Forex Daily Analysis


Today’s US Dollar Trading

• USD takes another plunge on Fed action and liquidity fears
• Equities have violent day, end positive
• Lots of jawboning for a better USD

Overnight Preview

• Expect volatility and more rhetoric
• Traders expect the majors to pullback soon to correct

Looking Ahead

• Fed has FOMC meeting starting tomorrow, traders expect 75 BP cut
• 7:30 AM CDT Housing Starts and PPI forecast 995K and +0.3%, core +0.2%

Summary
The USD got slammed again overnight trading to some of the worst levels in history against some pairs. The US Fed added liquidity and so did the BOE and traders fear the worst is yet to come in the liquidity “crisis” now panicking Wall Street. JP Morgan agreed to buy Bear Stearns today for $2.00 a share which amounts t around five cents on the dollar leaving investors furious; it’s only a matter of time before the lawsuits, Federal Probes and fines start happening. Traders note that the Greenback was sold heavily on high volumes during the overnight sessions but has stabilized during the New York sessions leaving some to suggest that the majors are going to take a breather for a short time; other desks report that their order books are wiped clean expect for stops on winning positions and the major pairs are less than tradable at this point. Apparently the market needs a correction of some kind or a word from someone who has the credibility to support the “crisis” and stabilize the USD. The only exception to the USD crash was the GBP; cable broke sharply along with the USD today. Making an early high at the 2.0231 number the rate started to sink on cross-rate liquidation breaking over 700 points against the yen and trading to a 1.9990 low for USD; traders note that the rate has closed below the 100 bar MA again making for a technical reversal. Aggressive traders can ADD to open shorts for additional weakness into the next level of support around the 1.9750 area. EURO rallied to an overnight high at 1.5905 before reversing but holding the overnight opening range at 1.5675 area. Forex Traders note that the rate is technically ready to advance again to the 1.5950 area but the large wick and head scratching suggest that the rally was used by longs to get out. USD/JPY and Swissy too both traded to significant lows; but both pairs have signs of reversals beginning. Low prints in USD/JPY at 95.76 were bought hard and the rate rallied to 97.70 area into the close; Swissy same story rallying off .9640 lifetime low back to the .9870 area into the close. Potential reversal in the works I think. Look for a Fed cut to be factored in.

EUR/USD Daily

R3: 1.5900/10
R2: 1.5850
R1: 1.5780
Current Price: 1.5745
S1: 1.9670/80
S2: 1.9620
S3: 1.9550

Rate takes the path of least resistance on the news but as the day wore on no follow-through was seen. Long selling wick on the day is the largest wick on daily action in over a year suggesting that volatility is being sold near-term. Late longs likely have stops under the daily low and bids may have been pulled after the highs so far away were hit; traders note that longs likely selling out into the highs. Expect volatility but a top is certainly forming near-term.

GBP/USD Daily

R3: 2.0200
R2: 2.0150
R1: 2.0080
Current Price: 2.0011
S1: 1.9990/2.0000
S2: 1.9940/50
S3: 1.9900

Rate falls back from resistance at the 50% fib defense area, close under the 100 bar MA argues for a near-term continuation of down trend. Look for the rate to open and stay weaker overnight and suffer intraday volatility around FOMC announcement and overseas data. Wait for the close before adjusting positions as I think the volatility will all be small day-traders; not big money accounts. Aggressive traders can add to open shorts and roll protective stops to B/E.


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.

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Latest Forex Analysis

Today’s US Dollar Trading

• Big news is Fed rate cut, 75 BP
• Markets are “disappointed”
• USD begins rally

Overnight Preview

• Look for more USD short-covering and book squaring
• Volumes likely to surge if close-in stops hit in Asia

