| May 17 2012, 11:36:00 GMT | Sydney: | 21:36 | Tokyo: | 20:36 | Barcelona: | 13:36 | London: | 12:36 | New York: | 07:36 | San Francisco: | 04:36 |
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U.S. GDP improved to 3.5%. This figure marked the first gain in over a year and was better than pre-report guesses of 3.2%. Trader appetite for risk soared after the report was released.
The EUR USD is in an uptrend and rallying strong today. Expectations are for a test of 1.4873 to 1.4918 before new sellers surface. This currency pair is also in a position to post a bearish closing reversal.
The GBP USD showed the most strength for the second day in a row. This surprised traders who felt more downside was likely following last week’s release of a bearish U.K. GDP number. Many traders had been looking for lower markets in anticipation of increased quantitative easing by the Bank of England. The strong rally today took out a minor retracement zone and now has this market in a position to test the recent top at 1.6691.
The Dollar gained ground against the Japanese Yen. The bullish GDP number helped turnaround the USD JPY which came close to turning the trend down after yesterday’s huge sell-off. Look for the USD JPY to take a run at 91.28 to 91.53 over the short-run.
The USD CHF is retraced most of this week’s gains. Based on the range of 1.0032 to 1.0285, traders should look for the current break to test a retracement zone at 1.0158 to 1.0129 over the near-term. Since the main trend on the daily chart is now up, buyers are likely to step in at this retracement zone. If buyers don’t show up, then look for a retest of the low for the year at 1.0032.
Stronger commodity and equity prices are helping to put pressure on the USD CAD. Overbought indicators are also contributing to the weakness as well as increased demand for higher risk assets. If weakness prevails the rest of the week, then look for a test of an uptrending Gann angle at 1.0609.
News that the Reserve Bank of New Zealand left interest rates unchanged and hinted that they wouldn’t hike until after the middle of next year has been set aside by traders as the focus has shifted back to demand for higher yielding assets. Today’s rally looks strong enough to test a resistance cluster at .7395 to .7398 over the next few days.
The AUD USD moved higher on increased demand for higher yielding assets. In addition, many traders are taking profits and covering shorts as technical indicators showed a short-term overbought market.
Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of
leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider
your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some
or all of your initial investment and therefore should not invest money that you cannot afford to lose. You should be aware of
all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
