Daily Forex Analysis

Today’s US Dollar Trading

• USD two-sided overnight
• Breaks lower during New York but still no new range
• Equities fall driving USD /JPY lower

Overnight Preview
• Look for follow-through selling of USD
• Book squaring ahead of US data in the morning

Looking Ahead
• 7:30 AM CDT Thursday Balance of Trade forecast -57.4B

Summary
The USD ends New York softer making fresh daily lows against most pairs after starting modestly firmer overnight. Initially firmer in Asia the Greenback remained two-sided for most of European trade and actually pressed for highs against some pairs in early New York today. Traders note that volumes were modest and flows were tight but once trade was in full swing the USD came under some light pressure. Close-in stops were seen in several pairs and once the EURO/GBP cross hit stops taking the rate into highs the USD really started to correct. Although holding previous S/R from last week and only modestly lower on the day from yesterday’s lows, traders note that the USD is more psychologically weaker due to the potential for G7 rhetoric to hurt the prospects for a recovery. Also weighing on USD today is the BOW and ECB rate announcements due out overnight. Traders are looking for no rate cut from the ECB and a modest 25 BP rate cut from the BOE. In either case, the move appears “baked in the cake” and traders expect that the USD strength leading into this week may have run its course. On the day, Cable dropped to a low print at 1.9649 overnight before bouncing higher on better UK data early this morning. High prints came after the London fix as EURO/GBP rallied to new lifetime highs and GBP was hit by stops on the way higher; high prints at 1.9798 were capped by long-liquidation traders say. EURO rallied also into highs at 1.5865 before encountering selling pressure to back off the highs; overnight lows at 1.5682 now seem a long ways away for the bears. Traders look for the rate to hold firm and attempt one more try at fresh highs; offers usually resting ahead of the 1.5880 area appear to be absent on the first round today. Stops noted above the 1.5780 and 1.5800 areas. USD/JPY rallied on BOJ rate news and potential for a new BOJ governor but high prints at 102.84 overnight were never challenged in NY forex trading; falling back to find stops under the 102.10 area and more at 101.80 area the rate had a low print at 101.49 before bids helped support. Across the board the majors did not reach any fresh ground so be prepared for a rotation the other way as the consolidation continues.

EUR/USD Daily
R3: ?
R2: 1.5900/10
R1: 1.5880
Current Price: 1.5825
S1: 1.5770/80
S2: 1.5720/30
S3: 1.5680
Rate powers higher on no news and short covering traders say, look for a brief try for highs and then a correction lower. Stops above the 1.5910 area said to be thicker now than last time the rate was here suggesting that the bears are more committed. Pair is in the sell zone of resistance so be ready for a pullback if no buyers show up overnight. Stops under the market likely back at the 1.5650 area which may be out of range today. Look for a quiet overnight session with follow- through to the upside early likely.

USD/JPY Daily
R3: 102.80
R2: 102.50/60
R1: 101.90/102.00
Current Price: 101.71
S1: 101.20/30
S2: 101.00
S3: 100.80

Rate holds at resistance again drawing sellers into the mix but total range still inside previous action so no real progress made by the bears or the bulls. Traders note that volumes were modest and tracking developments in other markets left the rate vulnerable to drifting. Stops likely under the 101.20/30 area in size, another stab for those orders likely overnight as equities disappoint Asian traders. Look for the rate to continue lower by the end of the week.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Overnight Asia/Europe

