Lack Of Direction And Momentum On The Majors

The last session of the week passed without major incidents or any important updates last Friday and the major currency pairs remained more or less around the same levels that we left them at. Price action has been choppy over the past couple of weeks in the money markets as August is the month with the lowest volume during the summer period and that is reflected on the consistency of the price swings.

The bias in the major instruments we monitor in our report has been mixed during the last couple of sessions and that is due to the recent reports from the US and Europe but also due to the reluctance of investors to take part into any major trading at this time. We saw more of the same performance on Friday as the Euro and the Cable remained trading around their previous levels lacking any direction or momentum.

Being more specific, the Euro spent the day trading between 1.1170 and 1.1080 lacking any momentum towards either direction. Early in the morning the good news that the Greek Parliament passed the new proposed loan agreement attempted to push the currency higher but no one backed this move.

As a result the Single currency retests the 1.1080 lows this morning and with its outlook remaining mixed we don’t expect any radical moves today either. Later in the week the release of the inflation levels from the US on Wednesday will be the next major report to provide some stimulus to the Euro so until then we could see some further consolidation.

Cable was also demonstrating choppy price action on Friday even though it remained on its general bullish trend, the UK currency had found support around the 1.5600 area earlier in the week and that has allowed a further extension of the rally towards the 1.5700 level. The Cable is trading around the 1.5670 area this morning and we have to note that the momentum to the upside seems fragile.

Nevertheless given the lack of any US related news we could see a further extension of the move higher with the 1.5700 area being the focus, as traders will look to focus on the release of the inflation report from the UK tomorrow.

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