The dollar continued to be preferred currency during the crisis
The US dollar surged to a 15-month high against a basket of other major currencies on Friday. The dollar index, which tracks the value of the greenback against a basket of six currencies, rose 1.25% to 82.450. The euro fell 1.5 % against the dollar at 1.3399 after touching an 18-month low. The euro last traded down 0.4 % to 134.57 yen. The US dollar traded up 1 % at 100.41 yen, coming off its worst level since March. The higher-yielding Australian dollar fell 5 % to 0.6484 dollars, while the New Zealand dollar dropped 1.1 % to 0.5987 dollars. Sterling had also its worst week against the dollar since November 1992 at current prices. The Monday trading started with gap a by USD crosses as a result of the coordinated G7 action during the weekend that supported the euro.
EUR/USD
The short term picture remains unchanged as the euro consolidates in a narrow range near the support level at 1.3490, which holds back the drop so far. The negative risk is still in effect as far as the pair is positioned below the key resistance at 1.3840, which is 50.0% retracement of the 1.1640-1.6035 rise. If 1.3440 is broken successfully, next target will be the key support at 1.3310, which is 61.8% retracement of the mentioned drop followed by 1.3060. We witness an attempt for slow recovery of the upward movement and the oscillators indicate oversold levels, which might be a signal that a mid-term bottom has been reached. On the upside resistance is seen at 1.3680, followed by the key level 1.3840, and 1.4270.
EUR/USD (chart, table)
USD/JPY
The short term picture remains unchanged as the pair consolidates in a narrow range near the support level at 98.50, which might turn to be a mid-term bottom as the oscillators indicate oversold levels. During the next days we may witness a neutral trading and on the upside resistance is seen at 100.80, followed by 102.50, which is 23.6% retracement of the 124.12-95.75 drop, and 105.70. On the downside, below 98.50 support is seen at 95.70 and 93.30.
USD/JPY (chart, table)
GBP/USD
The short term picture remains negative as the sterling continues its downward movement breaking the long-term support at 1.7050. If the pair remains below this level next targets will be the supports at 1.6790 and 1.6570. The downside risk remains in effect, but in the next days we will probably witness more neutral trading. Oscillators indicate oversold levels, which might be a signal that a mid-term bottom has been reached. On the upside resistance is seen at 1.7590, followed by 1.7800 and 1.7860, which coincides with the 26-days SMA.
GBP/USD (chart, table)
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13.10.2008 FX daily review.pdf, 322 Kb
