European currencies still under pressure vs. the Dollar
The US dollar rose against most of the major currencies on Friday, supported by more stable growth rate for the United States than the rest of the world. US consumer spending slowed in July, but it was not take so negative from the market as US Midwest expanded with a greater rate than expected, fueling around of dollar buying. Data released in the US saw the final August University of Michigan consumer sentiment indicator improve to 63.0 from 61.2 in July while the August Chicago PMI index improved to 57.9 from 50.8 in July with the prices paid component lower at 80.6. Investors expect sentiment on the US dollar to remain bullish in the coming week. But some market participants could to try to square positions by selling into any dollar strength ahead of next Friday's August US employment report and central bank policy decisions in the euro zone and the UK.
The sterling continued to lose ground against the US dollar as reached its lowest level since July 2006. Data released in the UK saw July Land Registry house prices fall 2% y/y while GfK August consumer confidence rose to -36 from -39 in July. Meanwhile, the yen appreciated versus the US dollar as the pair moved to its lowest intraweek level following the release of many Japanese economic data. The Japanese government announced that its economic stimulus package will aggregate 11.7 trillion yens. Economics minister said he is concerned about escalating inflation in Japan and said prices could accelerate more.
Data released in Japan overnight saw the nationwide core consumer price index rose to 2.4% y/y, exceeding forecasts.
EUR/USD
The short term picture remains unchanged as the euro continues to consolidate in a narrow range around the support level at 1.4650, which is 50% retracement of the 1.3262- 1.6035 rise. The pair is positioned in the bottom border of consolidation and there is a high probably for a new drop targeting the key support level at 1.4320, which is 61.8% retracement of the mentioned rise. A break of that level could open a potential for a new steep decline, and a long lasting positioning below that level could even lead to a trend reversal in the mid term. On the upside resistance is seen at 1.4980, which is 38.2% Fibo retracement, followed by the level around 1.5250, which coincides with the 200-days SMA, and 1.5440.
EUR/USD (chart, table)
USD/JPY
The short term picture remains unchanged as the yen continues to consolidate in a narrow range between 109.90, which is 50% retracement of the 124.12-95.75 and 108.20, which coincides with the 26-days SMA. Probably the pair will continued its mid term up trend with a main goal – the resistance at 113.30, which is 61.8% retracement of the mentioned drop. But there is not rejected the probability the pair first to test 106.60 level, which is 38.2% Fibo retracement coinciding with 200-days SMA and 104.90.
USD/JPY (chart, table)
GBP/USD
The sterling continues to lose positions. The short term trend remains extremely negative and the downward movement is likely to continue as there is not strong support till 1.7900 levels. The next main goal is the support at 1.8000, followed by 1.7900. On the upside, first resistance is seen at the level 1.8745, followed by the key 1.9100 and 1.9350.
GBP/USD (chart, table)
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01.09.2008 FX daily review.pdf, 284 Kb