• USD firmed in Asia on G7 comments
• Faltered in European trade

Today’s Economic Reports

• 7:30 AM CDT Retail Sales forecast +0.1%, no factor

Looking Ahead

• 7:30 AM CDT Tuesday PPI forecast +0.4%, core +0.2%
• 8:00 AM CDT Tuesday TICS

Summary
The USD is softer to start New York after initially starting higher in Asia. Traders say the G7 wording invoking a change to the communiqu?’s verbiage was seen as USD supportive but the Greenback was unable to add to early gains seen in Asia. Gapping higher across the board the USD began to fall in European trade eventually opening New York on the lows for the session so far; technical levels in a few pairs are again being tested and if the USD can’t hold the current lows more downside is expected before the London fix. Today’s data will likely not be a factor as the market appears focused more on the employment and growth data but a large decline might accelerate the USD’s fall. Cable initially started softer but held last week’s low at 1.9648 for a technical double-bottom. The rate began to trade higher on lighter volume and some close in stops were seen again as the rate lifted into the 1.9720/30 area; the release of UK data helped push the GBP higher during late European trade. UK output prices hit a 17 year high and combined with a firmer EURO the GBP rallied through stops higher at the 1.9800 area and currently is on the highs in New York at 1.9875; rate almost putting in a reversal. EURO remains firm after a slow start, lows in Asia at 1.5671 attracted large names traders say and the rate recovered quickly. Mid-East buying was seen in the rate around the 1.5780 area as was also seen last week in that area; high prints in NY at 1.5876 still unable to lift through the offers resting in the 1.5880 area. Forex Traders note that the rate is building a fairly obvious rising wedge into the lifetime highs and expect at least one try for stops said to be in the 1.5920/30 area; option defense expected to be solid at 1.5920. USD/JPY is reversing hard with two-way volatility rising as well; high prints at 101.52 offered by exporters and the rate is on the lows in early NY at 100.32. Traders note that the rate is poised to find large stops that are in the 100.00 area just under the lows from last week. Should the rate break into stops it would make a rather poor showing on the charts and will likely attract additional selling on a close under the 100.00 handle. For the most part, the USD is starting the week on the defense with traders disappointed the USD couldn’t hold the early gains. Look for more downside if US data tomorrow disappoints.


USD/JPY Daily

R3: 101.80
R2: 101.50
R1: 100.80
Current Price: 100.33
S1: 100.00/100.10
S2: 99.80
S3: 99.50

Rate fails hard at recent resistance making the 102.00 area firm overhead cap; stops under the lows from last week likely growing in size. Support under the 99.50 area likely to give at least one bounce so aggressive traders can sell the next rally. Look for stops above the market to be lowered into the 101.50 area as aggressive shorts likely to think that the
high for the week is in should stops under the 100.00 area get triggered. Potential for higher prices is lower after rejection of G7 upside help.


EUR/USD Daily

R3: ?
R2: 1.5915
R1: 1.5880
Current Price: 1.5873
S1: 1.5820
S2: 1.5780
S3: 1.5740/50

Rate up against offers at this moment, size said to be on the offer but bids so far able to absorb. Stops likely over the recent lifetime high but the speed of the recovery overnight suggests that those bids are the last of the stops; lots of close-in action from daily traders some desks report. If hook reversal is negated by a close over the 1.5915 area upside target is easily the 1.6080 area in my view. Look for a lot of volatility near term as traders cope with a potential breakout.

