The Euro managed to hold on to gains made in the earlier session. Stabilizing commodity prices helped buoy the Single Currency, coupled with the expectations of yet another bailout package for Greece. This curbed further sell off of the Euro, which was able to rise against the greenback in the Asian session, to peak at 1.4422, slightly higher than the previous high of 1.4410 reached yesterday. However, some traders believe the Euro will be capped around the resistance level of 1.4415.
Sterling seemed to maintain the same pattern against the US Dollar as the Euro did, by holding to gains made in the earlier session. From the earlier low of 1.6315, Cable rose to open Asian trading at 1.6356, and continued to rise peaking at 1.6382. The pair remained within range of the 23.6 and 382 Fibonacci levels. Analysts said that despite the Pound dropping after Tuesday’s disappointing retail sales data, the markets have already priced in any negativity into the Pound and that a further decline in the GBPUSD pair past recent lows is highly unlikely. Some even expect the Monetary Policy Committee to push for a rate hike. At the beginning of the week, GBPUSD touched 1.6269 but has managed to rise as much as 150 pips and remains on high ground.
The Australian Dollar remained on high ground after surging to its highest level since last week’s low of 1.0535. In Asian trading, AUDUSD peaked at 1.0871, aided by the stabilization of commodity prices, which have managed to rebound after reaching record lows last week. The Aussie is traditionally tied to commodity prices, especially gold. Carry trades also helped buoy the Aussie, where investors invest in high yielding assets such as the Australian currency. AUDUSD opened the Asian session at 1.0834 and hovered well above this support level all throughout the session.
USDJPY pair has been rising since last Thursday’s low of 79.55 rose with a few dips on the way up, to hit a session high of 81.08, then retraced for a slight correction in the later half of the session. The Japanese Yen’s strength against the greenback is aided by a weaker US Dollar. Meanwhile, the Yen was weaker against the Euro since EURJPY rose as high as 116.88, up from a six-week low of 114.78 yen reached yesterday in the European session. Charts show that the pair trade in a range during the session, between the 23.6 and 161.8 Fibonacci support and resistance levels.
Gold rallied in the first half of the Asian session, trading in a range after opening at $1,516.58, then taking off to hit a high of $1,523.88 boosted by intense fighting in Libya, uncertainty about debt-laden Greece and the rising cost of oil and grain. Since the $1,462.23 low reached last Thursday, Spot gold rose more than 60 pips, reflecting the discomfort among investors over Greek debt woes again. Also, as uncertainty grows again in the global financial markets, there seems to be a potential falling wedge pattern on the US Dollar Index. Generally, gold prices and US Dollar have an inverse relationship. Gold benefits as a hedge against the greenback’s depreciation.