Repatriation Likely to Trigger Break in USD JPY through 80.24
Japanese equity markets dropped sharply lower early Tuesday driven by panic selling investors after Prime Minister Naoto Kan said a “substantial amount” of radiation was leaking from a nuclear power plant. The weakness in Japan spread all over the world, sending some global markets to multi-month lows.
U.K. Inflation Data shifts Focus to Possible May Rate Hike
The British Pound is trading higher this morning after it was reported that annual inflation soared to 4.0 percent in January. This rate was the highest level for more than two years. The increase was 0.3 percent higher than December’s 3.7 percent, but lower than analysts’ consensus forecast for a year-on-year rise to 4.2 percent.
The Australian Dollar is under pressure overnight. A new main top has been formed at 1.0200, setting up a possible retracement to 1.0033 to .9993. Yesterday’s interest rate hike by China’s central bank is expected to slow down a heated up economy. This may lead to a slowdown in demand for Australian goods and services.
Most major Forex markets are trading in tight narrow ranges following the expanded range trade on Friday triggered by the release of the U.S. Non-Farm Payrolls report. With Non-Farm Payrolls coming in well below pre-report guesses and the Unemployment Rate dropping unexpectedly, on the surface the report appeared to be bearish for the Dollar, but the response by the U.S.
Uprising in Egypt May Trigger Flight to Safety Rally into U.S. Dollar
The Euro’s closing price reversal top on Wednesday was confirmed overnight, indicating that the market may retrace back to 1.3716 to 1.3681 over the near-term. Technically the main trend remains up unless 1.3570 is taken out; however, a closing price reversal top is often the trigger that begins a change in trend.
Euro Continues to Climb; Dollar Soars Versus Yen as S&P Cuts Japan’s Debt Rating
The Euro continues to climb higher this morning, challenging the .618 retracement level of the 1.4282 to 1.2873 at 1.3744. There may be a technical bounce off this level, but this action will most likely represent profit-taking rather than a change in trend. Both technical and fundamental factors are supporting the rally at this time, so if a top is formed it will come as a surprise.
Dollar Crumbles as Obama Fails to Win Any Friends with State of Union Speech
Euro Approaching Retracement Zone; Major Decisions have to be Made
With the Euro rapidly approaching the major retracement zone at 1.3577 to 1.3744, traders have to be asking themselves if overcoming this area means investors are betting on a rate hike by the European Central Bank or do they believe that Europe is overcoming its fiscal problems.