Analysis by: Forexpros.com written by Jason Alan Jankovsky


Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Today’s US Dollar Trading

• USD two-sided, ends mixed
• Volumes light

Overnight Preview

• Look for light flows overnight
• Book-squaring ahead of US data in the morning

Looking Ahead

• 7:30 AM CDT Tuesday PPI forecast +0.4, core +0.2%
• 8:00 AM CDT Tuesday TICS

Summary
After starting higher overnight on a generally USD-positive change in the closely watched G7 communiqué, the greenback ends the first day of the week mixed in relatively light trade. After the London fix traders report that volumes dropped and the majors drifted lower as the bulk of market participants covered positions initiated on the overnight volatility. GBP rallied into highs at 1.9896 overnight but drifted lower all day to end the NY session sharply lower off the highs near the important 1.9740/50 area; traders note that the rate still is rotating around the 1.9720/30 area as near-term traders debate the significance of the previous monthly support level. EURO rallied into formidable resistance at the 1.5880 area for a high print in early NY trade at 1.5888 before dropping back during the day a full handle lower. Traders note that the rate is securely trapped in a rising wedge formation combined with drifting volumes suggesting that the rate is coiling for a strong move one way or the other. Should EURO breakout of the wedge higher offers are expected to cap at option defense around the 1.5820/30 are with stops layered above. Technical studies point to a firmer EURO near-term but mostly off a dip into the 1.5720/30 area. Traders note that large names on the bid for EURO overnight and on the break today but remind that the rate has had a very violent last few weeks; EURO could be ready for more volatility. USD/JPY felt obligated to trade along with stocks today as initial strength was sold into highs at 101.50 area and dips into the 100.30 area were bought. Closing slightly better than mid-range the rate is ready to extend losses most desks say after the disappointing reaction to the G7 data Sunday. Most forex trading desks are looking for the USD/JPY to range-trade near-term ahead of US data this week which is expected to be USD negative. Look for most of the action to be stop-driven near-term as traders try to make sense of the recent volatility. USD data tomorrow should be USD neutral as the Fed is likely more focused on employment data. Should there be a surprise in the works it most likely will be in TICS. Look for inflation data to be “as expected”; we all know there is a bit out there.

GBP/USD Daily

R3: 1.9850
R2: 1.9820
R1: 1.9780
Current Price: 1.9754
S1: 1.9720
S2: 1.9700
S3: 1.9680

Rate gives back all the overnight gains as bulls are heavily disappointed by lack of follow-through. In my view, today’s break back to the 1.9720 area after pressing into the 100 bar MA is significant as the downtrend continues to offer resistance at areas where bulls expect to gain control. Look for stops under the 1.9650 area to grow again overnight and offers above the 1.9820 area to thicken. Expect a bounce to be sold hard after a test of the 1.9650 area again.

USD/JPY Daily

R3: 102.00
R2: 101.80
R1: 101.50
Current Price: 101.08
S1: 100.50
S2: 100.00/10
S3: 98.80

Rate gaps higher then fails with highs never being challenged all day suggesting that the rate is attracting active selling; longs who bought on the news have been disappointed all day. Support at the 100.50 area is only near-term in my view and a failure on another rally to hold the 101.80 area suggests a potential for a test of the stops under the 100.00 area. In my view, it is only a matter of time before the longs throw the towel in and push the rate under the 100.00 handle.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Today’s US Dollar Trading

• USD range bound ahead of PPI
• Muted reaction to the news but USD extends gains
• Traders note stops flushed

Overnight Preview
• More consolidation within existing ranges likely

Looking Ahead
• 7:30 AM CDT Wednesday CPI forecast +0.3%, core +0.2
• 7:30 AM CDT Wednesday Housing Starts and Building Permits forecast 1025K and 970K

Forex Summary
After a quiet two-way start overnight in Asia the USD stayed within existing ranges until the release of US PPI this morning. Traders note that the data was seen as USD supportive but not enough to break the USD out of current ranges; PPI out at +1.1% (well above expectations) while core was out at +0.2% (as expected). The Greenback attempted to build on initial gains but remained two-sided until after the London fix where a bit of additional buying lifted the USD into fresh highs against most pairs later in the day. Cable of course the big mover as UK data overnight was not so supportive and stops were finally triggered on the dip below the 1.9650 area. Low prints during late New York at 1.9603 erased a potential option barrier traders say and leave the door open for a test of the 1.9550 area near-term. Aggressive traders can look to add to open shorts on a rally back to test the 1.9680-1.9720 support zone. EURO also fell off a bit but remained above important support making a very strong case for the rising wedge formation to remain viable into the next round of data. High prints again at 1.5876 turned back from offers at the 1.5880 area and slightly higher traders say and after the news stops under the 1.5800 handle were triggered; lows later in the day at 1.5750 as more stops were set off. EURO is now poised to tackle a zone of bid interest said to extend from 1.5750 to 1.5720 with more stops below but most desks note that buying the dips is still on most traders minds as the downside still is seen limited until a test of the 1.6000 handle possibly changes the sentiment near-term. Expect a modest recovery from additional lows if they are seen overnight. USD/JPY continued to find bids on the dips as low prints overnight Asia at 100.78 were never challenged during NY trade; highs at 101.81 came later in the day with offers said to be thick above this area extended to 102.00 with stops beyond. For the near future the USD is tightly constrained by these existing S/R levels; stops have been in range and the volumes have been light suggesting the smaller trader is active. Firmer equities overnight likely to support the USD/JPY but for the most part the USD is range-bound. Look for book squaring ahead of CPI tonight.

