The AUD/JPY recovered from a six−month low

Varengold Bank Research Team from Varengold Wertpapierhandelsbank AG at 02/05/10

Good morning from Hamburg and welcome to the last Daily FX Report of the week. A dramatic week for the EUR and we still await further important U.S economic data which may boost the USD once again. However, we wish you successful trades and a nice weekend.

The EUR/USD extended its losses and fell to an eight-month low on concerns that widening deficits will hamper Europe’s economic recovery. The 16-nation currency was also bonded on speculation a German report may show today that the growth of Europe’s biggest economy slow down. While the President of the ECB, Jean-Claude Trichet, said that the euro area is solid and its budget shortfall will probably smaller than those of the U.S. and Japan this year. Both most important Central Banks in Europe, ECB and BoE, leave its key interest rates unchanged at 100bps rather 50bps. During the Asia session the JPY was sold out against the EUR and USD as traders take profits from its surge yesterday.

The AUD/JPY recovered from a six-month low as investors bet its declines were too rapid, after the RBA said in a report that the economic growth is likely to accelerate this year even if policy makers are forced to raise interest rates by another three quarters of a percentage point. The USD/CAD rose to the highest level since November on concern the slower pace of the economic recovery may deter demand for crude oil, the most important exports of Canada.

On the long-term view the EUR/USD left its bullish trend and is rebounding at the moment. After the EUR/USD also lost its support at the 1.3793 level yesterday it may boost its downward movement. The next support is even located at the 1.3424 level. Also the ADX indicator is showing an expanding bearish trend. If the currency could reverse the trend though, the next resistance is located at the 1.4051.

The GBP/USD broke through its support at 1.5779 for the second time after a long term zigzag movement. If it would loss this support sustainable, the MA Oscillator may indicate further bearish movements, it may boost the bears seriously because the next support is even located around the 1.5000 level. On the other hand the next resistance may be at 1.5988 if the currency pair could cross its support again.