EURO-US dollar formed a bullish engulfing candlestick yesterday and in the process made a breakout from its recent downward trend. A break of the $1.3280 level was crucial and led to further buying with the cross back above $1.3400. The strength could continue following this move and in the run up to the meeting of European leaders on Thursday. Capital Spreads quotes a price of $1.3420-$1.3421 for Euro-US dollar.
A major British clearer sold sterling-Australian dollar quite aggressively yesterday, helping drive it down to AU$1.5836, not far off its all-time lows. Although it might be dangerous to try to catch a bounce in this pair, the area around AU$1.5840 offered strong support in October, November and as recently as last week. If you are tempted to try a long trade, it might be wise to keep your stop losses tight, around AU$1.5760, in case it does break October’s low of AU$1.5768. Spread Co offers a spread on sterling-Australian dollar of AU$1.5837–AU$1.5849.
A rise in German sentiment announced in yesterday’s ZEW survey coupled with October’s increase in Eurozone industrial production is good news for the struggling euro. But the bullish trend we have seen cannot continue for long amid doubts over the future of the euro. Against the yen, the resistance area of ¥111.70 has been robust since November and shows no sign of being broken. Cantor Index offers euro-yen at ¥111.72–¥111.75.
Marginally hotter than expected inflation in the UK offered some support for sterling but it proved to be somewhat short lived after better than expected ZEW economic sentiment readings from the Eurozone. As a result, euro-sterling is rallying and a test of December highs would be the obvious next level to watch for. The debate over a pan-European bond issue continues, however, and there is a chance that this recent episode may serve to accelerate harmonisation of economic policies across member states. IG Index offers a price on euro-sterling of 84.91p-84.93p.