Forex Market Review by Finexo.com
Global risk appetite has returned to the markets, with both the Euro and the Sterling benefiting against the Dollar and the Yen. While some analysts are still criticizing the Euro Zone bank stress test for being significantly “unstressful”, markets have continued to react positively to test results. Moreover, risk appetite surged yesterday after a report showed a bigger-than-expected increase in U.S new home sales in June and FedEx Corp.’s boosted its earnings 
prospects, proving that the US economy is far from a double-dip recession scenario.
Today’s focus is on the U.S Consumer Confidence report, a major survey of 5,000 people that typically rocks the markets. Last month this key indicator plunged from 63.3 to 52.9 – reflecting the generally fear of a double dip recession. While analysts predicted another fall to 51.3 this time, the recent boost in investor confidence may has increased speculations of potential positive upside movement in the index.
EUR/USD
The Euro extended its rally against a weakened Dollar in this morning’s Asian session. The single European currency successfully passed yesterday’s high, to touch on a new 5-day high of $1.3017. The currency had since pulled back to around the $1.30 level. However, the EUR/USD is likely to remain in its current trading zone, or even go higher as some markets participants see a push towards the 1.3125 mark. Fundamentally, the recent better-than-expected string of data coming from the Euro Zone, together with the overall positive reaction to the stress tests, could help the EUR/USD push for further gains.
GBP/USD
The Pound has also benefited from the recent increase in risk appetite, as yesterday’s rally pushed the British currency to appreciate more than 70 pips against its American counterpart. The pair has since entered into a consolidation phase, and has remained range bound between 1.5477 and 1.5505 in this morning’s Asian session. Typically, a tight consolidation pattern potentially leads to a break out in either direction. While on the downside, the pair could find support near its 20-day moving average around 1.5260, on the up side a potential push towards 1.5650 seems unlikely.
Forex Market Review & Analysis by Finexo.com
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