Forex Market Analysis_12.03.2013

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Daily Forex Market Overview
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Euro Struggles to Hold, Yen Weakens to 3 ½ Year
Record Lows? ? ? ?
The Euro dropped sharply on Friday against the
US dollar after the surprising improvement in US
unemployment. US Jobless Rate dropped by 0.2 in
February from 7.9 to 7.7 and at the same time
Non-Farm Payrolls increased in February by 236K,
more than anticipated figure at 162K while the
January NFP revised downwards to 119K. The EURUSD
sank from 1.3118 to 1.2964 on Friday while US
indices continued rallying with Dow Jones rising
to record high again at 14,397 on increased risk
appetite. The single currency is also under
pressure due to political uncertainty in Italy,
struggling to remain above 1.30 versus the
greenback, also EU leaders are going to meet
again later this week to decide on Cyprus bail
out terms. Moreover, Fitch Ratings downgraded
Italys credit rating due inconclusive elections
adding to the selling pressure.

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The USDJPY inched up to 96.53 on Friday, trading
mainly affected by the much better than expected
US jobs data but also on anticipation that the
BOJ will follow more aggressive steps to achieve
its 2 inflation target with its new likely
governor, Kuroda. The currency pair breached key
resistance at 95 easily and achieved more than 3
½ highs on Friday.
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Yen Weakens on BOJ Minutes, EURUSD Holds Above
1.30 Ahead of EU Summit
The Japanese Yen weakened further early on
Tuesday due to BOJ Monetary meeting minutes
indicating that further easing could be decided
as the inflation remained at 0. Additionally,
governor nominee, Kuroda, stated that would go on
with more aggressive monetary policy as soon as
he is confirmed, followed by deputy governor
nominees arguing more monetary easing. The USDJPY
hovered above 96.60 but then retraced below that
level on profit taking or overbought indications
with NIKKEI following into negative ground to
close at -0.28. The Euro was little changed
against the greenback remaining slightly above
1.30, while shadow from political uncertainty in
Italy is still in place and concerns of recent
downgrade of its sovereign debt of Fitch ratings.
Moreover, later this week EU summit would take
place where Cyprus bailout is likely to be
agreed. The GBPUSD holds near more than 2 ½ year
lows at 1.4866. The pair retreated slightly,
earlier today from cap at 1.4932 due to
significantly less than projected RICS House
Price Balance released at -6 in February, much
worse than -2 that economists expected, compared
to -4 in January. Concerning other major
currency pairs, the USDCHF is in sideways trading
around 0.9490, AUDUSD advanced to 1.0311 from
handle at 1.0217. The precious metal remains just
below the upside barrier at 1584.48, lifting
earlier on European concerns while market
participants are expecting EU summit.
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