The euro has broken above the key 100-day-moving-average against the dollar. Looking at the GFT charts we can also see that the EUR/USD market has breached a key resistance level, namely the 50% price retracement of the late-October peak to the mid-January trough.
The Japanese yen meanwhile has tumbled across the board. The downtrend started with the Bank of Japan’s recent monetary easing program. Japan’s trade deficit, widening interest rate differentials with the United States (favouring the dollar) and rising crude oil prices also have hurt the yen’s prospects.
The Eurozone is focusing on the forthcoming G20 meeting. European officials are likely to seek a significant increase in resources available to the International Monetary Fund to help the region fight the debt crisis.
Some CFDs brokers believe the strength of the euro uptrend still has momentum because of the tremendous amount of ‘euro short positioning’ among speculators. That is to say, many traders have taken positions on the euro to fall. However, because the euro hasn’t fallen there is now a lot of pressure on traders to close their losing trades by buying the euro.
Whilst Sterling has risen against the dollar the expectations of more monetary stimulus by the Bank of England is likely to limit any further increases. Bank of England policymaker Paul Fisher said the outlook for the British economy was still uncertain. Note that the pound has fallen to a 10-week low against the euro.
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