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Markets rose across the board for the first time in days after positive comments made by the U.S Fed Chairman Ben S. Bernanke soothed traders concerns over the strength of the global economic recovery. In his speech last night, Bernanke stated that he does not believe that the U.S economy will slip back into recession as consumer spending and investments seem strong enough to sustain the economy’s current growth. In recent weeks, concerns of a double-dip recession have escalated. Last Friday’s disappointing Non-Farm Employment figure was the latest sign that the U.S economy may be faltering. In regards to the European debt crisis, Bernanke repeated that the U.S Fed was watching the situation closely and that the U.S must also take long term action to lower its debt level.
As expected, these optimistic remarks have led to risk appetite buying this morning: the Euro, Aussie, and Asian Rim stocks have all moved higher today.
EUR/USD
The Euro edged up from its four year low against the U.S Dollar, as Bernanke’s “optimistic” comments help risk appetite return to the market. However, the pair continues to remain below the 1.2000 mark. Without a substantial and sustained move above this key level, Forex investors will most likely continue to sell into every rally. The pair continues to remain vulnerable and any negative news could easily cause the Euro to slip back $1.1900.
Support/Resistance 1.1915/1.2000
GBP/USD
The British Pound hit a fresh daily high of $1.4550 yesterday, after British Prime Minister David Cameron warned the country to prepare for an era of drastic spending cuts necessary to revive Britain’s faltering economy. The newly elected Prime Minister went on to cite Greece as an example of a country who painfully failed to reduce its massive budget deficit. Currently, the pair has retraced some of yesterday’s upward movement; however traders are supporting the pair around 1.4460. If European stock markets maintain their pre-market gains and risk appetite continues, we could easily see another move towards yesterday’s highs and even beyond.
Support/Resistance 1.4460/1.4570.
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