Monday June 21, 2004 - 09:44:41 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Euro to test resistance
The dollar will continue to be unsettled by the wide current account deficit, although interest rate expectations will still tend to dominate. There is a risk that narrow range trading will continue ahead of the Fed decision, although the net risks are for a slightly weaker dollar tone unless expectations of a 0.5% interest rate increase are revived. Dollar losses through 1.2150 could also trigger more aggressive Euro buying, but the Euro will face tough resistance at this level.
The wider than expected current account deficit of US$144.9bn compared with a US$127.0bn the previous quarter pushed the dollar down to a low of 1.2145 on Friday. The Euro remained firm in early Europe on Monday, but was unable to push through this level drifting back to 1.2115.
The weak current account figures have reminded investors over the underlying US dollar vulnerability, especially as the US now needs US$1.5bn per day to finance the deficit. The US is still attracting investment funds, but it will be difficult for the dollar to avoid substantial downward pressure at some point, especially if Wall Street falters.
The immediate focus will still tend to be on interest rates. The markets have discounted a 0.25% Fed rate increase at the end of June and, unless there are any more aggressive Fed comments this week, the dollar will find it difficult to regain ground.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."