Tuesday, May 8, 2012
Risk aversion has been the major tone across multiple asset classes as investors continue to worry about political instability in the Eurozone and whether the 17-nation bloc will be able to solve some of their sovereign debt problems and meet their debt reduction targets by the year's end. For the past 2 trading days, investors have been searching for safety in other places, like 10-YR US Treasury Bonds or the 10-YR German Bund Market. As a result, we have seen US dollar strength across multiple currency crosses.
In today's technical analysis review, we will briefly explain the price action in the EUR/USD pair and identify common areas of support & resistance for potential trade entries.
Friday, April 27, 2012
Today's trading session began with a negative handover during the Asian Session, as news about Standard & Poors lowering of Spain's long term sovereign credit rating by two notches, from "A" to "BBB+", triggered a flight to safety across multiple asset classes. We began to see peripheral yields surge as the borrowing costs for Spanish 10-year paper rose 13 basis points at 5.93%. Meanwhile, the German Bund market benefited from the risk aversion and we saw the EUR/USD fall to support at 1.3158. However, prior to the European & London Open, we began to see signs of recovery as the pair begain to rally from the session low on news that Middle Eastern accounts & a Swiss supranational were buying EUR/USD at support. The mild recovery was also driven by a decent Italian bond auction, in which they managed to sell EUR5.946 billion of Treasury bonds near the upper end of the targeted range. During the New York Trading Session, we also had disappointing 1st quarter GDP data which added more strength to the rally as USD weakness began to push the currency pair even higher, despite growing concerns over the sustainability of the Eurozone Periphery Debt Market and the Spanish Banking Sector.