Forex daily analysis 22nd October 2013

The Euro held steady during Monday with no move to attack resistance in the 1.37 area against the

dollar, but there was also solid buying support on any significant retreats. The Euro was still gaining some

degree of support from global safe-haven demands as the currency’s correlation with emerging currencies

dipped to 10-year lows on defensive inflows.

There will be further speculation that the ECB will eventually have to act to loosen policy given underlying

monetary developments which will tend to deter longer-term Euro support. The ECB will also be

increasingly uneasy surrounding the deflationary risks and there will be strong pressure to combat any

further Euro gains given the threat to economic growth.

Forex daily analysis 18th October 2013

The dollar was subjected to heavy selling pressure on Thursday, especially against European currencies.

The US currency continued to be undermined by the fact that congress only put together a short-term budget and debt deal which will ensure further political tensions over the next three months Capital account trends remained an important focus with additional speculation over inflows into Europe.

European stocks pushed to six-week highs and the latest survey of investor sentiment suggested that

funds were not over-weight on US equities for the first time since January.

Forex daily analysis 10th October 2013

Technical positioning remained important on Wednesday as the Euro remained vulnerable to a correction 

following the second failure to break resistance in the 1.36 region and a drop below 1.3550 triggered 

fresh selling with the pair moving to the 1.3500 area. There were longer-term expectations that the ECB 

would provide additional liquidity through another LTRO. 

There were some hopes that the US would be able to move very tentatively towards a deal over the 

government shutdown and debt ceiling even if it is a stop-gap measure. Underlying uncertainty remained 

high with the volatility seen the short end of the US bond market leading to some speculation over a 

developing dollar shortage and defensive demand for the US currency. 

Fundamental trading opportunity/event risk over the next 24 hours 

There looks to be very little chance of a change in 

rates or quantitative easing at this month’s meeting. 

There is a small chance that there could be a 

statement to reinforce forward guidance.

Market and analysis overview

The US government shutdown remained a key market focus and continued to have an important impact

in curbing activity. The lack of political progress and deadlock on Congress increased fears that the US

would push closer to the potential default deadline of October 17th which would inevitably trigger a more substantial fraying of market nerves.

Euro - Market and analysis overview - Forex daily analysis 7th October 2013

The Euro dipped weaker with the US currency looking for some relief after five days of net losses on a 

trade-weighted basis. The Euro was hampered to some extent by fears that the ECB would move to take 

a more aggressive tone against tighter money-market conditions and could also start to verbally 

intervene against Euro strength, especially if the Euro moves to the 1.40 area against the dollar. In this 

environment, the Euro dipped lower and briefly tested support below 1.3550.

Forex daily analysis 1st October 2013

There was no compromise deal ahead of the US budget deadline and a partial shutdown will now take

place. The immediate market reaction was measured, but concerns will tend to increase if there is 

evidence of a prolonged closure as it would increase the risk of failure to raise the debt ceiling which 

would pose a much bigger market threat. There will be reduced speculation of any Fed tapering of bond 

purchases in October which will tend to curb dollar support. The Euro pushed back to the 1.3550 area 

with Euro-zone concerns making it difficult to extend gains.

There was a weaker than expected flash Euro-zone inflation figure of 1.1% for September from 1.3% 

previously which maintained expectations of a dovish ECB press conference on Wednesday following the 

monthly meeting and an overall accommodative policy stance by the ECB.