Looking Ahead

• No real news until Friday’s Philly Fed forecast -18.0

Summary
The USD is gaining ground making highs on the day against several pairs as the markets react to a “disappointing” 75 BP rate cut by the FOMC. Market gurus were touting a 100 BP rate cut due to the liquidity “crisis” but in my view, that was a reactionary point of view after the USD’s decline on Monday and the panicky nature of the market. Cooler heads are prevailing as a bout of short-covering is lifting the USD into the best levels of the day; Cable is dropping to new US lows as the selling takes hold. GBP highs just prior to the rate announcement at 2.0276 making for a huge range in the pair but heading into the close the rate is forex trading back under the 2.0150 area leaving a large selling wick on the day’s action and generating a “strong sell” signal. Traders note that the buying ahead of the news was e-platform accounts and CTA type accounts who are traditionally late to the party; stops close in under the 2.0200 handle helped break the rate lower. EURO has completely reversed from earlier highs above the 1.5800 handle; traders note that official and semi-official selling above the 1.5800 handle helped keep the rate in check until the news. Making lows on the week under the 1.5700 handle for a low print at 1.5666; EURO has found stops close in as well but a slight bid tone remains most likely from stubborn longs traders say. Most technical indicators in all the majors are over-bought and EURO making lows on the week after the news is an obvious clue that a correction is beginning in my view. USD/JPY is roaring back making a two-bar reversal and high prints back over the 99.00 handle at 99.51 as stops are triggered. The rate looks set to regain the 100.00 handle later today and in Asia you can expect more follow-on buying as the Japanese have been large buyers of USD the past two week on the break lower. In my view, the Fed easing was “baked in the cake” and the USD rally after the news confirms that the oversold USD is starting a relief rally. Look for the USD to continue firming up overnight and to end the week stronger across the board. Aggressive traders can buy USD across the board on a minor dip the next 24 hours.

EUR/USD Daily

R3: 1.5820
R2: 1.5780
R1: 1.5720/30
Current Price: 1.5685
S1: 1.5650/60
S2: 1.5600/10
S3: 1.5580

Rate completes an inverted hammer formation and marks new weekly lows from an inside range day; classic images of a failed high in my view. Close in stops under the Monday low triggered but bids mixed in for an initial bounce. Aggressive selling likely overnight as late longs are forced to cover back and early shorts press their advantage. More downside is likely and aggressive traders can sell the rate on any bounce. Look for continued weakness ahead of Philly Fed Friday.

USD/JPY Daily

R3: 100.80
R2: 100.30/40
R1: 100.00
Current Price: 99.36
S1: 98.80
S2: 98.20/30
S3: 97.80

Rate completes a two-bar reversal adding an exponential reversal signal; good signs of an extended correction in the works. Rally on stop driven trade likely to take a few days as late shorts will need time to take their beatings. Stops likely over the 100.50 area in large size as that was where the sentiment turned “really negative” last week. Rhetoric likely to drive additional buying as early longs are encouraged by BOJ and other Asian officials “welcoming” the fed move.


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.

Forex Daily Analysis


Overnight Asia/Europe

• USD two-sided
• Volumes light
• Most of Asia closed, Europe closed for Easter Break

Today’s Economic Reports

• 9:00 AM CDT Existing Home Sales forecast 4.86M
• 9:00 AM CDT Consumer Confidence forecast 75.0

Looking Ahead

• Durable goods on Wednesday
• Educational Broadcast on Wednesday

Summary
The USD resumed trading after the three-day Easter holiday on the offense in a very light session overnight; most of Asia was closed and Europeans are on their Easter break. Most large banks had light staff on the desks and the Greenback is trading mostly in a technical consolidation traders say. News overnight was sparse with today’s US data likely to cause little price action most agree. Overnight ranges were mostly within existing ranges from last week and the tone of the majors appears to remain more consolidative and possibly defensive. The USD was two-sided overnight as light volumes kept everybody on the sidelines most desks were reporting. GBP had a narrow 94 pip range and opens New York near the highs; high prints at 1.9851 and lows at 1.9757. Although the GBP continues to trade with a weak tone the 50 bar MA is offering some support while the 21 day MA is offering resistance suggesting that the rate is trapped in a consolidation sideways. In my view, any rally is a sell and aggressive forex traders can add to open shorts on a pop above the 1.9900 handle. EURO is two-way also with a more reasonable range of 117 pips but is unable to find buyers in size despite the rally into the 1.5450 area; high prints at 1.5457. Lows in the rate were at 1.4340 and traders report light stops on the break into new lows below last week’s lows but fib defense at 1.5330/40 area appears to be offering a bit of support near-term. Traders note that volumes in the EURO are very light as Europeans take a break also. In my view, the EURO has put in a top for an expected correction and I would look to sell strength into the 1.5550 area; anything over the 1.5480 area is a solid sell I think. Overnight USD/JPY regained the 100.00 handle again looking like a more aggressive rally could result. Lows at 99.38 followed by highs at 100.17 making for a tight range but that is due to thin conditions no doubt. Lack of news from Asia likely to keep the USD two-way but news from the US may help the rate into stops likely to be around the 100.50 area or slightly higher. For the day; look for the USD to continue sideways.

