Midweek Summary: March 19-23

By Nikolas Xenofontos from easy-forex

EUR/USD

The Euro commenced the week with a minor gap downwards against the US dollar. The single currency then soon advanced, peaking at 1.3265 as the eurozone’s current account widened unexpectedly to EUR 4.5 billion compared to EUR 3.4 billion before. Worries concerning Greece’s forthcoming elections may weigh on the Euro, as the new leaders may not be as committed in enforcing the austerity measures. A series of PMI readings due on Thursday should be expected to set the tone for the week’s end.

GBP/USD

The British pound versus the US dollar carried on its rollercoaster-like performance over the past four weeks and all this volatility is expected to stay around. Monday saw the pair appreciating by almost 100 pips but a higher than expected Consumer Price Index is expected to hurt the Sterling. On Wednesday, the Monetary Policy Committee minutes will be revealed and investors worldwide are expected to closely inspect them for hints of future policy.

EUR/JPY

The single currency was able to break through the 110 resistance level against the Japanese Yen on Monday. The pair even recorded a 5-month high at 110.83 on Tuesday, which was a bank holiday in Japan. With a relatively lackluster Japanese financial calendar, most movements will be dictated by developments in the euro area. On Friday, the only important economic data item for Japan, its Trade Balance, will be released.

EUR/GBP

The Euro versus the British Pound commenced the week strong; rising to 0.8343 after it had earlier plunged to 0.8283. The pair remains in search of a clear trend with a breakout below 0.8315 or above 0.8345 needed.

USD/CHF

The week commenced with the US Dollar weakening against the Swiss Franc. Better than expected US Building Permits were reported on Tuesday, but the key event to watch for the week is Federal Reserve Chairman Bernanke and Treasury Secretary Timothy Geitner testimony before the House Committee on Wednesday regarding the European debt crisis. An interesting development has been the International Monetary Fund (IMF) encouraging the Swiss National Bank to return to a free floating currency once inflation returns to a comfortable level and growth picks up. This raises questions over the longevity of the 1.20 floor SNB set on EUR/CHF.