Market Review for March 25

Despite the rather positive start to the Asian session for the European currencies, resulted in collapse of the major currency trading pairs. The agreement between Cyprus and the trio initially caused a sigh of relief among investors, but subsequent comments have disappointed. As a result, EUR/USD closed at 1.2850, and the GBP/USD — 1.5180 at.

So, EUR/USD opened the morning session gap down due to the lengthy negotiations that led to the president of the Eurogroup of Cyprus. Scheduled for Sunday evening meeting has been postponed to early Monday morning, which made a few open at 1.2944. Once it became known that an agreement is reached, EUR / USD jumped to 1.3047 high, but more power is not enough. Then came the realization, analysis and panic, especially, after the president of the Eurogroup, that it will be to everyone. He said that, despite the uniqueness of the Cyprus situation, it can then be used as a «template» for the entire eurozone. These words sent the pair to 1.2829 minimum, from which the pair was able to roll back only 20 points up to close.

GBP/USD has come under pressure due to the flight from risky assets, which fell to the level and the pound sterling. The pair opened at 1.5229 day, hit a low 1.5141, but closed, recovering above 1.5180. However, the dynamics of the cross is clearly demonstrated with the EUR investor preferences in favor of the pound, because during the day EUR/GBP ranged through 100-point range, losing a total of about 40 points.

USD/JPY continued to move lower, mainly due to the traditional repatriation flows due to the end of the fiscal year in Japan. The pair opened day at 94.37, slid to a minimum 93.52, closing the day around 94.10.

Forecast for Tuesday, March 26, 2013

Cyprus and EU authorities have decided to protect only investors with a deposit of less than 100 thousand euros, but the more affluent will have to accept losses, though it is unclear how much. Laiki bank will be liquidated, and the deposits of less than 100 thousand insured under European law, will be transferred to Bank of Cyprus. In turn, the surviving bank deposits in excess of 100 000 euros, will be suspended and may face significant losses, given the restructuring and recapitalization of the lender. The plan does not require approval by the Parliament of Cyprus, because the reduction of large deposits will be achieved through the restructuring of the two largest banks in the island, and not through taxes.

Meanwhile, EUR/USD after the resolution of the main plot of Cyprus may again draw attention to the economic releases from the Eurozone. Given the disappointment of last week at the PMI in Germany and France, before we have many indicators that point to the weakness of the regional economy. Data on consumer confidence eurozone, as well as retail sales and the labor market in Germany may be of particular interest this week. Today, the pair will remain under pressure, but most of the losses it has suffered. Strong support of 1.27 can be achieved only in the case of new negative developments on Cyprus — for example, the extension of «weekend» of the banking sector until early next week.

As for the GBP/USD, according to the dynamics of the previous week, as well as the comments of official representatives of the Bank of England, we can conclude that we will see a new wave of demand for the pair. Pair broke the resistance of 1.52 and closed the week above the mark, which gives a good chance to move up further if supported by economic releases. The greatest interest will be the consumer confidence, however, and the adjustments to the GDP should not be completely discounted. Recall also that in the year to pound accumulated a large number of short positions that are just waiting for a reason to close. The next target at 1.5260, 1.53 and 1.5340.

USD/JPY continues to decline and will remain under pressure for weeks, and this for several reasons. Basically, of course, is to repatriation flows that occur at the end of the fiscal year in Japan. In addition quiet parish Kuroda and his new deputies without loud statements and promises a little disappointed the bulls, and began the usual correction for accumulated long positions. Add to this the demand for «safe haven» and the looming possibility of pair retracement area from 93.60 to 93.00 for further before trying to get close to 100.00. Note the upward trend will continue, but in the medium term.


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Market Review for March 25 | Web Trade For All - Forex trading, analytical reviews of the market and help for beginners