EUR/USD Daily

R3: 1.5500
R2: 1.5480
R1: 1.5450/60
Current Price: 1.5434
S1: 1.5400
S2: 1.5380
S3: 1.5330/40

Rate finds some support at 38.2% fib defense but light volumes and thin conditions may exaggerate the bounce; so far holding a “doji” pattern after attempt to rally failed early. Likely that stops are now rolled up under the 1.5330 area for a weekly low; should the low be broken a deeper correction to the 1.5280 area likely. I think the rate continues to soften as the worst in the USD is over for now and look for the 1.5000 handle to fail as the correction deepens in the next few weeks.

USD/JPY Daily

R3: 100.80
R2: 100.50
R1: 100.10/20
Current Price: 99.75
S1: 99.20/30
S2: 99.00
S3: 98.80

Rate continues to build on early bid interest on the potential rejection of the exhaustion break. Exponential reversal still valid and building credibility for a sustained rally to the 105.50 area of the 50 bar MA; look for stops to be massive layered in the 101.50/60 area through the 102.20 area; that was where the panic selling started from. Sellers likely to get scarce as the rising wedge pattern gains security. In my view, the rate is set to rally and dips are a great buy.

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

• Quiet volumes and subdued price action

• US data encouraging but not market moving

• Traders note thin conditions likely to continue


Overnight Preview

• Look for consolidation and continued two-way trade

• No market-moving news due from overseas


Looking Ahead

• 9:00 AM CDT Tuesday Consumer Confidence forecast 75.0

Summary
The USD is ending New York a bit mixed in Two-way trade as holiday-thinned markets and lack of volume keeps the majors trading sideways. Overnight action was a bit on the buy-side early for USD as there was a slight bout of follow-through buying in Asia but with most of the Asian markets closed the action was light. Into European trade the USD continued to trade two-way and remained in tight ranges until the release of US data. Existing Home Sales were better than expected coming out at 5.03M units sold beating the forecast at 4.86M; inspiring a brief rally in the Greenback. USD/JPY rallied for new Monday highs finding stops over the 100.50 area as expected for a high print at 100.75 before going two-way; most of the day the USD continued to grind higher setting a few highs for a final high print just ahead of the New York close at 100.91. Traders note the rate looks ready to continue advancing in technical action the next few sessions or until resistance at the 102.50/60 area is tested. The Japanese are behind schedule picking a new BOJ chief and that may be adding to the corrective nature of the USD/JPY of late. Cable dropped into the 50 bar MA support area for the second time overnight for a low print at 1.9757 which went unchallenged all day. Briefly touching highs at 1.9879 the rate appears stuck in a sideways consolidation. Aggressive forex traders can look to add to open shorts above the 1.9900 handle looking for further strength to fail on a test of the S/R area of 1.9950. EURO fell into stops overnight under the 1.5380 area for a low print at 1.5340 making a solid retracement from the highs. A “dead cat bounce” is likely from the 1.5340 area but expect a rally to fail at the 1.5480 area ahead of 1.5550; a short will gain credibility on a test and failure of the 1.5500/50 area in my view. For the most part today the USD remained two-way and consolidative. Traders expect more of the same overnight and with the release of Consumer Confidence tomorrow the Greenback may get another push in the upward direction; but don’t count on it. I think the majors will continue to consolidate and cover a lot of the same ground twice. Expect quiet trade overnight.


