U.S. Update: market after ECB and G20

The two huge fundamental events scheduled for today have not disappointed market participants. High volatility all across the board, send Gbp and Euro to test or even break key mayor resistances levels.

Through G20, world leaders summit a plan to increase international aid by $1.1 trillion to cushion the deepest global recession world is suffering since World War II and agreed to tighten oversight of the financial industry. They will channel $750 billion to the International Monetary Fund, $100 billion to the World Bank and provide another $250 billion in trade finance, the draft said. All hedge funds will have to register with national regulators.

ECB surprise market with a cut of just 0.25% points instead of the 0.50% economist were expecting, and it’s President, Jean Claude Trichet, said policy makers are ready to lower their benchmark interest rate further, while the deposit rate has probably reached its floor. “I don’t exclude that we could in a very measured way go down from the present level” of 1.25 percent, he add. The deposit rate is at “an extremely low level at 0.25 percent, and I don’t expect that we’ll move in the period to come.” Important notice, Trichet did not made any comments about unconventional monetary policy, giving Euro further support.

Positive sentiments together with bolder trader are growing at a very fast pace after this, and also Wall Street is cheering: Dow Jones Industrial Average has just reached the key 8000 level, mayor resistance zone. Clear continuation above, will bring more optimism around the world.

Gbp/Usd overview

Upside momentum in the pair continues after just reaching the 1.4740 zone that temporally halt the continuation. Strong resistance lays around 1.4770/80 a tough congestion zone. If this last is cleared, after due corrections longer term perspective in the pair turns clearly bullish, and targeting next mayor resistance zone around 1.5000. 1.4637 could well be a target for corrections. As long as the price remains above that level, upside bias remains intact. 4 hours charts are getting into over bought territory right now. Next candle opening will probably clear if we will see more continuations or corrections for the next hours.