GBP/USD Daily

R3: 1.9700
R2: 1.9680
R1: 1.9650
Current Price: 1.9607
S1: 1.9600
S2: 1.9580
S3: 1.9550
Rate drops back to potential support and tests the lows late in the day suggesting there is more downside coming after a slight bounce. Look for the upside to remain limited to between the 1.9680 and 1.9720 zone with follow-through selling expected tonight. Stops likely clustered under 1.9550 and layered with bids to 1.9520 area suggesting volatility is in the works too. In my view, the potential for a rally back above the previous monthly low is dropping quickly on closes at or below 1.9600.

USD/JPY Daily

R3: 102.20
R2: 102.00
R1: 101.80
Current Price: 101.54
S1: 101.00/10
S2: 100.70/80
S3: 100.50
Rate has inside range day closing higher which is technically inconclusive at this point. Traders note volumes were light and the rate seemed to be tracking equities more than other things. Additional impetus seen on tomorrow’s CPI should the data disappoint and a break back to trend line support around the 100.50 area is likely. Look for stops building in range now that the up-channel continues to be respected. A break lower very possible tomorrow with a quick drop under the 100.00 handle.

Forex Daily Analysis

Today’s US Dollar Trading

• USD has range-bound trade despite news
• CPI as expected, Housing data worse
• EURO scores a lifetime high

Overnight Preview

• Look for the USD to consolidate with weaker tone
• Book-squaring ahead of US data tomorrow likely

Looking Ahead

• 9:00 AM CDT Thursday Philly Fed forecast -14.0

Summary
The USD was under pressure most of the forex trading day today after a quiet two-way start in Asia that saw the highs for the day. Remaining inside established ranges on the highs, the Greenback continued to probe for serious buyers but found none as today’s inflation data and housing data disappointed USD bulls quickly. Although benign, the CPI numbers suggest that producers are holding back some of the pain that the inflation pressures seem to be giving the economy at this time; PPI yesterday showed that inflation was certainly being seen at the manufacturing level while today’s “as expected” CPI numbers show the cost is not being passed to the consumer very quickly. That leaves a lot of room for the Fed to stimulate growth and most analysts are upping the forecasts to include a 25 BP rate cut at the April 30 FOMC meeting. In my view, the lack of hard downward pressure on the USD despite the bad housing data suggests that the jury is still out as to the extent of the potential for a housing rebound. Still declining the housing starts fell 11.9% while permits continued to lag. Traders took the opportunity to sell USD across the board but the lack of downside follow-through argues for continued two-way trade. The one exception was EURO which scored another lifetime high at 1.5980 and ends NY near the highs suggesting more upside on the way. Aggressive traders can look for the 1.60 area of psychological “big-figure” resistance to offer a selling opportunity. Likely to see a “first through the even” scenario and I suggest a short from above the 1.6000 handle. Cable rallied along with EURO but found resistance at the 1.9800 handle; high prints at 1.9809 before falling back with the rate dropping under the 1.9720/30 area “sell-zone” on the close. More selling expected in GBP so hold shorts if you have them. USD/JPY continued to trade two-way with high prints at 101.94 in Asia going unchallenged in NY; lows at 100.81 also unchallenged leaving most of the day mid-range. Firmer stocks were a big help for the rate and traders expect offers between 101.80 and 102.00/10 to cap further gains should the Nikkei open firmer. In my view, a sideways selling opportunity today; look for the USD to suffer more tomorrow.

