The US Dollar have risen against risk currencies like the Euro, Pound and Aussie today after news broke out that North Korea shelled a South Korean island. This political tension, together with Europe’s debt crisis is causing some risk aversion in the markets as traders try to make sense of what is happening with some staying on the sidelines. It was reported that the shelling by North Korea caused the South to return fire causing the financial markets to adopt risk aversion as it heads into the end of the year.
We should take note also that many investors are not convinced that the aid given to Ireland is going to prevent the other weaker European countries from seeking help as Ireland and Greece did. Canada’s finance minister have even addressed the European Union to address also the Portuguese debt crisis. Together with Spain, Portuguese is seen as the next weakest link in the Euro zone.
From all these news that is happening right now, we see the Euro taking a tumble and have lost about 5% against the US Dollar this month, backing off from a price that was a nine month high which was achieved on 4th November 2010. So where is the next support you might ask? The way I see it, support could come at around 1.345, which happens to be at 1.3446, the November 16th low and if that level is to break, we could see euro dollar going to as low as the 1.32 levels.
Take note guys and stay nimble.
To your trading success!
Singapore Forex Traders’ Blog