{"id":59823,"date":"2014-09-04T04:13:50","date_gmt":"2014-09-04T08:13:50","guid":{"rendered":"http:\/\/countingpips.com\/?p=59823"},"modified":"2014-09-04T06:58:46","modified_gmt":"2014-09-04T10:58:46","slug":"daily-market-report-eurusd-selling-pressure-takes-a-breather","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/09\/daily-market-report-eurusd-selling-pressure-takes-a-breather\/","title":{"rendered":"Daily Market Report: EURUSD selling pressure takes a breather"},"content":{"rendered":"
September 4, 2014<\/div>
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Article by ForexTime<\/a><\/p>\n

The major story from Wednesday involved Russia and Ukraine reaching a ceasefire. Immediately, this increased confidence from investors in the EURUSD which has suffered due to the ongoing conflict in recent months. Following the breaking news, the EURUSD increased by nearly 40 pips and concluded trading at 1.3149. Today, the latest European Central Bank (ECB) interest rate decision is scheduled, followed then by ECB President Mario Draghi\u2019s press conference. Succeeding Friday\u2019s news that EU inflation levels were edging towards five-year lows, there are suspicions that the ECB may add further stimulus measures today.<\/p>\n

However, there remains a strong argument that the lower inflation levels last month were due to a drop in energy prices, alongside an oversupply of oil. I expect the ECB to leave monetary policy unchanged this month. In which case, the major risk to the EURUSD valuation might be the Draghi press conference. Last month, Draghi appeared relaxed but calmly expressed that the \u201cfundamentals for a weaker exchange rate are better now than a few months ago.\u201d He was proved correct with this assertion, with a streak of negative EU economic releases throughout August leading to the EURUSD declining by nearly another 200 pips.<\/p>\n

If Draghi indicates that further stimulus, including a possible introduction to quantitative easing (QE) remains at the central bank\u2019s disposal, additional pressure on the EURUSD should occur. In which case, support can be found at 1.3136 and the current yearly low, 1.3109.<\/p>\n

The Cable declined again on Wednesday, despite another impressively strong performance from the UK economy. The latest UK Services PMI (The UK\u2019s largest GDP contributor) was at its highest in 10 months, following a similar performance from the UK Construction PMI the day prior. Still, the GBPUSD fell by as many as 60 pips throughout the day, before concluding trading at 1.6460. At one point, the GBPUSD traded as lowly as 1.6439 which represents the lowest Cable valuation since the 12th<\/sup> February.<\/p>\n

The selling pressure in the GBPUSD was again correlated towards the upcoming Scottish referendum and, although I understand the prospect of political instability would create unease among investors, I still think there is another factor behind the Cable\u2019s decline this week. The Bank of England (BoE) are all but confirmed to keep interest rates unchanged today and there could be an assumption among investors that no matter how consistent UK economic performances remain, the BoE will refuse to raise rates. If selling pressure continues today, the GBPUSD could find support at 1.6439 or the 26th<\/sup> March low, 1.6509.<\/p>

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As expected, after appreciating by over 200 pips since surpassing the 103 psychological resistance level, the USDJPY began to pullback yesterday. The pair dropped around 60 pips from the daily high (105.301) to the daily low (104.734), while concluding trading at 104.779.<\/p>\n

This pullback was encouraged by the overnight monetary policy statement Bank of Japan (BoJ) revealing that stimulus measures remain unchanged. The BoJ have maintained confidence that despite the April sales tax leading to a substantial decline in consumer\/household spending its monetary goals (particularly inflation) remain achievable.<\/p>\n

More negative Japanese economic releases showing the detrimental impact the sales tax is having on expenditure is required, so that further pressure is placed on the BoJ to add further stimulus. In my eyes, this holds the key to a further USDJPY bull run.<\/p>\n

Finally, it may have been a slightly delayed reaction but investors finally began to react favorably to Tuesday evening\u2019s Australian GDP data. The Aussie increased by nearly 90 pips from the daily high (0.9350) to the daily low (0.9261) before concluding trading at 0.9345.<\/p>\n

The delayed reaction may have been linked due some of the Reserve Bank of Australia\u2019s (RBA) warning signs from as far back as April being correct. The central bank warned that the Australian economy was set to enter a period of weaker economic growth and there were some signs of accuracy in regards to this. For example, quarterly GDP growth was recorded at 0.5% in contrast with 1.1% in the previous quarter. However, annualised GDP growth at 3% remains impressive and investors have clearly looked positively upon this.<\/p>\n

There are no major releases scheduled for the remainder of the week in Australia. Therefore, after Wednesday\u2019s appreciation in value the Aussie may now be susceptible to a pullback. In which case, potential support could be found at 0.9320.<\/p>\n

Written by Jameel Ahmad, Chief Market Analyst at FXTM.<\/strong><\/p>\n

For more information please visit: Forex Time<\/a><\/strong><\/p>\n

Disclaimer:<\/b> The content in this article comprises personal opinions and ideas and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime Ltd, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/p>\n

Risk Warning:<\/b> There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.<\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n

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Article by ForexTime The major story from Wednesday involved Russia and Ukraine reaching a ceasefire. Immediately, this increased confidence from investors in the EURUSD which has suffered due to the ongoing conflict in recent months. Following the breaking news, the EURUSD increased by nearly 40 pips and concluded trading at 1.3149. Today, the latest European […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-59823","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/59823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=59823"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/59823\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=59823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=59823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=59823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}