The Euro slightly retraced from its three-week low reached against the greenback in the European session, without making any significant movements. After opening the Asian session at 1.4201 it edged up to a high of 1.4232. The pair hovered around the 161.8 Fibonacci level, creating support at 1.4215. The Single Currency has been bruised amid renewed concerns that Greek debt problems could run out of control. Meanwhile, the weaker Euro could be a result of a US Dollar recovery across the board.
Sterling trading in the Asian session was uneventful. Most of the action happened in the previous two sessions. The Pound gained 160 pips against the greenback after a hawkish inflation report from the Bank of England on Wednesday morning, then lost all gains by the afternoon as the Dollar gained strength. In the Asian session, the pair rebounded from the low of 1.6321 just above the 1.6315 support level to gain just 60 pips peaking at 1.6379, remaining below the 61.8 Fibonacci resistance level. EURGBP traded sideways within a very tight range of barely 20 pips: a low of 0.8672 and a high of 0.8691.
The Australian Dollar slid by a full cent after disappointing employment news came out showing a much larger than expected fall in jobs created. Employment fell 22,100 in April while the unemployment rate held steady at 4.9 percent. This narrows the probability of a near-term interest rate hike. In reaction to the report, AUSUSD spiked down from 1.0690 down 85 pips to 1.0606 within a minute, then continued further down to 1.0585, erasing any gains made after rebounded last week’s low of 1.0535. EURAUD spiked up by over 90 pips in a minute from 1.3295 to 1.3386.Even before the data came out the Aussie had already been under pressure on risk aversion and a slide in commodity prices in the earlier session. 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.
USDJPY pair was volatile during Asian trading but mostly on an uptrend. The pair has been rising since last Thursday’s low of 79.55. The low was 80.89 and high was at 81.33. The Japanese yen was weakened by disappointing data showing the country’s current account surplus fell by 34.3 percent in March, affected largely by the devastating earthquake that happened that month. USDJPY remained above the 20 Moving average and above the support line of 80.90 (23.6 Fibonacci level). EURJPY also rose from 115.06 to peak at 115.61.
In the previous session, gold began its fall from its three-day high to drop over 30 pips down, breaking the $1500 support level to an Asian session low of $1,495.43. It rebounded slightly and hovered above this level but not breaking past the 38.2 Fibonacci resistance level, hitting a maximum high of $1,506.28. Today’s stronger US Dollar capped gains in the precious metal. Gold has an inverse relationship with the Dollar. It is expected that the precious metal will be supported by demand as long as the euro crisis is prolonged as well as other socio-political uncertainty, such as crisis in the Middle East.