USD/JPY Daily

R3: 101.80

R2: 101.50

R1: 101.00/10

Current Price: 100.82

S1: 100.40/50

S2: 100.20

S3: 99.80

Rate continues to gain a foothold for a relief rally but light volumes hamper the potential and are a bit of a warning. Look for volumes to pick up in the coming days as traders continue to debate a recovery; stops likely to be rolled closer to the market. Late shorts will fuel advance short-term so look for offers at technical levels then buy the dips. Rally to the 102.50 area likely to attract a round of early long-liquidation but a correction under the 100.00 area should be short-lived.



GBP/USD Daily

R3: 1.9950

R2: 1.9900/10

R1: 1.9880/90

Current Price: 1.9852

S1: 1.9800

S2: 1.9740/50

S3: 1.9710/20

Rate has a very clear technical pattern and a slight rally is very likely but should hold the 1.9950-2.0000 area on a bounce. Traders note the rate is attracting cross-spreaders who are buying for Yen which should keep the upside pressure on near-term. Look for a test of the 1.9950 area to fail as that level is previous major S/R which has turned resistance. Stops likely under the 50 bar MA and a close under there likely to cause the longs to bail. Bears trying to get control and when they do it’s new lows I think.


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.

Forex Daily Analysis

Today’s US Dollar Trading

• USD falls but holds important S/R
• US data worse-than-expected but volumes still light
• Traders note that stops were the rule today

Overnight Preview

• Look for reasonable USD follow-through selling
• Book-squaring again ahead of more US news

Looking Ahead

• German IFO index overnight
• 7:30 AM CDT Wednesday Durable Goods forecast +1.0%
• 9:00 AM CDT Wednesday New Home Sales forecast 580K

Summary
The USD has fallen back today after a firm start overnight that gave way to stop-driven trade. Traders note that a lot of New York action was stops placed “after the bell” suggesting that some accounts were trading on the sharply worse than expected Consumer Confidence number and placing their forex trading exit orders in range. After the initial flurry of action that saw the Greenback remain within overnight ranges the USD started to slowly erode and by the end of the day had made new lows across the board making a mess of the technical potential for a rally. Picking off “hail Mary” stops above the 2.0000 handle in Cable the GBP saw a high print at 2.0028 as late shorts got squeezed after the London Fix. Traders note that volumes were light and thin conditions may have exaggerated the move but the fact is the rate is above the 1.9950 area with some authority; a fall back must happen soon or the rate will possible look to extend gains and the pullback may have been over. Aggressive traders in GBP need to be nimble and not give back gains on the short position. EURO has once again scored the 1.5600 handle as stops layered from 1.5550 were triggered all day into the close; high print at 1.5619 left resting stops above untouched for now but technically the rate looks poised for an attempt overnight. Volumes were light on the move and traders expect that the rate could try to push for a brand new lifetime high if the market thickens up a bit this week. In my view, the rate is again overextended to the upside and our liquidation stops in the short position are not hit yet so I suggest holding the trade one more day. USD/JPY gave back a lot of hard-won gains today dropping back to trade the 99.00 handle after the disappointing US data but firmed up into the close; lows at 99.62 still above key support and the rate looks to rotate higher to find close-in stops. Volumes light as well. In my view, the USD is testing the confidence of the bulls. Look for some light follow-through tonight; US data likely to help tomorrow.

GBP/USD Daily

R3: 2.0100
R2: 2.0080
R1: 2.0050
Current Price: 2.0017
S1: 1.9980
S2: 1.9950
S3: 1.9900

Rate rallies into stops between the 1.9900 and 1.9980 area and maybe follows higher on active buying in sympathy with EURO; 100 bar MA offering resistance near term and no test of the 2.0050 area so far which is major resistance in my view. Longs likely have stops close-in so watch for a pull-back to gain momentum should the rate fall back to the 1.9950 area; traders note light volumes on this rally so it could be a classic bull trap. If not stopped out of the short—sit tight another 24 hours.

USD/JPY Daily

R3: 101.00/10
R2: 100.80
R1: 100.40/50
Current Price: 100.14
S1: 99.70/80
S2: 99.50/60
S3: 99.20

Rate technically has a net positive day with a higher high and a higher low; rate apparently testing the bull’s conviction on the day but no real selling effort threatens the recovery in my view. Look for more two-way action the next 24 hours and an upside bias may remain should stops above the 101.20 area get triggered. News tomorrow likely to help as today’s data spooked the USD bulls; a positive reading may help with a reversal higher. Dips likely to be bought around the 99.50/60 area again.

