FX Futures

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Forex Trading: 06 January 2012

Europe remains the key issue and next week sees the French and German leaders meet for the first time in the New Year. There are also important bond auctions from Spain and Italy which will be closely watched. But before then the focus of today will be the US Non Farm Payroll number.

Following the unbelievable ADP figure yesterday, that was double expectations, there's a great deal of optimism surrounding today's number. However, as we saw with the ADP figure yesterday any big surprise to the upside may not be met with a frenzy of equities buying as the European issue continue to dominate.

The euro broke to a new 14 month low yesterday taking it below $1.2800 where it remains this morning at $1.2785.

The selling pressure on the single currency doesn't seem to have abated and this weakness and breakout to the downside really puts it in a downward negative trend. Key levels to watch are $1.2750/20 to the downside and for the bulls $1.2910/60.

The euro's weakness has played into the hands of sterling which has broken the back of the €1.2000 level. GBP/EUR trades at €1.2120 at the time of writing, levels not seen since September 2010.

Forex Trading: 05 January 2012

The concerns over the Eurozone that crept back in yesterday caused EUR/USD to snap back on its gains and as a result it dipped back below $1.3000 after a brief visit above it.

At the time of writing we're at $1.2930 and traders will be watching key levels to the downside as the single currency remains the dog of the FX markets. Near term support is seen at $1.2900 and $1.2880, meanwhile resistance is seen at $1.3045/75.

Forex Trading: 04 January 2012

The risk on trade yesterday took EUR/USD back above the $1.3000 level where it remains so far this morning.

Trading at $1.3070 at the time of writing the move higher so far this year shows that the contrarians are in control. Sentiment towards the single currency at the end of 2011 was so dire that many traders see that as the time to buy.

Near term support and resistance levels are seen at $1.3000, $1.2920 and $1.3085, $1.3120 respectively and no that the bulls have dragged the euro back above the $1.3000 level they seem to have the wind behind their backs.

Forex Trading: 03 January 2012

The risk appetite is feeding across into all futures markets with the dollar coming under pressure which is allowing the euro to test the $1.3000 level again.

We have been above here briefly already this morning but at the time of writing the EUR/USD forex pair is sitting at $1.2985.

The $1.3000 level can be expected to offer up some resistance as it replaces its previous role of support so for now the euro bears are just keeping it in check.

Near term support and resistance is seen at $1.2915, $1.2885 and $1.3025, $1.3050 respectively.

Sterling is also enjoying the risk on scenario as it makes gains against the dollar, but is flat against the euro.

GBP/USD is at $1.5570 at the time of writing with GBP/EUR at €1.1995 as the latter pair continues to find the €1.2000 level a bit too much of a hurdle.

For cable near term support and resistance is seen at $1.5400, $1.5350 and $1.5610/45 respectively.

Forex Trading: 29 December 2011

Yesterday showed that despite this supposedly being one of the 'quietest' weeks of the year, with many people either recovering from their festive excesses or more focussed on what they plan to do for their New Year's party, the markets still managed to provide a lot to talk about.

There was an encouraging start to the first post-Christmas trading day for the UK equity markets, which was boosted by news that strong demand for 6 month Italian debt halved Italy's short term funding costs.

However, market sentiment soured later in the day, as the markets weighed ECB figures showing overnight deposits at the central bank rose to an all time high of 452 billion euros, a sign of risk aversion.

Furthermore, many investors are still waiting for the outcome of the more crucial 10 year Italian Government auction later today. A poor showing here would add further fuel to the fire that is the Eurozone debt crisis.

Despite Italian 10 year yield initially falling to around 6.75%, it closed flat at around 7% yesterday. At the time of writing, it is still around 7%, however if it starts to head north from here many investors will wonder how much more battering Italy can sustain. Especially as it also recently announced another record round of austerity measures.

The fallout from the news of ECB deposits also led to another round of selling of the Euro, which again moved below the psychological $1.300 level. It is trading around $1.2930 at the time of writing.

The single currency is now back to the levels it was back in January, at the start of the year. If it continues to fall from here, there really is not a lot of support to speak of for the currency until gets to about $1.2650. At which point, why stop there?

$1.2500 would certainly seem a reasonable target. If we manage to consolidate support around the current levels, we could see a possible a bounce back up to around $1.3200, and then $1.3420.

Forex Trading: 28 December 2011

FX futures have been subject to low volumes. The main London session has not seen a return of traders in their numbers yet so as a result trading ranges were narrow yesterday and could remain so for the next few days.

Gains are hard to come by for the single currency as bond yields on the government debt of the peripherals remains stubbornly high.

Italian 10 year bonds saw their yield head back above 7% yesterday and going forward there's no question that these will continue to be the focus at the start of 2012.

At the time of writing EUR/USD is at $1.3070 so half way through the festive season the single currency has still held onto the $1.3000 level.

Support and resistance are seen around $1.3020, $1.2980 and $1.3130/95 respectively.

By Simon Denham, 6 January 2012

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