.5720. Talk of support at 1.5600 and 1.5540, a level last seen in August.

And the Aussie has finally delivered what it’s been promising for a while after disappointing Retail Sales figures. AUDUSD had enjoyed a brief, albeit limp, rally to 1.0458 following the previous night’s decision to keep interest rates on hold but the ship’s been leaking water since and last night’s data was all it needed to start sinking.

AUDUSD has fallen through previously strong support at 1.0365 and so far dipped to 1.0312 where it’s trading as I type. A lot of calls for Aussie weakening this year and perhaps this is the start of the rot. Time will tell soon enough. EURAUD has been up to 1.3136 and even the ailing Pound has made small gains to 1.5176.

So far this morning we’ve seen a pull back in the Euro as traders book a little profit in these volatile times with EURUSD dipping to 1.3512, EURGBP testing support/pivot around 0.8650 (GBPEUR 1.1560).

Little in the way of data today but that’s not going to make a lot of difference to the volatility or indeed developing trends out there. We are most definitely in interesting times after the relative inertia of the past year.

No inertia on show in the England Women’s cricketing team as yesterday they overcame the West Indies to book a place in the next stage of the World Cup and tonight England’s footballers take on Brazil in a friendly at the cavernously acoustic-vacuum of Wembley, which sees Ashley Cole get his 100th cap only the 7th English player to do so.

Funny ol’ game, but more importantly today is the 55th anniversary of the Munich air disaster when 8 Man Utd players and 15 others died in such tragic circumstances. Lest we forget……

Interbank Rates at 08:35 BST

Today’s Data: BST

11.00-EU – German Factory Orders

00.30-AU – Australian Unemployment Rate

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Mike ‘Oscar’ Paterson has been in the Forex trenches for nearly three decades working as a senior Spot trader in London at UBS, Chief Dealer FX at the State Bank of Victoria and in charge of Spot CHF at Credit Suisse with a daily turnover in excess of $1.5 billion. Mike now works as an independent consultant providing a fully bespoke service to the corporate and private sectors in physical FX delivery as well as guiding those who wish to improve their currency trading. Mike also presents seminars and workshops and writes for a number of publications.

To contact Mike please call +0044 (0) 1732 700383 or email mike.paterson@economicvoice.com

The views expressed above are those of the author and should not be taken as investment advice. MSP Foreign Exchange Services will have no liability for, or to, any persons executing trades based on the content above.