EUR/USD hit fresh eight month highs in yesterday’s US trading session printing 1.3682. The EUR is taking advantage of the sustained USD weakness across the board. EUR/USD climbed around 200 ‘pips’ since the Wednesday morning low. If we break above the 1.3710 resistance level we’ll be at two year highs. Are we in for some further USD weakness? I’m going to say we will see a retracement down as the US dollar, technically speaking, has taken a hammering of late. Evidently all the USD weakness has been down to disruption from the US debt ceiling debacle. Has anything been so unnecessary? Perhaps the creation of ‘Reality TV’. Investors have been speculating that it will hamper growth and prompt the Federal Reserve to postpone its currency debasing stimulus program hence the weakening of the dollar.Cable? We’ve moved 250 pips in either direction in a couple of days. Weeks like this are where market orders prove their worth. We’ve been under 1.59 and then back to almost 1.62 in recent trade. I would look at placing orders at 1.6150 to buy USD from GBP. As I’ve said before, anything above 1.60 on GBP/USD is good value. As usual, drop myself or one of the ACM trading team a note to implement these orders in the market. I don’t see too much more upside for GBP/USD with just over 1.62 being top of the range. Have you considered utilising forward contracts or OCO’s to manage your currency risk and take advantage of the levels on GBP/USD? Our trading team is on hand to answer questions you may have.

There will be strong resistance at the 1.6260 level. With the debt ceiling saga over we should see some normality return to the market. However, all the ‘”deal” has done is kick the can down the road to February. No doubt we’ll have the exact same conversations again then.

GBP/EUR? We’re quite range bound and floating around the 1.18 level. I would look to ‘lock in’ some of your EUR exposure if you can at this level if converting from GBP into EUR. I would say anything around 1.18 is a good rate to execute your transactions at.

We have little data of note out today and I would expect a fairly tight range bound day with currency pairs not moving much either way in the UK session.

If you have any questions please do get in touch.

Have a fantastic weekend

Written by Liam Alexander