Currency Pair Overview Dollar Strengthens At The Sunday Open

Overall, the market continues to be driven by risk-aversion, probably extending the Friday’s momentum. The dollar opened the new trading week slightly higher, as the majors continued their downside actions. Particularly, the euro and aussie are sitting near some very important support levels. If the two pairs break any lower, a test of the current lows might follow, dragging the whole currency market lower.

The Euro (EUR/USD) opened lower tonight, heading towards the fifth consecutive day of declines. The pair also reached almost a 2-month low, after it lost nearly 350 pips in the last two days of trading. Later this week, the ECB is expected to vote for a hold at the current 2%. However, the ECB is projected to cut again at the March meeting.

The Pound (GBP/USD) is posting the first decline in the last six days of trading. The pair opened the new trading week with a 70 pips gap, just under the 20-day moving average. This area, the 1.4400, also represents a strong swing point that took the pair almost two months to be able to break under.

The Aussie (AUD/USD) broke in the first minutes of trading under the Friday’s low, but the move lacked any real momentum. The pair is trading just above a very important support area that holds the pair for a few months. If the aussie breaks any lower, most likely the road to the 0.6000 area will be clear. Tomorrow, the RBA is expected to cut to 3.25%.

The manufacturing sector in Australia has fallen to 36.6 in January from the previous reading of 33.7 in December. This is the eighth consecutive monthly decline for manufacturing activity in Australia, although the rate of decline has eased slightly from the low seen in November of 2008. During the December quarter, the Australian housing market saw a 1.7 percent decline during the previous three months. House prices for the year fell 3.3 percent, down from a 2.8 percent gain during the September quarter.

The Cad (USD/CAD) rose 30 pips since the new trading week started. The pair opened in a very volatile area, where the 20 and the 50-day moving averages meet. On Friday, the cad failed to break above this area, forming a bearish pin bar.

The Swissy (USD/CHF) had a small gap at the opening of the Sunday session. The pair advanced a few pips in the Asian session, but already managed to break above the Friday’s high, and above the resistance area that held the swissy lower in the last few days.

The Yen (Usd/Yen) opened the new trading week near the neutral pivot point (89.70). The pair was not able to trade within a decisive direction in the Asian session, and remained near the pivot point almost the entire time. Currently, the pair trades just under the 20-day moving average.