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.

Forex Daily Analysis

Today’s US Dollar Trading

• US data positive but USD falls
• EURO rallies past resistance and is again “euphoric”
• Sentiment returning to the bearish side traders say

Overnight Preview
• Look for the USD is firm in Asia and then come under pressure in Europe
• Some book-squaring likely ahead of US data

Looking Ahead
• 7:30 AM CDT Thursday Q4 GDP forecast + 0.6%

Summary
Despite positive news from US data today the Greenback continued to remain on the defense all day building on European weakness from the start. Although the USD started in Asia on the firmer side the firm USD was short-lived as general bearish sentiment has returned to haunt the USD bulls. Trading softer all morning, traders expect the USD to continue on the defense through tomorrow’s GDP data. Today’s New Home Sales were better-than-expected and included a revision higher to last month’s numbers but the forex majors refused to trade lower and in fact continued to make highs all day into and after the London Fix. The one exception was USD/JPY which never revisited the morning lows but continued to build on the 99.00 handle. Low prints at 98.87 were never challenged and despite USD weakness elsewhere the rate was able to extend gains during the day for a New York high of 99.61 before settling back a bit. Obviously volatility was the rule today as the majors first rallied then fell then rallied again to end the day; most noticeable was Cable. First scoring highs overnight against the 2.0100 handle before dropping back to the 1.9900 handle then recovering to the middle 2.0000 handle to make a mess of balance sheets from both sides. No one had a winning day in Cable I am sure of it as the rate crossed a 200 plus point range three times. EURO continued to shrug off news and continued to march higher all day; highs late in New York at 1.5832 after grinding higher all day with no let-up. Traders say that the bearish USD sentiment has returned in force and the fact that the EURO has recovered so fast after the potential top was in only underscores that the rate will likely test the 1.6000 area near-term. A double-top or perhaps a new lifetime high will likely cause a lot of jawboning but Trichet’s comments today left no doubt in the minds of traders that the ECB will not lower rates anytime soon. In my view, you need to be ready for another round of USD weakness. The USD is set to challenge lows I think.

USD/JPY Daily

R3: 100.00/10
R2: 99.80
R1: 99.50/60
Current Price: 99.26
S1: 98.80
S2: 98.50
S3: 98.20
Rate continues to soften from highs the past 48 hours; traders note that stops under the market helped drive into the lows today but bids as expected at the 98.80 area. Upside is limited for now after the rate failed to build on the 101.00 trade earlier in the week. More likely the rate will consolidate with a lower bias near-term. Tomorrows’ GDP data likely factored-in to prices already so unless a surprise is in the works expect the rate to fall briefly on Wednesday.

EURO/USD Daily

R3: ?
R2: ?
R1: 1.5900/10
Current Price: 1.5830
S1: 1.5750/60
S2: 1.5700
S3: 1.5650/60
Rate powers higher with absolutely no offers in sight; traders expect the rate to test 1.6000 by the end of the week. In my view, the market has gone “euphoric” again and likely will ignore fundamentals as complete bullish fever takes over. Model and momentum accounts active on the bid all day traders say, look for continued volatility and a “but the dip” mentality. Aggressive traders can look for a failure at a new high on huge volume and turnover but 1.60 looks almost certain.

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.

Forex Daily Analysis

Overnight Asia/Europe

• USD two-way
• Opens New York better
• Year-end drives Tokyo trade

Today’s Economic Reports

• 8:45 AM CDT Chicago PMI forecast 46.7

Looking Ahead

• 9:00 AM CDT Tuesday ISM Index forecast 48.2
• 7:00 PM CDT Tuesday Japan Tankan report

