By Fast Brokers – Although the Cable is making a strong intraday rally from intra-session lows and its psychological 1.52 level, the currency pair has still been dealt a solid psychological blow by negative psychological developments across the globe. The SEC’s Goldman suit is dominating headlines as investors fear that this may only be the beginning of numerous financial investigations involving fraud attributing to the economic crisis. Additionally, by going after Goldman the SEC is giving politicians ample fuel to push a new financial regulation bill in its more aggressive form, a negative for financials and consequently the risk trade. Investors have reacted as expected by snapping up the Dollar and Yen, and the Cable is no exception despite its relative strength as of late. In addition to the Goldman situation, news that the Chinese government is cracking down on real-estate lending practices has only contributed more to Friday’s risk averse momentum. The SCI dropped by nearly -5% as investors fear that China’s economic growth rate will slow since it is highly dependent on real-estate. Although Goldman has had a larger impact on the risk trade thus far, a slowdown in China could have a more serious impact on the Dollar as a whole over the medium-term. Today’s data wire was quiet, leaving psychological forces at the steering wheel. However, the UK will reenter the fray tomorrow by releasing CPI data. If consumer prices print hotter than anticipated this could benefit the Cable since the BoE would likely refrain from loosening liquidity. On the other hand, weak CPI growth could drag on the Cable for the opposite reason. Meanwhile, investors should keep a close eye on the news wire since psychologicals are in control. Investors will also receive key tech earnings releases this week, meaning we could be in for an active few days.
Technically speaking, the Cable has managed to avoid a retest of previous April lows this far and has intraday lows along with its psychological 1.52 area serving as technical cushions for the time being. As for the topside, the Cable faces multiple downtrend lines along with intraday, 4/9, and 4/12 highs. Additionally, the 1.53 level could serve as a psychological barrier.
Present Price: 1.5309
Resistances: 1.5325, 1.5343, 1.5371, 1.5386, 1.5404, 1.5419
Supports: 1.5282, 1.5263, 1.5247, 1.5232, 1.5209, 1.5189
Psychological: 1.52, 1.53, April highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
