Asian & European Anaylsis Report 7.26

The better than expected 2nd quarter earnings report have boosted equities and a slight recovery for the USD finishing the end of week with a much stronger tone for investors sentiments. Although, the 1st day of the Federal Reserve Chairman Ben Bernanke gave no real inspiration as the " unusually uncertain "economic outlook outweighed the markets during his semi-annual monetary policy report. However, the 2nd day he gave a more subtle and a bit more positive outlook as the market were waiting for the release of the highly anticipated European stress test result. Quite a mix of ups and downs on market prices seemed to overwhelm participants as the two days market's volatility has increased.

With that said, Asian and European markets have followed suit with recovery still in mind making the markets absorbed after trading the positive outcome that most European banks have passed the stress test. This have prompted the positive tone currently being felt in the market place.

With increase volatility in the Foreign exchange market, a wider trading range would still be expected like we have mentioned in our previous market view. such an example is the recovery moves of the AUDUSD and the NZD making the 2nd attempt to the high side more visible than ever. closing at the top of the range for the AUDUSD at 0.8955 and still working at the higher levels as of this writing. With the Kiwi at the 0.7298/00 levels will still have some legs to move to their next target 0.7445/50 range, but do expect some wider up and down swings to create enough momentum for these prices to move higher.

Meanwhile, out of the ordinary configuration on the USDCAD weekly bar formation of market up and down swings have been more of a struggle for players getting caught in between movements. With an average trading range of its HI/LO between 1.0600 and 1.0250 plus / minus a few pips. The prices are caught in a wider symmetrical triangle where until such breakouts would be speculated on or for others simply a wait and see attitude as to where it is going to break. Watch for the next few days as we would be releasing our market analysis on the currency as to where it would likely break through.

The USDJPY and the USDCHF still has to maintain its tighter trading range as the players reluctance of a follow through trade seems to diminish when the volumes and the open interest are low from last week's trading. Some fresh incentives may surprise some traders and may try to catch the market's price movement when it does. However, both currency pairs have no signals of a trend reversal nor a price reversal in an overall picture. In essence, the prevailing trend for them to head south is more favorable at present circumstances and market conditions.

Which only means that the probability for a USD recovery may only be slim and sluggish. The USDX to hurdle its 1st resistance of 84.60 -85.20 range is much wider than anyone would expect. This will have an underlying effect for the majors to trade with increase volatility as we head towards the end of the trading week and month. Again, position adjustments are made during the course of the trading.

The EURUSD and GBPUSD shares the same sentiments for its bullishness with the EURUSD may outperform the British Pound depending on the money flow and market sentiments that would prevail the first three days of trading that will set the pace for the closing price and sentiments for the month of July.