Euro enjoyed buoyancy in early Asia before news of the S&P downgrade of Spain’s credit rating and European banking stocks tanked. Also Hurting sentiment was the European Commission slashing growth forecasts for 2009 to -1.9% from -0.1%. Looking ahead for German Zew Survey is forecast at -44 vs. -45.2 in January. Sterling was the worst performing currency as Royal Bank of Scotland forecast losses of 28 Bn pounds, the largest in UK corporate history. Shares of RBS fell 67% and pressured other banks stocks lower on fear of nationalization. Looking ahead for December CPI is forecast at -0.8% vs. -0.1% m/m previously.
Technical outlook:
EURO R1: 1.3160 S1:1.2900
R2: 1.3180 S2:1.2880
chart pattern hints towards a volatile move . Trading range for the day is expected between 1.2920-1.3150 levels for the day. Momentum is seen flat and stochastic is seen at the oversold territory giving clues for the possibility of an upward correction after taking the lower range support.
GBP R1: 1.4380 S1: 1. 3950
R2: 1.4420 S2: 1. 3940
chart pattern shows the currency to remain on a bearish note for the day. Trading range is expected between 1.3970-1.4350 levels for the day. Currency is trading below the moving average and stochastic is also seen trending down forming a head and shoulder pattern showing further downside.
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