By Russell Glaser
The sharp appreciation of the euro and the Aussie dollar coupled with the continued decline of the dollar and the yen highlight traders’ appetite for yield and distaste for currencies with loose monetary policy.
EUR/USD
For the third time in the past four weeks the pair is closing on its weekly high indicating momentum is behind the move higher. A breach of the long term trend line off of the 2008 high should also help spur bids for the euro. Traders will initially target the 2010 high at 1.4580 with a mid-term target at 1.5140 from 2009. Weekly stochastics show the pair is overbought and to the downside the 20-day moving average at 1.4180 has proved to be supportive. Value buyers should be looking to enter on dips at 1.4020 and 1.3860.
AUD/USD
The Aussie dollar continues to make new all-time highs on the back of the carry trade. The next big round number is 1.0600 and should be targeted by traders. Technical indicators show the pair is overbought but are not yet signaling for a reversal. Support for the pair comes in at Thursday’s low at 1.0410, followed by 1.2090 and the February high at 1.0200.
USD/JPY
The pair’s appreciation was capped at 85.50 where the trend line falling off of the 2007 high comes in. Momentum has swung higher and a breach of this barrier should initially target the post intervention high from September at 85.90. Traders should be targeting the May 2010 low at 88 where the pair should encounter selling pressure with the 100-week moving average not too far behind at 88.60. Support is found at this week’s low at 83.85. The 2010 low at 80.20 as well as the previous channel line should contain any pullback in the pair.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
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