Summary
The USD is firmer to start New York this morning after opening on the weak side in Asia. USD/JPY rallied briefly as year-end needs favored short-covering and book-squaring but once the year-end buying was over the Greenback feel back to unchanged; the other majors were firmer into the start of European trading. Traders report volumes were light but it was still enough to help the USD extend its range against GBP; Cable falling back to the 50 bar MA at 1.9812 low print on the back of disappointing UK data. Trader’s note that the Sterling crosses were under pressure overnight and that contributed to the weakness in GBP to start the week. Many traders also note that the sentiment is turning to “sell rallies” in Cable suggesting that the rate will suffer more losses ahead. EURO is two way inside established ranges with the “usual suspects” on the bid/offer. Traders note that hawkish rhetoric the past few days has emboldened the bulls even with the rate sitting within a short distance from all-time highs. Sellers were at the 1.5830 area again with a high print to start the week at 1.5836 coming after a cross-driven rally from the Asian lows at 1.5758; stops are likely building in the 1.5850 area and ahead of the previous lifetime high at 1.5880 area. Look for a massive rally to the 1.60 handle if stops above the 1.5920/30 area are triggered; in my view the rate is poised for 1.6100 on an extended technical play but that would be the place to short the rate. Aggressive traders can sell EURO on a rally into new highs. For the most part the USD is trading sideways with a slightly firmer tone to start Monday but I think that caution is advised on the long side. I don’t think the Greenback is recovering just yet; I think there is simply a lack of selling. Today’s Chicago PMI data will likely be USD negative and the USD could fall back from the firm open. This week’s data is also expected to be weak so I would be a cautious buyer of USD on the break into the recent lows if we get them. I think the USD is trying to bottom in here and that when it does it will make the turn. In the meantime, expect two-way action and stops on both sides to get triggered over the next 72 hours.

GBP/USD Daily

R3: 1.9980
R2: 1.9930/40
R1: 1.9880
Current Price: 1.9845
S1: 1.9810/20
S2: 1.9780
S3: 1.9750

Rate finds some support as expected at the 50 bar MA; look for a technical bounce the next 48 hours but as long as the highs remain under the 1.9950 area on a closing basis the shorts are gaining control. Strong sell signals on the daily will need a day or two to confirm so sells strength into the 1.9980 area in my view. Close under the 50 bar MA argues for further declines and large stops likely under the 1.9780 area; big money traders likely to work with “stop close only” orders under the 50 bar MA.

USD/JPY Daily

R3: 100.80
R2: 100.50
R1: 100.20/30
Current Price: 99.57
S1: 99.10/20
S2: 98.50/60
S3: 98.00

Rate continues to consolidate and range-trade within established S/R; rate could be coiling for a sharp move in either direction but the bias is downward in my view. Look for stops above the market to be thicker at 100.50 area and below the market at 98.50 area; I think the bears are willing to cut and run on any strength and the early bulls will bail on any weakness, both sides are nervous I think. Close over the 100.00 area argues for upside break; close under 99.10 for downside.

Forex 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.

Forex Daily Analysis

Today’s US Dollar Trading

• USD remains two-sided
• US data no factor
• EURO attempts new high

Overnight Preview

• Look for more consolidation
• USD likely to remain two-way near-term

Looking Ahead

• 7:00 PM CDT Monday Japan Tankan report
• 9:00 AM CDT Tuesday ISM Index forecast 48.2

Summary
The USD continued to range-trade today for the most part initially rising in Asia then falling into European trade. Briefly lower on the day the Greenback started New York close to Friday’s closing levels in technical two-way action until the release of Chicago PMI data. Although better-than-expected the report failed to lift the USD any higher than the overnight prints and in fact once the news was out of the way the USD began to falter into the London Fix. Falling hardest against the EURO the USD looked as if it might drop convincingly but bids under the market supported and the forex trading majors headed south for the most part leaving the USD trapped within existing ranges and out of the really big stops. Traders suggest that today’s action in EURO may be close to a topping signal as the market ran for new highs above the 1.5905 lifetime high but ran into offers to cap the rally at 1.5895 before falling a full handle as the day wore on. EURO actually closed negative on the day and traders argue that volatility and a lower close all point to a near-term top again. In my view the rate is indeed looking to top but there is most likely one more lifetime high in the works; the sellers today were covering longs I think. Short-term gains aside, longs are still lightening up on their positions leaving the early shorts chasing the drops. I think the close-in stops set today will fall soon as did stops at the 1.5860 and 1.5880 area did today. Early sellers are still at risk because the volumes have been light. Light volume sell-offs are not a good sign for a price decline in my view. I think aggressive traders will use the pullback to get long again as no real technical damage was done to the EURO. Cable tracked the EURO both higher and lower with lots of interest from cross-spreaders overnight. I think the GBP is set to remain whippy the next few sessions so be nimble if you are trading GBP. USD/JPY continues to hold under the big stops at 100.30/50 area and above the 98.50 area. Trapped in a range the rate is looking a lot like it did in February; look for traders to remain less-patient in that pair tomorrow. Tankan out tonight so expect some volatility.

