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Stocks recover: dollar and yen lower

Posted on August 18, 2009 at 16:28 in Short-Term Analysis by Valeria Bednarik

Stocks in the U.S. keep gaining after a two-day sell off, with DJIA 0.85% and S&P 1.0% up testing key 990 area, supporting some risk appetite across the board. Sentiment turns constantly, even intraday, sending currencies up and down strongly among the different sessions.

EUR/USD remains above 1.4100 after struggling with the level all European morning, finally above it yet unable to regain the 1.4150 strong resistance level. Pair is likely to remain consolidating in that range for the rest of the American session.

GBP/USD rose strongly from yesterday’s low of 1.6275 and reached an intraday high this far at 1.6570, breaking above 1.6520 and 1.6550 without noticing the levels. Above that zone, rally should remain capped by the 1.6600 area, thus at this point I expect some downside corrections in the pair. Daily 20 SMA around 1.6580 will also offer some resistance.

USD/JPY failed to hold above 95.00, and is back at the 94.75 zone, despite rising stocks. Pair remains U.S. yields dependant: as long as yields remain under pressure, pair is unlikely to regain the upside. Levels to watch are 95.00 to the upside and 94.45 to the downside. Seems unlikely any of both to be broken in the next hours.

Despite macro data, currencies remain attached to stocks movements, so leave an eye on indexes, before deciding a trade.

Tags: Majors, Trend

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