Forexnews

Dollar Fell on Subprime Worries
The greenback suffered further losses on Tuesday as more negative news related to the deteriorating subprime mortgage market was reported.

Two world’s largest credit rating agencies, Standard & Poor’s and Moody’s, today warned of ratings cut on over $17 billion risky mortgages debt, most of which are subprime loans. Coupled with profit warnings from homebuilder and home appliance retailers, subprime debt rating downgrading lead investors highly worried about the subprime issue in US housing market and the severe impact it may spread into the broader economy. The euro formed a base at 1.3730 and refreshed record high to 1.3783 versus the dollar. Following yesterday’s rally, the British pound gained another 1 cent to as high as 2.0361 against the dollar.

The euro was also boosted by hawkish comments from the European Central Bank officials. ECB President Trichet reiterated that the bank’s monetary policy remained accommodative, signaling further interest rate increases. ECB executive board member, Jurgen Stark, said today that euro appreciation reflected the strength of economic growth in Europe.

EURUSD will face interim resistance at 1.3780, followed by 1.38 and 1.3830. Additional ceilings will emerge at 1.3850, backed by 1.3880. Support starts at 1.3730, backed by 1.37, 1.3660 and 1.3630. Subsequent floors are eyed at 1.36.

GBPUSD encounters interim resistance at 2.0360, backed by 2.0380 and 2.0400. Subsequent ceilings will emerge at 2.0420, followed by 2.0460 and 2.0500. On the downside, support begins at 2.0300, followed by 2.0280 and 2.0250. Additional floors are eyed at 2.0220, backed by 2.0200 and 2.0150.

Yen Pared Gains as US Stocks Rebounded
US stocks are back in buying mode after sharp decline yesterday. The yen pared its earlier gains since carry trades surged as investors re-entered risky equity market. The dollar climbed back to above the 122 handle against the yen.

USDJPY encounters interim resistance at 122.30, backed by 122.70 and 123. Subsequent ceilings will emerge at 123.20, followed by 123.50 and 123.80. On the downside, support begins at 121.80 and 121.50, followed by 121.30. Additional floors are eyed at 121, backed by 120.80 and 120.20.