GBP/USD Daily

R3: 1.9920
R2: 1.9880
R1: 1.9860
Current Price: 1.9828
S1: 1.9800/10
S2: 1.9780
S3: 1.9750
Rate holds below the 1.9950 area after rallying into that area today, look for the rate to bounce from the 50 bar MA again overnight with large stops likely out of reach at the 1.9780 area. Bids said to be at 1.9800/10 again with offers again on the approach to the 1.9880 area suggesting the rate will remain range-bound the next 24 hours. Aggressive traders can sell the next attempt at the 1.9880 to 1.9950 area for the next leg lower; I think the rate is due to follow-through sooner-or-later but is two-way now.

EURO/USD Daily

R3: 1.5890/1.5900
R2: 1.5860
R1: 1.5820/30
Current Price: 1.5786
S1: 1.5740/50
S2: 1.5700
S3: 1.5660
Rate tries for new lifetime high and is rejected on the first attempt; I think that is long-liquidation and early shorts capping the move but volumes were light. Stops above the 1.5900 area left untouched for now and stops above the 1.5950 area are said to be huge. Bids under the 1.5740 area layered with stops to the 1.5700 area traders say with more stops sub-1.5700. Rate looks ready to challenge for a new high the next 24-48 hours; aggressive traders can look to sell that high.

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.

Forex Analysis

Overnight Asia/Europe

• USD higher overnight
• No real news driving trade
• Two-way action with stops helping to firm USD

Today’s Economic Reports
• None of note in the US

Looking Ahead
• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes

Summary
The USD is a bit firmer to start New York this morning after making lows in Asia in quiet two-way trade. The Greenback was in no rush to get anywhere overnight as market-moving news was nowhere to be seen and traders focused on technical levels for the most part. Across the board the USD is high this morning with the main action coming in USD/JPY overnight. Traders note that large Japanese names were on the bid for the rate when early selling pushed the rate into a low print at 101.30; bids lifted the rate past the opening range and into stops at the 102.00 and 102.20/30 area for a high print at 102.64 before momentum faded. Additional buying helped extend the range to 102.86 in Europe where the rate rotated around the 102.50/60 area until the NY open. Currently the pair is holding under technical resistance at the 103.00 area with offers said to extend to 103.20 with stops beyond. The rate appears to be consolidating traders say and two-way action is expected to continue through tomorrow and the BOJ policy meeting starting tomorrow; no change in rates expected. Cable is softer after failing to attract bids above the 1.9950 area; high prints at 1.9956 are right in line with technical resistance and sellers were able to extend the rate into stops under the 1.9850/60 area; low prints at 1.9833 for now. Traders note that book-squaring ahead of the G7 meeting on Friday and projections for a 25 BP rate cut this week from the BOE are keeping pressure on GBP. Also of note the EURO-Sterling cross is firmer suggesting that the cross-rates may be driving some pressure on the rate also. EURO is down around the 1.5690 area after a firm close in New York last week drew sellers as the high prints at 1.5740 overnight are also technical resistance; traders note that the lows at 1.5626 drew bids from a private Swiss name. For the most part the EURO is range trading and consolidating but studies have the chart-readers looking for additional weakness. In my view, the USD is starting off firmer in two-way trade as short-time frame traders look to take advantage of potential short-covering and technical S/R areas. I don’t think the USD will hold gains easily as a lot of the fundamentals due this week are factored in.

