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The EUR traded near a one year low

Varengold Bank Research Team from Varengold Wertpapierhandelsbank AG at 02/08/10


Good morning from Hamburg and welcome to our first Daily FX Report of this week. Today, we will report about the weak EUR and its downward trend against other major counter parts. However, we wish you a good start in a new trading week.

Market review

The EUR dropped towards its lowest level in eight months versus the USD on speculation that the budget deficit in some European nations will keep policy makers from raising interest rates. The USD climbed to 1.3652. In the meantime, the EUR reached 1.3586, its lowest level since May 2009. Furthermore versus the JPY, the EUR traded near a one year low. The EUR weakened to 121.78. The USD was at 89.37 JPY. The CHF lost for a fourth day against the USD on speculation that U.S. reports this week will show that the trade deficit has shrunk and retail sales rebounded. This increased the demand of assets in the world largest economy. The USD rose to 1.0726 versus the CHF.

The European Central Bank left its benchmark rate at a record low of 1 percent and ECB President Jean-Claude Trichet signaled that there isn’t in any rush to raise borrowing costs. The EUR also weakened for a fourth day versus the USD as futures traders raised its bets to the highest level in more than a decade that the EUR will fall against the USD.


Since the middle of January, the EUR has been trading in a bullish trend channel against the AUD. Currently, the prices reaches the lower line of the trend channel. Two times before as the EUR touched the lower line, the prices could recover and the currency pair could continue its upward trend. Also a crossing MA Oscillator through the signal line from below may indicate a further increasing trend.


Since the last two weeks, the GBP has been trading in a sideways movement versus the NZD. Recently, the currency pair touched its resistance around 2.2956 and rebounded. Now it seems that the prices will continue its downward trend like the last time as the GBP couldn’t cross its resistance. Also the MACD may support this with a breakthrough by the signal line from below. Next support level could be around 2.2457.

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