Forex Investment and Currency Trading

The flow of news continues to support an extension of risk appetite; while the early focus has been on US earnings, Chinese data earlier today reflected significantly better import and export numbers which underpins expectations that the global economy is recovering. As risk aversion declines, the USD is expected to lose support and riskier assets to outperform.

Technically, noted yesterday a EUR/USD move above 1.4810 would be a positive (targeting a move up to the 1.5150/75 area) and while the EUR has slipped quite sharply in early North American trading so far (large offers have been noted in the 1.4925 area) suspect that the underlying trend higher will remain intact. Look for firm support now on dips to the low/mid 1.48 area. Sterling has picked up a little support overnight on the back of better domestic data while the JPY has underperformed as risk positions have ramped up; some profit taking in the AUD and NZD has been seen after this morning’s JPM results but AUD/JPY remains close to an important break out point (above 82.00). AUD/USD resistance at 0.9150 may hold the market up briefly but we see limited downside for spot at the moment and expect good support on dips to the 0.9075/85 area intraday.