The EUR/CAD has started a bullish trend

Varengold Bank Research Team from Varengold Wertpapierhandelsbank AG at 10/26/09

Good morning. Due to the clock change during the weekend, the Server time of Varengold has changed from GMT+2 to GMT+1. However, the week starts with a weak USD on optimistic expectations about the global economy. We wish you a nice start in the new trading week.

The weak USD fell to a 14-month low against the EUR and dropped also versus the JPY as Asian stocks gained on expectations that the global economy is recovering, which reduces demand for the USD as a refuge. The MSCI Asia Pacific Index of shares climbed 0.3 percent after earlier falling as much as 0.4 percent. The Nikkei 225 Stock Average climbed for a second day after climbing 0.4 percent. The USD decreased versus 12 of the 16 Major currencies before some reports this week may show that the confidence among the U.S. and French consumers climbed, which spurs investors to purchase higher-yielding assets, according to economists. The USD fell to 1.5034 after touching a low at 1.5063 against the EUR while it reached a price of 91.83 against the JPY. Today, the GBP dipped against the USD on concern that the BoE policy maker Adam Posen may signal that the central bank will expand its asset-purchase program.

The GBP fell for a second day against the USD and reached a low at 1.6252. It fell for a third day against the EUR and touched its low at 0.9239, which is the highest level since October 15th.

Since the end of September, the GBP has lost along a downward trend line against the AUD. After it crossed the 1.7600 level, the pair started to recover its losses and reached a high of around 1.8000. The market is trading currently on the downward trend line again and touched its support level at 1.76. If it breaks these two lines, it might enter back to its bearish phase and may extend its losses.

After breaking the downward trend line in the middle of October, the EUR/CAD has started a bullish trend. It has reached the 1.5835, which is a resistance level from September. It might rise up near to the next resistance at 1.5900, but as you can see the MACD may indicate a trend reversal which could be a sign for an overbought market.