S amp P eurozone downgrade watch warning

Standard & Poor’s is putting all 17 EU states on a negative credit watch, including the remaining AAA countries, following the region’s leaders’ inability to implement sustainable structural changes that would ensure the future of the common market.

EUR/USD

Range: 1.3335 – 1.3401

Support: 1.3305

Resistance: 1.3410

Euro-dollar closed in New York at 1.3400, having recovered back from react lows of 1.3375 after S&P put eurozone states on credit watch negative, negating any positive speculation from this week’s EU Summit, with risk aversion seen as Asian equity markets moved into negative. Euro-dollar was dragged down to 1.3370, which in turn allowed euro-dollar to drift down to 1.3361. The rate recovered to 1.3380-1.3385 through the balance of the overnight session, trading in this area into Europe. This week’s ECB rate meeting and Friday’s EU Summit remain in focus, the latter still providing for some underlying buoyancy, though weaker than Monday. Markets remain open to negative headlines, however. Support remains into 1.3305, with bids seen down to 1.3297, stops on break. Resistance at 1.3410, with stops above.

GBP/USD

Range: 1.5595 – 1.5646

Support: 1.5600

Resistance: 1.5650

Cable closed in New York at 1.5650, off pullback lows of 1.5625 after the rate saw a recovery extension to 1.5721 during the New York session. The rate opened Asia around 1.5640 but was able to edge back to 1.5652 in early trade before tracking euro-dollar lower. The rate stepped its way down to an eventual overnight low of 1.5616, with main moves dictated by euro-dollar as the cross was held within a tight range of 0.8552-0.8564. The rate recovered ahead of the European open to 1.5640, only to be met by early sellers that have taken the rate back to 1.5627. Support remains in place at 1.5600, with a break here to open a retest on recent lows at 1.5577. Resistance now seen at 1.5650-1.5655, ahead of 1.5670 and 1.5695-1.5600.

Gold

Range: 1,708.90 – 1,724.25

Support: 1,700.90

Resistance: 1,747.90

Gold prices fell of sharply yesterday from early opening highs in Asia of 1,755.00. The initial move lower in Europe was largely seen as correction after steep rises last week falling to 1,728.00, before recovering to 1,747.50. A new sell off to lows of 1,718.00 came into play before a weak recovery into the close at 1,722.75. The move was also assisted by modest falls in crude oil, equities and other commodities. Asian markets have seen a further fall to 1,708.80, before a recovery to 1,717.35. Today’s support comes in at 1,700.90 and 1,672.00, with resistance at 1,747.90 and 1,763.35, with a move up through 1,803.00 likely to trigger a sharper leg higher.

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