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31/3/2011 - The current market sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, Mar 31, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The single currency is still unable to have a stable place above 1.42 versus the greenback as it is still capped by the market worries about the debt crisis in Europe with the current continued pressure which have resulted the recent Moody's downgrading of the Greek sovereign debt 3 notches to B1 and Spain's long term debt to Aa2 which have been followed by new downgrading of the Portuguese long term debt 2 notches to A3 and so, it has become concluded to the markets to know another downgrading to it from S&P to BBB from A- and Fitch exposing it to be revised down in the case of not asking a share of the offered bailing out plan which has been extended recently from 250B Euros to 440B Euros and it looks that it is depending now on the new government in Portugal to take this decision which can put pressure on it to take further austerity measures for capping its budget deficit to be the second country to take a share of this offering package after Ireland which added worries to the market by its yearly GDP which shrank in 2011 by .7% while the market was waiting for rising by 1.2% after shrinking by .3% yearly in the third quarter of last year but it looks that the governmental spending cuts and the worries about the countries budget deficit have taken it toll on Irish GDP which was doing double digits rates of growth yearly in the 1990s.
    So, despite the ECB hints to hike the interest rate for containing the prices which were underpinning the single currency in the beginning, this tightening action can also put more weights on the debt ailing countries in the Euro area as it should increase the cost of repaying their debts driving up the yields of their new issuance too which can weakening their creditability further weighing negatively on the Euro and its backed securities which were getting support from the ECB adopted easing stance for stimulating the Economy.
    The Single currency could rebound in the beginning of this week from 1.4017 after it had reached it under technical pressure resulted from failing several times to be well-supported above 1.42 to test 1.4281 which has been reached in the beginning of last November after the Fed's decision to add another 600b$ to its quantitive easing policy to be the recorded high of this pair since the credit crisis ending until now and the pair is still unable to make it which can expose it to lose further momentum in its way up getting back to 1.4017 which can be followed by 1.3855 and the breaking of it can lead to 1.3751 again while the main supporting level of the pair is existing at the formed bottom of the recent ascending to 1.4247 at 1.3428 while the next resistance should be now at 1.4247 then 1.4281 and the breaking of it can trigger stop loses orders and further buying momentum to be gained.

    Kind Regards
    FX Market Strategist
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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