GBP/USD Daily

R3: 1.9800/10
R2: 1.9750
R1: 1.9720/30
Current Price: 1.9710
S1: 1.9680
S2: 1.9650
S3: 1.9620

Although reversal pattern is active for the bounce off the 1.9600 area the long selling wick is more significant as the stops above the 1.9720/30 area “sell-zone” failed to include fresh buying. Close under the 1.9700 handle ideal but with a few minutes left to run a close under 1.9720 is still technically viable for a “head-fake” up day. Look for stops to build under the 1.9680 area in range for late longs today adding to volatility. 50 bar MA offered resistance today and as long as rate hold below; stay short.

USD/JPY Daily

R3: 102.20/30
R2: 102.00/10
R1: 101.80/90
Current Price: 101.66
S1: 101.20/30
S2: 100.80
S3: 100.50

Overhead resistance continues to remain thick with lots of offers reported between 101.80 and 102.00/20 area (?) suggesting that the rate will remain range-bound at least through Philly Fed tomorrow. Look for stops above the 102.30 area to build as well as under the 100.50 area with more at 100.00/10. If rate can hold under the 101.50 are by Friday’s trade I think a downside test of support is in the works for next week. Stops likely large under the trend line for the small up channel.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Today’s US Dollar Trading

• USD two-way initially overnight
• USD data disappoints
• Ends USD mixed

Overnight Preview

• Traders look for consolidation and book-squaring
• No news is due so volatility possible

Looking Ahead

• Next week Durable Goods, Existing and New Home Sales, Michigan Sentiment

Summary
The USD ends New York mixed after a solid two-way forex trading day. Traders note that stops and USD short-covering were seen overnight and after the London fix; a short-squeeze in Cable also flushed weak hands and desks report that today’s action was not an expected reaction to the worse-than-expected Philly Fed data. Forecast at -14 the released number came in at -24.9 and was seen as further evidence the US economy is slipping into recession. Regardless of the debate the Greenback showed only a modest initial reaction preferring to remain within established overnight ranges until after the London Fix. Cable lead the complex higher as stops above the 1.9850/60 area and more at 1.9880 lifted the rate into the next level of resistance at the 1.9926 making today’s action in cable one of the largest ranges in the past few weeks; one trader made the observation “don’t try and make sense of it” when asked of the unexpected rally. A solid short-squeeze forcing out the longs is all it is and a reaction lower is likely ahead of Friday. EURO held up near the highs until comments from overseas cracked the amour of the bulls, falling into stops the rate pressed for lows at the 1.5850 area during New York but never testing the earlier lows under the 1.5800 handle Wednesday. EURO although firmer, is unlikely to rally significantly tomorrow as today’s break likely will encourage a round of long-liquidation from the nervous longs. USD/JPY held firm after the initial flurry of activity around the news; high prints came later at 102.73 challenging the resting offers said to be ahead of the 102.80/103.00 area. Traders note that across the board the USD had bids and offers in places where previous S/R was expected to contain but somehow was vaulted; apparently a lot of trade today was “unexpected” and that is pushing people to the sidelines a bit. Looking ahead to Friday no news is expected leaving the USD vulnerable to rhetoric-driven rally or breaks; if not on the right side today it’s OK to stay on the sidelines tomorrow. Forex Traders with shorts active in GBP likely stopped out so don’t rush back to the trade; tomorrow will likely end the week with volatility.

GBP/USD Daily

R3: 2.0000
R2: 1.9980
R1: 1.9950
Current Price: 1.9910
S1: 1.9880
S2: 1.9820/30
S3: 1.9780

Another “what the …..?” rally squeezes shorts hard triggering stops all the way past the comfort zone of the 100 bar MA. Now that the bids are erased there is little change of a follow-on rally without aggressive new buying and that is unlikely ahead of a weekend. Rate appears to be rallying on EURO-Sterling liquidation; not outright buying. Stops from longs likely in range from 1.9800 all the way to 1.9900 for the day-traders. Expect a fall-back soon, if stopped out—take a break. Next week is a new week.

