Euro Up on Strong Spanish Auction
The euro rose on Thursday, supported by a
solid response to a Spanish debt auction with an
improvement in risk appetite spurring investors to
unwind bearish positions, although brief rallies are
unlikely to break the single currency's downtrend.
Spain sold 6.61 billion euros of government bonds on
Thursday, more than its announced target, in an
auction which analysts said went well, supported by
domestic banks and a pickup in appetite for riskier
assets. Hopes the IMF could boost its resources to
help countries deal with the euro zone debt crisis and
some optimism over talks to avoid a chaotic Greek
default were adding to the positive tone.
"We think the ongoing short squeeze we've
seen in the euro this week can continue. The newsflow
we are seeing is reasonably encouraging for risk with
the IMF headlines yesterday and hopes growing over
the Greek restructuring talks," said Tom Levinson,
currency strategist at ING. Talks between Greece and
its creditors are proceeding, but much more progress
is needed before a bond swap to reduce the country's
towering debt pile is reached, three sources close to
the talks said. Still, uncertainty over the euro zone
debt crisis would continue to weigh on the euro and
upticks were unlikely to last long, presenting
opportunities to more investors to sell.
On 4H chart, euro manages to get-out from its
bearish channel; it could signal more gains
ahead. But, falling stochastics could erode
euro’s performance. Nevertheless, downward
pressures may be limited by MA 100 and its
ascending trend line. 1.2945 and 1.3000
(December 14 low and psychological level) are
resistance. 1.2840 and 1.2770 (January 19
and 5 low) are support.
Resistance Level : 1.2945, 1.3000, 1.3030
Support Level : 1.2840, 1.2800, 1.2770
Trading Range : 1.2830 – 1.2950
Trend : Sideways
QE Speculation Caps Sterling Gains
Sterling edged higher against the dollar on
Thursday, tracking gains in the euro versus the dollar
after solid demand at a Spanish debt auction, but its
rise was limited by weak consumer confidence data
that added to concerns about the UK economy.
A survey showed UK consumer confidence
dropped close to its lowest level in seven years in
December, adding to worries about a fragile economy
and the risk of the Bank of England easing monetary
policy next month. "We have had some positive
developments over the last day or two and a good
auction out of the euro zone today," said Ankita
Dudani, currency strategist at RBS. "(However) we did
not have good data out of the UK, and lower inflation
suggests the BoE may be ready to ease as soon as
next month. Come February we will probably start to
see some downside in cable."
On 4H chart, rising RSI could help sterling
approach upper level of its bearish channel.
But. falling stochastics could limit gains, but
downward pressures may be limited by MA 50
and its ascending trend line (green line).
1.5500 and 1.5560 (January 10 and December
16 high) are resistance. 1.5415 and 1.5360
(January 19 and December 29 low) are
support.
Resistance Level : 1.5500, 1.5560, 1.5440,
Support Level : 1.5400, 1.5360, 1.5275
Trading Range : 1.5380 – 1.5500
Trend : Sideways
