The development in the forex markets were quite mixed last week despite all the high profile events. While the ECB launched unprecedented easing measure, the selloff in the euro proved to be brief and the common currency indeed gained over the week against the dollar and yen. The Canadian dollar was the weakest major currency last week as BoC statement played down the significant of the surge in inflation. The yen was the second weakness currency on risk apettie as US indices continued the market to new record higher. On the other hand, Aussie was the strongest currency after RBA maintained the pledge to keep rates unchanged for a period of time. Sterling was the second strongest currency as helped by buying in crosses. The Dollar was mixed after some solid economic data, including the ISM indices and non-farm payrolls.
Technically, the euro could have formed short term bottoms against dollar and yen. While, euro extended the down trend against Sterling and Aussie, the move in both crosses looked exhausted. The selling momentum in euro might continue to fade in near term. The yen continued recent consolidative trading. While the yen crosses continue to edge higher together with stocks, we'd be cautious on reversal any time as these crosses are generally staying in consolidative range trading. Aussie is staying in range against dollar and would likely extend the sideway trading in near term. The Canadian dollar dipped against dollar, it started to lose downside momentum towards the end of the week. And recent price actions of USD/CAD were also corrective in nature. Thus, we'd also be cautious on reversal any time.
The overall developments in the forex markets left us with no ample opportunity to trade this week. Though, we'd keep an eye on 0.9408 in the AUD/USD and 1.6921 in the GBP/USD. Break of these resistance levels would imply larger rally resumption and could bring rise back to 0.9460 and 1.6995 high respectively. Otherwise, we'd prefer to stand aside this week.