USD/JPY Daily

R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.59
S1: 102.20
S2: 102.00
S3: 101.80

Rate almost at resistance offered by the 50 bar MA; highs today still within established S/R of sideways range. No real action happened today despite the large rally; mostly stops and short-time frame traders some desks reporting. Look for follow-through buying to be limited and hold under the 103.00 area; a long-liquidating break is possible as profit taking hits the rate. Firmer stocks into the close today likely to give a boost in early Asia but don’t expect it to last.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Forex Analysis

Overnight Asia and Europe

• USD two-sided and consolidates
• No real market moving news

Today’s Economic Reports

• None in the US today

Majors open New York mixed

The USD is trading sideways in a reasonable pattern of consolidation this morning after a quiet two-way overnight session. No real market moving news was on tap and the majors are both sides of yesterday’s New York close. Currently at the start of New York trade the majors are mixed as light volumes and technical trade start the day. The USD is higher against the GBP; overnight highs on light volume were 1.9976 and after the release of BOE MPC minutes the rate sold off for a low print at 1.9866 on better volume. Traders say the split vote was seen as bearish and sentiment continues to be neutral to bearish long term; cross spreading for EURO continues to increase volatility some say. EURO fell back from the all-time high yesterday as traders remain cautious ahead of US data due tomorrow. Desks report thin order books but also a Swiss private bank on the bid around the 1.5960 area; highs overnight at 1.6002 with low prints at 1.5939 during European trade. Stops are likely building under the 1.5920 area and aggressive traders can look to add to shorts on a break into the 1.5800 handle; a close under the 1.5880 area argues for a deeper pullback in my view. USD/JPY is on the defense this morning as no bids were seen in Asia for a high print at 103.34 before offers took over; low prints just ahead of New York at 102.74 making the day an inside range day so far. Forex Traders note that tensions with China ahead of the Olympics and trade talks with the Eurozone are making trade “nervous” which often is seen as USD bullish; potential will likely keep USD/JPY two-way and within established ranges making for good opportunity on the short time-frames. Swissy is also locked inside range today with very little action; traders expect support at the bottom of the range near-term. In my view, today will likely remain a consolidation day with the GBP sliding around for the most part; I don’t think the EURO has another high in mind this week and I think the USD will remain range-bound through the data tomorrow. Look for data to be USD neutral-to-bearish on Thursday and for the weeks’ range to extend to the downside for the Greenback during Thursday.

GBP/USD

Resistance 3: 1.9980/2.0000
Resistance 2: 1.9940/50
Resistance 1: 1.9900
Latest New York: 1.9845
Support 1: 1.9820/30
Support 2: 1.9800
Support 3: 1.99750

Rally yesterday was indeed a head-fake so far this next 24 hours. Offers are thick ahead of the 1.9980/2.0000 area again, stops said to be under the 1.9850 and 1.9820 areas today.

Comments
Rate back below the 1.9900 handle on the day; look for continued pressure back to the support zone around the 1.9750 area.

Stops likely to drive trade lower today and rate is making lows in early New York action. Close below the 1.9800 handle opens the door for a test of the 1.9700 handle.
Upside is limited in my view but ranges can be wide as evidenced by the past 48 hours of trade. Sell rallies if not short; buying dips dangerous in my view.

Aggressive traders can sell over the 1.9880 area during the day.

EUR/USD

Resistance 3: 1.6020/30
Resistance 2: 1.6000
Resistance 1: 1.5980
Latest New York: 1.5940
Support 1: 1.5920/30
Support 2: 1.5900
Support 3: 1.5880

Rhetoric from ECB to remain hawkish, Wednesday German manufacturing news, Thursday IFO.

4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.6100
Hold and look to add on a close below 1.5900 area

Comments
Market is failing at resistnace, be patient on the potential break

Overhead resistance is heavy above the 1.5980 area; traders say offers extend into the 1.6000/30 area with stops above.

Looking for a “first through the even” scenario; a strong long-liquidation break is coming and aggressive traders can look to sell into a sharp rise.

Sell zones today are 1.5980, 1.6000, 1.6020; buy zones 1.5850, 1.5830, 1.5800

Watch for two-way volatility; expect a sell signal on the hourly charts. Hook reversal still valid. Be ready to add quickly if this rally fails.

