The Euro found support after the guidelines for the ‘new’ European Financial Stability Facility were revealed, although some unsettling news in regards to Greece now threatens the credibility of the European Troika.
Market sentiment turned lower on Thursday, dragged by concerns surrounding the European debt crisis, and the shift away from risk-taking behavior may gather pace ahead of the EU Summit as policy makers struggle to meet on common ground.
Crude oil and gold prices may rise as S&P 500 stock index futures advance, pointing to a recovery in risk appetite that is likely to weigh on the safe-haven US Dollar.
The 1H AUD/JPY chart shows a sideways market. A large head and shoulder scenario is no longer valid as the market failed to break the neckline at 77.60. During the Thursday Asian-European session, the market was supported even higher, near 77.70, respecting the 200-period simple moving average. We have a projected trendline that acts as resistance near 79.00
The commodity currencies pared back all of their losses from the Asian session and looked to extend their gains through the European session, although mixed retail sales for the United Kingdom held back the British Pound.
The safe-haven US Dollar and Japanese Yen rose amid rumors of infighting among EU policymakers but S&P 500 futures warn a reversal may be ahead.
US Dollar technical positioning points to gains ahead as the S&P 500 stalls below resistance at a key range top. Crude oil and gold are likewise likely to decline.
When trading ranges narrow but correlations are still very strong, volatility within the constricting channels very often increases. This is both the situation we are facing with the US dollar and the broader capital markets. Looking across the dollar-based majors, we would note that there were no efforts to break from the congestion that has set in over the past week.
The British pound tops the performance chart mid-day in New York as the dollar drifted and stocks dipped in and out of positive territory. Swiss Franc remains under pressure despite indications that the SNB will not look to raise the EUR/CHF price floor.