EUR USD closed in NY at 1 3712

EUR/USD

Range: 1.3678 – 1.3730

Support: 1.3650

Resistance: 1.3670

EUR/USD closed in NY at $1.3712, off late session recovery highs of $1.3715 following reaction to the FOMC announcement. The rate initially eased back to $1.3691, taking some direction from the sell off in the Aussie following PM Gillard’s announcement of a ‘flood tax’. However, general lethargy in most markets saw euro-dollar settle quickly into the $1.3691 – 1.3715 range, opening with a firmer tone into Europe as early traders react to the overnight FOMC. Some trader notes suggest that the upside is starting to look a tad exhausted, although the current play seems to be to buy dips. On this note, demand is seen in place to $1.3650 and $1.3640, with stops below. German inflation data and eurozone sentiment indicators will be the morning’s focus.

GBP/USD

Range: 1.5900 – 1.5941

Support: 1.5870

Resistance: 1.6000

Martin Weale joining Andrew Sentance in voting for a hike at the last BOE MPC meeting (as per Wednesday’s minutes) has provided cable with an underlying corrective boost. This follows the sharp sell off reaction to the shock negative showing in UK 4Q GDP released on Tuesday, which saw the rate drop back to $1.5750. Last night’s FOMC announcement showed the Fed’s QE2 remaining on track, providing the lift as the market sees UK still open to a hike earlier than the US. Cable offers have been seen placed to $1.5940, with stronger interest noted between $1.5955 and $1.5965. A break here to open a move back toward $1.6000 ahead of $1.6015/20. It is interesting to note that overnight negative UK data had little detrimental effect on the pound. Cable support remains between $1.5900 and 1.5890, with stops below. CBI data is due at 11am GMT.

USD/JPY

Range: 82.00 – 83.09

Support: 81.90

Resistance: 83.20

Yen demand into the Tokyo fix saw dollar-yen press down from early posted session highs of Y82.28 to Y82.15, with further buys at the fix taking the rate down to lows of Y82.00 before recovering back to Y82.15. There’s nothing major to report in yen overnight. The rate is holding recognisable levels and demand is placed from around Y82.00 through to Y81.80, containing the base (with some talk of semi official interest in this area aiding support). Yen crosses also traded with a slight heavy tone, led by the sales of Aussie-yen as the Australian unit was pressed lower following PM Gillard’s announcement of a flood tax levy.

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