Home > News > FOREX Trading News

FOREX Trading News

WORLD FOREX: Euro Firms On Greek Hopes But Portugal Still A Worry

ITC News Center Blog

January 31st, 2012

FOREX-The euro, pound and Canadian dollar maintained a firm tone against the dollar in European trading Tuesday after 25 European Union leaders struck a deal on a EUR500 billion permanent bailout fund.

Investors also took heart from assurances that an agreement on Greece's second bailout will be reached by the end of the week, briefly nudging the euro above $1.32 after steady gains in Asian trade.

Some market participants, however, remained skeptical about the capacity of the single currency to extend its gains.

"The market appears to be fixated solely on Greece and solely upon the likelihood of a Greek solution. That is a bit of a concern," said Nick Parsons, global head of FX strategy at the National Bank of Australia.

Some analysts warned that an agreement would only boost sentiment temporarily, arguing that Greece's debt burden would probably remain unsustainable even after a successful restructuring.

Although yields on 10-year Portuguese government bonds came off Monday's euro-era highs, easing below 16%, investor concern over the potential for a similar debt restructuring in Portugal--with private-sector involvement--has also been building.

"Recent concerns that a PSI scheme could be an option for Portugal, if markets remain closed to the country next year, is a reminder of possible indirect contagion from the way the Greek crisis is handled," Bank of America-Merrill Lynch said in a note to clients.

The yen eased off three-month highs against the dollar as improved sentiment softened demand for the Japanese currency, perceived to be one of the safest currencies in times of stress. Japanese Finance Minister Jun Azumi provided some relief, warning of "decisive steps" if the currency's appreciation became too sharp and disorderly.

The data run was a mixed bag, with German jobs data showing unemployment fell to a record low of 6.7% in January. In the euro zone, unemployment hit a 13-year high in December, at 10.4%. Meanwhile, money supply in the U.K. registered its sharpest fall since 1998.

Sterling shrugged off the print and regained its footing after some initial weakness, hitting a two-month high against the dollar, while the Canadian dollar rose to its strongest level against the buck since Oct. 31.

Emerging market currencies also traded with a firmer tone, following the euro, with the Turkish lira hitting a fresh 2012 high against the dollar and the Hungarian forint inching higher against the euro.

At 1135 GMT the euro was trading at $1.3195 compared to $1.3126 late Monday in New York, according to EBS via CQG. The currency was at Y100.78 compared to Y100.60 in New York and the dollar was at Y76.36 from Y76.65. Sterling was trading at $1.5792 compared to $1.5639.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 79.232, compared with 78.812 from 79.232.

A summary of key levels for chart-watching technical strategists:

 
Forex spot:       EUR/USD    USD/JPY    GBP/USD    USD/CHF
 
Spot 1127 GMT     1.3195     76.38      1.5784     0.9131
3 Day Trend       Bullish    Bearish    Bullish    Bearish
Weekly Trend      Bearish    Bearish    Bullish    Bearish
200 day ma        1.3575     78.51      1.5817     0.9043
3rd Resistance    1.3288     76.78      1.5931     0.9250
2nd Resistance    1.3251     76.65      1.5870     0.9229
1st Resistance    1.3235     76.41      1.5845     0.9178
Pivot*            1.3151     76.44      1.5697     0.9165
1st Support       1.3147     76.17      1.5730     0.9112
2nd Support       1.3076     76.00      1.5643     0.9081"
3rd Support       1.3025     75.31      1.5600     0.9066
 
 
Forex spot:       EUR/JPY
 
Spot 1127 GMT     100.77
3 Day Trend       Bearish
Weekly Trend      Bullish
200 day ma        106.59
3rd Resistance    101.45
2nd Resistance    101.22
1st Resistance    100.88
Pivot*            101.20
1st Support       100.41
2nd Support        99.98
3rd Support        98.80
 

- By Eva Szalay, Dow Jones Newswires.