THE TIPSTER Cable pulling higher

The pound is trading near critical levels against the US dollar. Cable has rallied strongly since mid-January and has continually found support on a sharply-rising trend line. It is now managing to hold above both its 50 and 100-day moving averages around the $1.5835/40 area. However, the pound is now nudging up against resistance at $1.5960, and a failure to break above here would point to the formation of a bearish head and shoulders pattern. But for now the momentum is to the upside, and this will be reinforced if today’s release of minutes from the last MPC meeting are more hawkish than expected. GFT quotes sterling-dollar at $1.5958-$1.5960

The Canadian dollar has been on a downer over speculation that the Eurozone debt situation is worsening, which could make the currencies of countries that export raw materials less attractive. The pound has so far rallied 130 pips against the loonie to Ca$1.5930, but many traders will be anticipating Bank of Canada’s interest rate decision, which is expected to remain at 1 per cent. As long as Ca$1.587 remains a support level, the pair could continue to move higher. Capital Spread quotes sterling-Canadian dollar at Ca$1.5908-Ca$1.5918

Having tested the £0.8220 support and hitting 18-month lows on Monday the single currency has bounced back against the pound with the £0.8250 and then the £0.8270 levels the key resistance to further upside. Above that the £0.8300 is elusive. Another break below £0.8220 could see £0.8140 retested – last seen in August last year. Above the £0.8300 level the 55-day MA should cap gains around the £0.8350 level. CMC Markets gives a spread of £0.82400-£0.82407 for euro-sterling.

The brief piercing of $1.300 in euro-dollar on Monday triggered buyers into action and caught some late shorts on the hop on Monday afternoon as it rebounded hard back over $1.3100. Despite the better than expected EU ZEW economic sentiment figures and good European bond auctions yesterday, the pair failed to gain any traction above the key pivot area of $1.3150 and looks like it wants to resume its attempt to get back under $1.300. Look to sell euro-dollar around $1.3150 with a stop just above $1.3200 for another run at $1.300. Spread Co quotes euro-dollar at $1.31493-$1.31511.

With the price of dollar-yen sitting below its resistance and the technicals pointing towards a sell, currency traders will be looking to see if the Japanese Merchandise Trade Balance being released this evening can outweigh the thin data from the US. Capital Spreads quotes a price of ¥80.654-¥80.662.

With euro-Aussie dollar rising for a second consecutive day yesterday, the question is now whether slowing Chinese growth will continue to worry investors in this currency pair more than a newly-revitalised Eurozone crisis. Faced with an expected reduction in the explosive expansion of the Chinese economy, euro-Aussie dollar managed to make decent gains throughout March. But now, with Spain teetering on the brink, Italy not far behind, and Greece and Portugal loitering in the background, will investors now decide that the Aussie is the safer bet, even with the China story looking rockier by the day? IG Index’s price on euro-Aussie dollar is Au$1.2690-Au$1.2700.