Forex Market Insight 07/06/2011

The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headline:

• Risk sees reversal as Portugal downgraded to 'junk' by Moody's

• US equities weaker after lower-than-expected result from factory orders

• AUD trades back below 1.0700 after RBA keeps rates on hold

• Gold and oil surge higher as both break above key resistance levels

• Dow drifts lower to close 0.1% down

• Europe in focus tonight with Eurozone GDP and German factory orders due this evening

AUD/USD
Some of the heat has come out of the Aussie over the last 24 hours after the RBA doused expectations of two further rate hikes this year. This could see the Aussie come back to test support at 1.0600. After seeing a move back to 1.0600, traders could then be looking to a bounce from support.

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XAU/USD
Gold popped higher overnight after US factory orders came in below expectations. For gold, the driver remains the outlook for further stimulus from the US government, so any disappointing news on US economic growth is likely to see gold pushed higher. That said, the technical outlook is still bearish, so trader will be looking at the overnight move as a potential entry for.
EUR/USD
The Euro has failed to sustain the move above 1.4530 and the sellers have driven the pair back into the symmetrical triangle pattern. This changes the picture to bearish and setups up a potential move back to 1.4200. In the near term, initial support is seen at 1.4340.

GBP/USD
The pound remains trapped by downward pressure, but the most recent price action is signaling the potential for an upside break. Overnight, we saw the pound break above resistance at 1.6100, but yet again the sellers pushed the pair lower. The upward trending lower support line suggests bullish pressure is rising, and a break of 1.6140 could see a sharp move higher.

USD/JPY
The USD/JPY is still trapped in its trading range, with last night's move higher unable to breach 81.25 resistance. From here, trader will be looking for a move back to support at 80.40/60 before rebuilding long positions.

SILVER
Silver surged higher along with gold and oil overnight, bringing the precious metal back to resistance at 35.50. We're at a crucial juncture now, with any break above 35.50/36.00 bullish, but if silver can't break higher, the market will be looking for a move back to support at 33.30.

USD/CHF
The USD/CHF has moved lower from the top of the trading range and the market now expects a move back to support around 83.30. The USD/CHF remains dominated by the bears and traders will be looking to follow the path of least resistance lower.

GBP/JPY
A recent bout of yen weakness has seen the GBP/JPY push higher and break above resistance at 130.00. As long as the GBP/JPY holds above 130.00, traders will be looking for further gains, however, this pair remains in a strong downtrend and any move back below 130.00 is likely to see the downtrend continue.
AUD/JPY
The Aussie-yen has held relatively steady after yesterday's decision to hold interest rates steady and this can be seen as bullish for this pair. Support is seen at 86.00/40 and any move back into this zone is likely to be seen as a buying opportunity.

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OIL
The crude market has pushed higher overnight in line with the move higher in gold and silver. This changes the market's view on crude to more bullish and traders will be looking for any move back to 95.80 as an opportunity to take new long positions.

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