The euro hit an all-time high against the yen and hovered near a two-month peak versus the dollar on Thursday, supported by expectations that the European Central Bank will boost interest rates in coming months.
The central bank is widely expected to keep rates unchanged at its policy meeting later in the day but traders expect ECB President Jean-Claude Trichet at his new conference after the meeting to signal that rates will climb next month.
"The market will focus on whether Trichet uses the word 'vigilance' on inflation," said Hiroki Shimazu, market economist at Mizuho Securities. "If he does, the market will presume that the ECB will increase rates in May."
The upbeat outlook for euro zone rates contrasts with a growing view that the U.S. Federal Reserve may wind up its tightening campaign after a widely expected rate increase in May.
The euro was at USD 1.2285 and in sight of the two-month high of $1.2306, if the single EUR breaks above 1.2325, its rally could gain a momentum.
The euro rose to as high as 144.70 yen the highest level since the single currency was launched on Jan. 1, 1999.
Daily technicals
USD/CHF
MACD is gaining power again and heading to the overbought levels but the RSI has started a correction in neutral zones. The first level to be tested is the 1.2875 level buy a sustained break.
EUR/JPY
Hourly oscillators are close to overbought levels with some more room to move, the target is 145.45 but it will probably take some time to test that level.
EUR/GBP
The market is probably getting in a new trading range between 0.7040 and 0.6990. MACD produced a bearish cross supported be the 10 MA. RSI and Slow Stochastic are heading up.
USD/CAD
MACD has a slightly positive pendent but start loosing power, RSI is supporting the long positioning. The MA's are aligned showing a negative pendent.
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