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UK current account is in a better state than expected, FTSE up & USD weakens

Daily Outlook - 25th October 2011

Written by Zoe Fiddes

CURRENCY TRADING SUMMARY 25/10/2011

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

GBP/USD is back to test 1.6005 after spiking at 1.0620 highs this morning. The market is certainly putting pressure on this level. The UK current account data came out less negative than expected at -2bn vs. -9bn which has helped the pound. At 14:00 GMT US consumer confidence (Oct.) will be released, 46.5 is the forecast. From a technical stance the pair stands above its 1.5940 support and it remains in a bullish channel, the initial resistance is 1.6050.

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

EUR/USD came back to test 1.3950, following 1.3875 lows, but was unable to break higher. The news has focussed in on the state of Italy’s finances today however the Italians claim they have followed austerity plans from the ECB are in far less trouble compared with France and Germany since they have less tied up  in Greece. The market awaits the EU debt summit tomorrow and is looking for a final plan of action. The pair is supported by a rising trend line and is rebounding on its bullish channels lower boundary. Trading Central has a preference to buy above 1.3830.

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

USD/JPY made a break higher to 76.30 however this was brief and the pair came back to trade in the lower 76’s. The 76.00 support level is maintained but Trading Central sees the pair as under pressure intraday and has a preference to sell below 76.30. The BoJ are to lower the 2011/12 financial years GDP growth forecast to +0.2% from +0.4%, 2012/13 FY to -2.5% from 2.9%, due to the global economic slowdown, and eurozone debt crisis. Also, Japan FinMin Azumi said – To take decisive steps if JPY rise excessive, instructed staff to be prepared for all possible steps since recent rise is speculative and doesn’t reflect fundamentals.

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

AUD/USD attempted to break 1.0500 to the topside overnight and in the early UK session.  The pair is range trading between 1.0450 – 1.0500. Trading Central sees further upside to the moves with the initial resistance at 1.0500 and if this breaks it may make its way to 1.0575. At 00:30 GMT tomorrow Australia’s CPI figures will be released which are expected to be 3.5% YoY and 0.6% MoM.

Gold (XAU):

Gold (XAU) gold turned at the pivot point $1644 overnight. The uptrend has taken the price to the critical resistance $1661-65 which has been tested numerous times.

Oil:

Oil (crude) has traded higher reaching $93.50 a two month high. On the daily chart the next major resistance is around $99.50 but on the way $95 and $97resistance levels may act as a barrier to further up moves.

Technical Commentary:

  Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5900  1.5940  1.6014  1.6050  1.6090
EUD/USD  1.3750  1.3830  1.3952  1.3955  1.3985
USD/JPY  75.80  76.00  76.14  76.30  76.50
USD/CHF  0.8700  0.8750  0.8785  0.8875  0.8925
AUD/USD  1.0305  1.0370  1.0490  1.0500  1.0575
NZD/USD  0.7960  0.8005  0.8035  0.8060  0.8085
XAU/USD  1644.0  1650.7  1662.9  1665.0  1677.4
OIL/USD  90.05  90.60  93.71  94.93  97.98

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