EUR/USD
The pair finished the session sharply lower after Moody’s said the Euro area sovereigns remain under pressure in the absence of decisive initiatives and they are to revisit all EU sovereigns in Q1 2012. They said there is a risk of negative Europe rating action in the coming months. Moody’s also said the Euro bank recapitalization plan is credit positive. In addition to that, ECB's Nowotny said he sees a risk of implementing the EU Summit decisions, adding that the ECB and EU Summit have provided strong measures and the EU treaty will prevent the ECB from monetary financing. Of note, the ECB said it purchased EUR 635mln worth of bonds last week via the SMP which compares to the previous reading of EUR 3.662bln. In terms of technical levels, supports are seen at the 21DMA line at 1.3213 and then at 1.3145 which is daily low Oct.4. On the other hand, resistance levels are seen at 1.3356/88 and then at the 21DMA line at 1.3414.
Demand for GBP from a UK clearer which is speculated to be related to a dividend payment offset some of the bearish sentiment which prevailed across the risky assets on Monday. Nevertheless, the pair finished the session in minor negative territory and is set to remain closely correlated to EUR/USD pair. Of note, the BIS said that the BoE has overestimated the boost to the economy from quantitative easing (QE) and further asset purchases will have less of an effect than the Monetary Policy Committee (MPC) expects. Separately, according to analysis by Standard Chartered, Britain is on the verge of entering a deep recession that could last until the summer of next year. Finally, technical supports are seen at 1.5526, 1.5469 and then at the 21Day Lower Bollinger Level at 1.5432. On the other hand, resistance levels are seen at 1.5665, 1.5735 and then at the 55DMA line at 1.5751.
The pair trended higher throughout the session on the back of a stronger USD, which gained around 0.8% after Moody’s said the Euro area sovereigns remain under pressure in the absence of decisive initiatives and they are to revisit all EU sovereigns in Q1 2012. In terms of Japan specific commentary, Japanese Consumer Confidence for the month of November fell to 38.1 vs. Exp. 38.3 (Prev. 38.6). In terms of technical levels, supports are seen at 77.56/12 and then at 77.00. On the other hand, resistance levels are seen at 78.00/11 and 78.16 which is November 30 daily high.
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