USD/JPY

Resistance 3: 104.00/10
Resistance 2: 103.80
Resistance 1: 103.50/60
Latest New York: 103.05
Support 1: 102.70
Support 2: 102.40/50
Support 3: 102.20

Yuan still marching higher taking the Yen with it.

04-21-08 SHORT USD/JPY 103.60/80 Stops @ 104.80
Look to ADD Wednesday/Thursday on a close under the 102.50 area.

Comments
Drop under the 103.00 area still labored as conditions are thin.

Traders note that the market is still trading technically and expect stops to be run in both directions near-term; expect some volatility. Day traders may get a lot of opportunity as the rate will likely cover a lot of the same ground twice on the hourly time-frame.

Need a close back under the 50 bar MA today before the start of Tokyo, REALLY making us wait for it.

Balance of trade number no factor overnight Tuesday; close under 103.00 likely to attract more selling.

USD/CHF

Resistance 3: 1.0180
Resistance 2: 1.0140/50
Resistance 1: 1.0100
Latest New York: 1.0087
Support 1: 1.0050
Support 2: 1.0010/20
Support 3: .9980

If short from 1.0180/1.0200 area hold and look to ADD on a close below the 1.0050 area today.

2-22-08 SHORT 1.0030 Stop @ 1.0130

Comments
Rate still two-way and consolidating, waiting for US housing data tomorrow most likely. Stops a risk above the 101.40/50 area; also under the .9950 area

look for a test of the lower portion on the range within 48 hours (Wednesday AM)

Expect a bounce from .9950 so OK to cover shorts and go long from that zone. Be nimble though as a break below there likely to draw aggressive selling.

No follow-through is to be respected; look for inside range day closing higher tomorrow 4-22-08 with no action over the 1.0140/50 area.

ADD on the close 4-22-08; should be Short 1.0180 Stop @ 1.0280, more on at 1.0030 Tuesday.

USD/CAD

Resistance 3: 1.0220
Resistance 2: 1.0200
Resistance 1: 1.0160
Latest New York: 1.0122
Support 1: 1.0070
Support 2: 1.0020/30
Support 3: 1.0000/.9990

04-21-08 SELL 1.0060 Stops @ 1.0160

BOC cuts rates 50 BP; slightly surprises market.

Stop was missed; OK to ADD on further weakness.

Comments
Sell signal overnight, OK to hold through the close as stops are out of range from last week. Close below 1.0000 sets up break into the bottom of the range in my view.
Massive head-fake on the news this morning but rate misses our stop; OK to ADD more on a break of the 1.0000 handle

Tested downside for light support at the 50 bar MA,

Nothing to do but continue to wait in my view.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Daily Analysis

Today’s US Dollar Trading

• USD mixed
• EURO fails at highs

Overnight Preview

• Look for more booksquaring
• Quiet ahead of US data in the morning

Looking Ahead

• 7:30 AM CDT Durable Goods forecast +0.1%
• 9:00 AM CDT New Home Sales forecast 490K

Summary
The USD is mixed to end New York today after a correction overnight driven by rhetoric and stops. Traders note that the Greenback traded two-sided in Asia vesting both sides of the New York close and volumes were light suggesting that technical trade was dominate. Once the European session opened the USD began to climb a bit led by a drop in EURO as enthusiasm for an ECB rate hike faded. German manufacturing data was on the lighter side and the failure of the EURO to score another high after the psychological 1.60 handle traded yesterday added to a bout of profit-taking by nervous longs. Opening lower in NY the EURO ran for lows and printed at 1.5860 during the day; a close under the 1.5900 handle appears to have solidified the bears argument that a correction is in the works. Aggressive forex trader can add to shorts on a close under the 1.5880 area. Cable rotated lower for a low print at 1.9771 and found stops all the way down layered 1.9880, 1.9850, 1.9820 and 1.9800 but support ahead of the 1.9750 area suggests that the rate will bounce; look to sell a 1.9880 area bounce in my view. MPC minutes showed a split vote at the last meeting and the doves are not agreed moving forward; seen as mildly bullish the rate was unable to hold and remained under pressure all day. USD/JPY had a brief bout of short-covering and a rally to 103.50 area but as expected the rate found offers on the approach and fell back for lows at 102.74 before bouncing again for a short-squeeze to 103.80 area; close around 103.50 suggests the top of the range. In my view, the USD has had a low-volume rally that has kept prices within established ranges. I would look to sell the rally and expect a break lower on US data due out tomorrow. Look for poor housing to push the Greenback tomorrow but tonight expect a quiet overnight session.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

