FXstreet.com (Córdoba) – The Pound is regaining some ground against the Japanese Yen. GBP/JPY started Thursday moving down and reached an intraday low at the 134.30 zone for second consecutive day. The pair bounced from the support zone and rose around 50 pips in the last couple of hours after news of Chinese economy cooling.

Currently GBP/JPY is trading at 134.70, 0.19% below its opening price. According to the 4CAST team, next resistance levels come at 135.07, 135.57 and 135.74, while next supports are listed at 134.26, 133.95 and 133.40.

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FXstreet.com (Córdoba) – The pair has come under pressure at the beginning of the Asian session following the FOCM minutes, although AUD/USD is holding above the 0.8800 level. The pair has lost over 30 pips and is currently trading at the 0.8810 zone, 0.42% below its opening price.

“Strong support however, lays around 0.8780 area, and only under this last, pair could trigger a bearish rally. Upside continuation now will depend on a technical confirmation above mentioned 0.8860 zone”, said Valeria Bednarik, analyst at FXstreet.com.

Support levels: 0.8780 0.8720 0.8690. Resistance levels: 0.8860 0.8890 0.8940

For more information, read our latest forex news.

Euro makes an attempt at gains early in the U.S. session

The euro is weak in forex trading, dropping down solidly below the 1.25 level. An attempt at recovery is being made right now, with the euro gaining a little bit, but, overall, the euro remains relatively weak in forex trading against the U.S. dollar.

Weakness in the euro has prompted some speculation that parity could be on the way for the euro and the U.S. dollar on the currency market. However, this scenario is unlikely, unless the euro zone moves toward dissolution.

GFT’s Kathy Lien discusses the issue of parity in FX360:

Given the rapid response of global policymakers to the volatility in the financial markets on Thursday, there is only a very small chance that the ECB would allow the euro to reach parity without attempting to stop its fall.

Stability returns to the euro zone — for now

The euro is seeing some gains in forex trading right now. Stability has returned to the euro zone, for the time being. In currency trading, the euro is getting some help from a slight return to risk appetite on the news that U.S. jobless claims are lower, and that the employment situation in Germany is improving.

However, there are still problems surrounding the debt situation in the southern countries of the euro zone, with Spain and Portugal downgraded, and Greek debt now at junk status. There are some hopes that the moves will spur euro zone leaders to action, but we will have to see.

GFT’s Boris Schlossberg offers a look at the forex trading forecast for the euro:

The EUR/USD rebounded above 1.3200 in the aftermath of the release and remained in a quiet consolidation mode throughout the morning European trade. The better than forecast economic data has been the one stabilizer to the massive risk aversion flows that have battered the currency. For the time being 1.3000 level in the pair remains out of reach and is unlikely to be challenged this week unless yet another exogenous shock triggers a wave of panic selling in the single currency. With the unit now grossly oversold and eco data supportive some light short covering could push it back above 1.3300 before the week’s end.

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The end of the euro eminent

Just as the euro was reaching record highs, thanks to the announcement that nearly 1/3 of China’s U.S. dollar currency reserves are counterfeit, another bombshell dropped. The European Monetary Union is breaking up.

This comes as a huge shock to most investors and analysts, who were certain that the euro zone had weathered the crisis brought on by the Greek debt rating debacle. However, it turns out the political acrimony goes deeper.

Greece announced its intention to pull out of the monetary union and look elsewhere for help, since the EU’s lackluster efforts of a few weeks ago. Greece had hoped that Britain, a fellow member of the E.U. but not in the euro zone, would help, but a debt downgrade for Britain has scuttled that thought.

With the defection of Greece, Portugal soon followed. Austria, Italy and Luxembourg have also followed, and other countries are rumored to be considering pulling out. Nicolas Sarkozy may have no choice, as the French public is insisting the France return to the use of the franc.

It will be interesting to see who goes next. Or it would be interesting if any of this were true. But none of it is. Happy April Fools’ Day!

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Euro selloff on the currency market

The euro is struggling in forex trading right now, thanks to a number of developments in the European debt drama. Between Greece, and now Portugal, the euro zone has its work cut out for it.

The initial selloff for the euro on the currency market came in response to Greece, reports Boris Schlossberg in FX360:

The selloff was precipitated by fears that an IMF involvement in the Greek (Germany’s preferred solution) budget crisis may not be enough to help Greece reduce its financing costs which are double that of Germany’s. Without a pan-European loan guarantee Greece may not be able to lower it cost of borrowing which is the primary concern of Greek fiscal authorities. Markets will keep a watchful eye on the EU summit tomorrow for any clarity on the issue.

Of course, this news was soon followed by the credit downgrade for Portugal, sending further shock waves through the euro zone — even though most probably saw it coming. Also weighing are concerns about British debt. Even though Great Britain isn’t part of the monetary union, its economic stability (or perceived stability) influences the euro zone.

Right now, the U.S. dollar is gaining against both the sterling and the euro in forex trading. With political leaders in the U.S. promising that health care reform with reduce the deficit in the long run, and the situation so dire in the euro zone, it is little surprise that the U.S. dollar is the currency of choice right now.

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Euro down in forex trading on U.S. GDP

Even though the European Central Bank has stated publicly that it is not planning to stage a dramatic rescue of Greece’s economy, quietly euro zone leaders are contemplating their options. Greece is not so unimportant that the euro zone is ready to lose the country.

GFT’s Boris Schlossberg has information on a possible euro zone plan, and reports in FX360 on the options on the table for Greece:

“Greece will not default. Please. In the euro area, the default does not exist,” Mr. Almunia told Bloomberg TV. Asked if there was any possibility Greece would leave the euro zone he said: “no chance.” Although Mr. Almunia stated publicly that there was no special European plan for Greece, privately European monetary and fiscal officials appear to be moving towards a consensus for some type of a rescue package for the Greek economy. Greek GDP comprises only 3% of total EZ output, but officials fear that the political cost of Greece’s exit from the European monetary union would be far greater than the economic numbers suggest. Officials worry that a default in Greek debt could trigger a domino effect for the possible exit of other southern European nations facing similar fiscal deficit problems.

The euro is already weakened in forex trading due to issues surrounding Greece, Portugal and other euro zone countries. The fact that U.S. GDP came in much higher than expected is not helping matters much, and the euro has now sunk through the 1.4000 mark and is struggling to find support at 1.3900.

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Euro still struggling in forex trading

Confidence is improving in the euro zone, according to the latest measures. This comes even though unemployment remains a problem in the region. However, it appears that members of the euro zone are becoming more confident in recovery, and that employment will eventually have to follow the rest of the indicators.

Also helping confidence in the euro zone is the fact that confidence is slowly returning in the U.S. Recent consumer confidence numbers showed improvement, and last night’s State of the Union Address from President Barack Obama is helping matters. On top of this, there are indications that the Fed may begin tightening monetary policy in order to combat possible inflation.

All of this points to a possible recovery in the euro zone as well. However, the euro still struggles in forex trading, unable to overcome some of the weakness seen in recent weeks.

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