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The currency world reminds about the old bugaboo, early this morning - geopolitical risk which caused abundance of volatility in the past markets, but which has not been much of an issue over the last couple of years.
Market Comments The currency world reminds about the old bugaboo, early this morning - geopolitical risk which caused abundance of volatility in the past markets, but which has not been much of an issue over the last couple of years. In this case, we are talking about firing test in Iran of long-range missile this morning, which generated a noticeable move across markets. It seems that the rumblings lately related to a potential US or Israeli confrontation with Iran over its nuclear program are generating enough concern to start hitting financial markets when actual events make headlines. In this situation, the reaction in the market turns out to be more overstated than it is justified. By the implication of actual measures, the stories of geopolitical risks can make significant short-term instability. Moreover, the vision of any complete attack on Iran may call up a never-ending fear, of the affect on oil prices and a wider infection in the region, so it is positively a tale worth following and caring a portfolio trade against crude oil. Yesterday, the full focus was on huge drop in oil prices, which went down till 5 dollars and helped to drive an recovery in the equity market and boost a bit sentiment of USD, although it was not influentially enough to get the key technical levels. The JPY and CHF remained on the weaker side, as it seem that when risk aversion is high, the market sell-off these currency on strapping commodity prices. We carry on, in other words, shaking our heads at the response patterns in this currency to inter market moves. Iran worries on the other side, but the USD remains in no man's land and the position is beginning to bend over a bit to the bearish surface for the greenback with the failure of very positive USD news (especially the oil and the recent negative Euro Zone data) to force a extra credible move in USD strength. Still, the momentum is completely absent in the shortest term and we are looking for breakouts to force technical interest. If EUR/USD falls again at 1.5750/1.5800, a test of 1.6000+ can be in our hands. The 1.5600 level needs to break on the way to create more bearish technically. Watch out for the volatility in the oil markets on the figures of this week. The protest against the negative Australian data continued, with a razor-sharp fall in the consumer confidence data and home loans. The Australian Employment report of June can be seen tonight, the unemployment data is lastly viewing symbols of bottoming out in recent months. Still, the capability of the AUD/USD, to hold below 0.9500 levels overnight is another series of bad data points and signs of bearish USD. The moving average of 55-day comes around 0.9500 and a strong close is below that level which is needed for bears to increase some support in this pair. AUD looks weaker in another place. The UK data is also continues showing some problems, and it looks like at the level of 0.8000 the EURGBP pair could be prepared for one more level and further than today, a positive surprise can be expected from today’s UK data. Chart Analysis on EURUSD The EUR/USD pair was unsuccessful to follow the lower side after the early pleasure generated through the lack of ECB supervision last Thursday. This, positive news on USD has failed to see the stronger greenback which means that the risks are leaning reverse to the upside, in this area this pair is in a bit of technical limbo. The weekly spin around point and high for the week is at 1.5750, which is the first line followed by the upside, swing levels are coming in around 1.5800. If these two levels give way, then a dramatically raise can be seen at an eventual test at 1.6000 and beyond. 1.5610/00 area is the key to the downside, for confirming the fresh turnaround and for setting a experiment to the low down of the old range. |
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