GBP/USD Daily
R3: 2.0000
R2: 1.9980
R1: 1.9950/60
Current Price: 1.9875
S1: 1.9820/30
S2: 1.9750
S3: 1.9720/30
Rate has strong sell signal this morning after technical failure on the last rally leaves the rate vulnerable to a sell-off. Lows today supported by the 50 bar MA but stops now likely building in-range between the 1.9830/40 and 1.9780 area as short-term longs place orders. Big stops under the 1.9720/30 area still working and likely to be tested this week. BOE rate cut expectations are high and could get a “buy rumor/sell fact” rally; close today under the 100 bar MA a good sign for shorts.

USD/JPY Daily
R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.67
S1: 102.20
S2: 102.00
S3: 101.50
Big stops rumored to be under the 101.50 area were a no-show overnight suggesting that the stops for size might be under the 101.00 area, large names on the bid traders say supported off the lows for a reversal into the highs. Offers said to be thick around the 103.00 area with stops higher suggesting the upside may be slow-going. A long selling wick is needed today and a close back under the 102.20 area better for the bears. Bulls need a break above 103.00 to keep momentum.

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 two-sided in range bound trade
• Overnight news thin but important
• BOJ holds rates steady as expected

Today’s Economic Reports

• None of note in the US

Looking Ahead

• 7:30 Am CDT Thursday Balance of Trade – 57.4B
• Friday Michigan Sentiment and G7

Summary
The USD is two-way to start New York after a relatively quiet overnight session that saw nothing unusual in the way of news. Starting a bit weaker in Asia the USD followed through briefly from US selling pressure but began to recover to press for highs during European trade. The BOJ held rates steady as expected which saw little initial reaction in the USD/JPY but within an hour or two the rate began to slide off as the Yen gained a bit on the news. No new Governor as of yet and that may be keeping the USD/JPY pair range-bound as the BOJ lacks direction and it is not known if a “hawk” or a “dove” will be appointed next. The Japanese economy is beginning to show signs of weakening and it is reasonable to expect that rates won’t change ahead of the end of the year. USD/JPY lows overnight at 102.16 with highs in Europe at 102.84 (again). Talk of option defense and official sales are limiting the upside this morning traders say. Cable remained inside established ranges for most of the overnight action but managed to probe for stops said to be resting in the 1.9650 area; low prints at 1.9649 but recovered after better-than-expected UK Industrial Production numbers came out. Highs in the rate at 1.9727 are right up against S/R and a failure here opens the door for the 2008 lows in my view. Aggressive traders can add to open shorts at the 1.9700 area if not already yesterday; look for the rate to close under the 1.9600 area on the week after US news tomorrow and Friday. Don’t forget the BOE meets tomorrow and a 25 BP rate cut is expected so some volatility around the news is likely. EURO continues to grind higher between the 1.5680 are and the 1.5750 area; low prints at 1.5682 and high prints at 1.5743 leaving stops on either side of consolidation untouched for now. Eurozone GDP released about as expected but showing a brief dip q/q while remaining at +2.2% overall; EURO had a muted positive response but unable to go anywhere at this point. US action today likely to keep the USD range bound one more day ahead of news due tomorrow; technical trade within expected ranges will likely make for a quiet day. Look for book-squaring at the London fix to provide some volatility.

GBP/USD Daily

R3: 1.5800/10
R2: 1.5780
R1: 1.5750
Current Price: 1.5723
S1: 1.5680
S2: 1.5650
S3: 1.5620
Rate continues to remain trapped in near-term pennant formation as the pair is coiling and likely to make a breakout within a few days. Traders note that stops are said to be in-range at 1.5750 and if triggered expect a sharp rise to the 1.5800 area where option defense and private name sales are likely. Stops under the 1.5650 area also in play but dips under the 1.5620 area likely to be bought traders say; potential to remain range-bound today is very high. Day traders may have some opportunity.

USD/JPY Daily

R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.54
S1: 102.20
S2: 102.00
S3: 101.80
Rate remains range bound while bumping up against resistance for the fourth time in six days suggesting that the rate wants to try for stops above the 103.00 area but unable to vault offers ahead of 102.80; volumes are getting lighter and if the rate continues to coil in this area and fail there is a strong possibility for a free-fall several handle as disappointed longs bail; support at 100.00 area said to be strong. Resistance likely at the 50 bar MA should an upside break happen.

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.