8 May 2009

Technically, it all point to a bearish movement. GBP hit 1.52 high and reverese. It did a major reverse with strength breaking support at 1.516, 1.509, then 1.50. It finally landed low at 1.494 and now doing retracement.

Candlestick formation shows bearish engulfment and CCI 14 point to a new start of selling soon.

So, then are the fundamental supporting the bearish movement?
Yesterday, BOE steady rates as contrast to ECB reducing rates. MPC increase bond purchase, a sign which in my opinion point to an economy that still need more medicine.

In the US, the much expected news on bank stress test point to an economy that is still recovering. DOW drop by a 1%. More US news will be out tonight. The steady accumulation of job losses does not bode well for economic growth going forward and indicates that the unemployment rate will continue to climb. The 8:30 ET release of US non-farm payrolls (NFPs) is likely to show job losses for the sixteenth straight month in April, but the rate of decline is anticipated to slow.

US news are tricky - but if both economy are weak, the flock back to the greenback for safety is there and that strengthen the dollars.