Foreign Exchange Rates ? EUR/USD Nosedives While GBP Edges Downwards as Currency Markets React to Japanese Disaster

March 15, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Rates ? EUR/USD Nosedives While GBP Edges Downwards as Currency Markets React to Japanese Disaster

The Euro Dollar exchange rate (EUR/USD) is 1.3871. The Euro Pound exchange rate (EUR/GBP) is 0.8668.

News emanating from Japan continues to dominate the currency markets, with fear spreading that nuclear radiation may contaminate the North Eastern part of mainland Japan following an explosion at a third reactor in Fukushima.

Elsewhere, a battle continues to rage between government and rebel forces in the Libyan town of Brega. Libyan leader Colonel Gaddafi refuses to go quietly, despite increased pressure from the international community and this is causing continues concerns about future oil supplies. In spite of this, a barrel of Brent Crude is currently trading down by over 2% on the day as fears persist that the situation in Japan will de-rail the global recovery.

Looking to the Eurozone, this morning’s ZEW German Sentiment Index disappointed analysts by coming in at 14.1 as opposed to expectations of 16.0. This figure has further added to concerns that the Eurozone’s economic powerhouse is far from ready to lead the single economic area out of recession.

The US Dollar continues to make strident gains against the other majors and is trading at or near key levels against both the Euro and the Pound. The Greenback rejected the key 1.4000 level against the Euro for the fourth time since 4th March overnight. 1.4000 is now established as a strong resistance for this pair. Meanwhile, GBP/USD has traded below 1.6000 for the second time in three sessions today. A close below this level would send out a strongly bearish signal for this pair.

Tonight’s FOMC Rate Decision is highly unlikely to cause any market movement with rates almost certain to be maintained at 0.25%. The accompanying minutes are sure to adopt the usual dovish tone, particularly in light of events of the past week.

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