WSJ:WORLD FOREX: Euro Edges Higher In Quiet Markets
-- Euro rallies above $1.38 in thin trading
-- Key technical level for the euro of $1.3848 against the dollar eyed
-- Traders hopeful of positive outcome from G-20 finance ministers' meeting
By Jessica Mead
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The euro drifted higher during European trading hours Friday as thin dealing conditions helped the single currency regain all the ground it lost during the Asian session.
The euro had come under pressure during Asian hours after Standard & Poor's Corp. downgraded Spain's sovereign credit rating one notch to double-A-minus and after Fitch Ratings fired a warning shot at European and U.S. banks late Thursday.
But reports that finance officials from the Group of 20 industrialized and developing economies meeting in Paris are considering boosting the International Monetary Fund's lending capacity to help the euro zone allowed traders to shrug off some of these concerns.
That gave the single currency a boost to as high as $1.3828 against the dollar and to Y106.41 against the yen, even as the gap in yields between France's 10-year government debt and that of Germany widened to a euro-era high of 91 basis points. This hints at concerns over France. The cost of insuring European government debt against default also rose slightly.
"People have been ignoring the bad news and are even more hopeful of good U.S. news later," said Sebastien Galy, senior currency strategist at Societe Generale in London. Advance September retail sales at 1230 GMT and the University of Michigan survey of consumers at 1355 GMT are due.
The key technical level for the euro now is $1.3848 against the dollar, according to Galy, who said he sees a good chance that we will touch or even break that level soon.
Where the euro goes from there could depend on the G-20 finance ministers' meeting. "Markets appear to be stuck in a range, waiting for their next cue to come from policy makers," said Adam Cole, chief currency strategist at RBC Capital Markets. He added that while positive sentiment prevails, it is with "less conviction than earlier this week and it feels like we need some bigger policy decisions to take another leg up."
At 1032 GMT, the euro was trading at $1.3796 against the dollar, compared with $1.3781 late Thursday in New York, according to trading system EBS. The dollar was at Y76.99 against the yen, compared with Y76.90, while the euro was at Y106.22 compared with Y105.96. Meanwhile, the pound was trading at $1.5774 against the dollar, compared with $1.5767 late Thursday in New York.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 76.937 compared with 77.036 late Thursday in New York.
A summary of key levels for chart-watching technical strategists is below.
Forex spot: EUR/USD USD/JPY GBP/USD USD/CHF
Spot 1034 GMT 1.3799 76.99 1.5769 0.8974
3 Day Trend Bullish Bullish Bullish Bearish
Weekly Trend Bearish Range Bearish Bullish
200 day ma 1.3971 79.91 1.6017 0.8812
3rd Resistance 1.3950 77.86 1.6000 0.9122
2nd Resistance 1.3858 77.48 1.5895 0.9065
1st Resistance 1.3834 77.21 1.5796 0.9038
Pivot* 1.3764 76.96 1.5738 0.8983
1st Support 1.3723 76.86 1.5664 0.8918
2nd Support 1.3685 76.67 1.5615 0.8835
3rd Support 1.3582 76.30 1.5545 0.8800
Forex spot: AUD/USD
Spot 1034 GMT 1.0247
3 Day Trend Bullish
Weekly Trend Bullish
200 day ma 1.0261
3rd Resistance 1.0400
2nd Resistance 1.0325
1st Resistance 1.0295
Pivot* 1.0176
1st Support 1.0144
2nd Support 1.0102
3rd Support 1.0000
