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A better day for Germany as business confidence unexpectedly rises

Daily Outlook - 24th November 2011

Written by Zoe Fiddes

CURRENCY TRADING SUMMARY 24/11/2011

Sterling / U.S Dollar (GBP / USD):

GBP/USD traded down yesterday testing the 1.5500 area. USD strengthened on increase risk sentiment in the market as the German bond auction was unsuccessful selling only  €3.644 billion of the €6 billion in 10-year bunds total. This is a sign that investors as not even willing to go into what is regarded as the safest country in the euro zone. Also, sentiment that the BoE may have to increase there QE program added to the downward pressure on the pound. The downtrend remains and there is a preference to sell below the pivot 1.5610 with initial support at 1.5495 followed by 1.5435.

Euro / U.S Dollar (EUR / USD):

EUR/USD traded down to 1.3320, the months low, following the poor sale of German Bunds. Overnight the pair avoided falling  further however the downtrend is likely to continue given the fundamental outlook; renewed fears of Germany’s debt situation and pressure on euro zone country’s AAA rated sovereigns whilst a sense of urgency to act from the EU region is lacking with leaders unable to agree on a strategy. Trading will be thin today with Thanksgiving which may lead to short-traders avoiding the markets today and wait for better liquidity. The German Q3 GDP came out inline with expectations at 0.5% q/q and the German IFO  Index was slightly up. This news has given the euro some support today and it has advanced against the USD and GBP. As downward pressure remains there is a preference to sell EUR/USD below the 1.3430 pivot with the initial support at 1.3310 followed by 1.3275.

U.S. Dollar / Japanese Yen (USD / JPY):

USD/JPY made a surprise jump up to 77.57, the high of 2 weeks, the spike was soon sold into which took the pair back to 77.00. The 77.00 was reported yesterday as the pivot point with a preference to buy above and overnight the pair did rebound from here to 77.22. This level remains intact and in the near-term there could be bids to buy here however in the bigger picture there is downward pressure with a preference to sell below 77.35 and the initial support is 76.85 followed by 76.7.

Australian Dollar / U.S. Dollar (AUD / USD):

AUD/USD traded down reaching a 0.9663, a 7 week low. Overnight, however, the pair made a good recovery trading back to 0.9785. Despite the pull back pressure to the downside still mounts and there is a preference to sell below 0.9810 with the initial support at 0.9655 followed by 0.9595.

Gold (XAU):

XAU/USD came under pressure falling from $1708 as USD strengthened reaching $1677 lows. Now the price is coming up to test the $1700 level again with no clear break as yet. The more critical level to the topside is $1712 and there is a preference to sell below this with initial support at $1684 followed by $1667.

Oil:

OIL/USD (Crude) jumped down to 95.30 in the late U.S. session before rebounding back to 96.70. The 95.30 level is showing it’s significance after a previous test earlier in the day. The critical zone to the topside is 96.70-96.90 and if this holds there is a preference to sell with the first profit target at 95.60 followed by 95.20

Technical Commentary:

Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5435  1.5495  1.5544  1.5610  1.5690
EUD/USD  1.3275  1.3310  1.3386  1.3430  1.3480
USD/JPY  76.70  76.85  77.07  77.35  77.60
USD/CHF  0.9085  0.9120  0.9173  0.9210  0.9230
AUD/USD  0.9595  0.9655  0.9761  0.9810  0.9890
NZD/USD  0.7335  0.7390  0.7439  0.7470  0.7515
XAU/USD  1667.0  1684.0  1698.4  1712.0  1725.0
OIL/USD  95.20  95.60  96.77  96.90  97.50

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