For More Forex Analysis

Overnight Asia/Europe

• Greenback starts firm then falls in Europe
• Lots of rhetoric from Europe
• Technical trade dominates

Today’s Economic Reports

• None in the US

Summary
The USD is slightly weaker this morning after a quiet start in Asia last night; traders note that firmer equities in Asia had no impact on USD/JPY this time and most feel that the market is sidelined ahead of FOMC rate announcements on Wednesday. Desks report some early demand for USD/JPY but once the European markets opened the demand fizzled; high prints in USD/JPY at 104.83 after a slow start. Exporters are noted to be ready on the offer at 105.00 with stops resting above traders say. GBP had a slow start as well but follow-through bids from Friday lifted the rate into early stops at the 1.9850/60 area and a high print in Europe at 1.9913 before dropping back when selling emerged in the EURO-Sterling cross; lows in Asia currently unchallenged at 1.9780 in early NY trade. Lots of rhetoric out during European trade and some data; traders note that the EURO seems heavy at the highs after the release of CPI data but the rate is still firmer on the day; high prints at 1.5694 with lows at 1.5592 making for some volatile trade early. ECB Mersch had no comment on the report but did emphasize that the bank is still concerned with upside risks to inflation; traders note that the market is braced for no ECB rate cut until at least Q4 2008 but note that dips are bought at key technical levels suggesting that at least for the near term the EURO will remain more two way even in a correction. Traders holding open shorts in EURO and GBP can sit tight for now as it appears that the technical S/R levels will contain dips and rallies; stops on the other side of those levels likely to be growing in size as the forex trading market is looking for a decisive move by the Fed with more rate cuts to come; if that is not the impression the markets get on Wednesday then the USD may rally hard against the European currencies. Other major pairs remain range-bound and technical in nature this morning; USD/CAD has had a volatile morning so far and buying dips seem to be the favored move to start the week. Look for the Greenback to consolidate today and into tomorrow; it’s a light calendar until then. Aggressive traders can trade from both sides as the USD is likely to cover a lot of the same ground twice.

GBP/USD

Resistance 3: 1.9980/90
Resistance 2: 1.9950/60
Resistance 1: 1.9910/20
Latest New York: 1.9883
Support 1: 1.9750
Support 2: 1.9690/1.9700
Support 3: 1.9650

Comments
Rate bounces nicely on lighter volume, should be a “dead cat bounce” Closing under the 1.9800 the next 24 hours likely set the stage for a return to lower prices early in the week.

Upside is limited in my view but ranges can be wide as evidenced by the past 72 hours of trade. Sell rallies if not short; buying dips dangerous in my view.

Drop to under the MA’s very important in my view. Long selling wick makes sell side attractive for further losses. Need down bars with higher volume to confirm.

EURO/USD Daily

Resistance 3: 1.5750
Resistance 2: 1.5720/1.5730
Resistance 1: 1.5690/1.5700
Latest New York: 1.5633
Support 1: 1.5590/1.5600
Support 2: 1.5550
Support 3: 1.5520

Comments
Market has failed at 1.6000 area resistance with confidence now, be patient on the potential break.
Overhead resistance is heavy above the 1.5750 area; traders say offers extend into the 1.5800/30 area with stops above.
Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works.
Strong long-liquidation break is still coming; look for a test of the lows again within 24 hours. Watch for two-way volatility. Be ready to add quickly if a rally happens; likely to fail quickly.

Today a close back under the 1.5600 handle very important; look for a test of the 1.5550 area early this week, offers likely on a rally to 1.5700 area.

Analysis by: Forexpros.com written by Jason Alan Jankovsky

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.