| CATEGORY: FX |
FX afternoon update - Dollar slips back on Bernanke testimony |
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By Michael Hewson
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Wed 24 Feb 2010
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LONDON (SHARECAST) - The dollar slipped back this afternoon as Federal Reserve Chairman Bernanke reiterated the Federal Reserve’s stance of lower rates for an extended period.
As if to underline this stance, an unexpected slump in new home sales for January to an all-time low, helped underline that the “nascent” recovery requires continued low rates.
Bernanke’s testimony helped overshadow the turmoil in Greece today as the country walked out on a general strike in protest at the austerity measures due to be implemented by the Greek government.
The strike shut down air, rail and maritime transport in Greece with no flights in and out of the country's airports, and train, bus and ferry services also cancelled nationwide.
If evidence were needed of the rocky road ahead then TV pictures of rioting protestors in Greece provided it today.
EURUSD – the Euro continues to hold above its 61.8% Fibonacci support at 1.3485, after last nights sell-off on the poor US data
This remains the key obstacle to further declines. A close below 1.3485 could well be the signal for further losses and the move towards 1.3200. While the market is able to hold above this level it could well be susceptible to bounces back towards 1.3640 and 1.3750.
GBPUSD – has traded in a broad range between 1.5400 and 1.5480 today, treading water ahead of this week’s revised UK GDP figure which is due out on Friday. Resistance can be found around yesterday’s highs as well as the 1.5530/40 area. The next down side target remains around the 1.5270 level initially, which is a 50% retracement of the up move from last years lows at 1.3500 to the highs at 1.7045, and then trend line support from the 1.3500 lows, at 1.5180/85.
EURGBP - the 200 day moving average at 0.8825/30 remains the key level with respect to further Euro gains. The recent range highs should also act as some form of resistance around 0.8840. While below this important 0.8825 level the downside risk for the Euro pre-dominates.
USDJPY – a low today so far of 89.75 brings into focus the bottom of the Ichimoku cloud at 89.30. While below resistance at 90.30/40 the onus remains to the downside.
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