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The major pairs are a bit softer against the USD in narrow ranges overnight as many traders remained sidelined ahead of a slew of fundamental data due up the next 72 hours. This morning is US CPI forecast to be benign but lately the data has surprised on the bearish side for the USD, over the weekend is the G-7 finance ministers meeting in Singapore expected to discuss FX flexibility and specifically address Asian currencies and Monday morning is TICS data where the speculation is about even that foreign purchases of US debt covered the record trade deficit announced last Monday. Recent USD strength has mainly been by default due to non-USD cross-spreading some analysts say suggesting that the USD may be in for a wild ride just ahead of and just after the weekend.
Overnight GBP gave back a fair amount of the recent three-day rally to trade at a low print of 1.8802 as the USD gained ground late in the European session and just at the New York open. Analysts say there are signs of bull divergence on the hourly studies suggesting the GBP has more upside today; traders note that bids are firm at 1.8800/20 area and may be the extent of the pullback from the weekly high on Thursday. EURO provided a very frustrating night for some, remaining in a narrow 10 pip range for part of the European session before tracking GBP lower in thin trade as cross-spreaders took advantage of the quiet market to leg EURO/GBP crosses. Volume was practically nil ahead of the US open so traders remind that moves may be exaggerated by thin conditions.
USD/JPY has remained in a narrow range as well, analysts note that the pair has been “nervous” the past few sessions ahead of US data and the G-7 meeting; the rate may be hyper-sensitive to rhetoric or news the next few days because the Yen weakness is the focus of world attention recently. In my view, the USD is overpriced and a correction lower is brewing. Today’s data will likely be the impetus for a corrective break in the USD/JPY and the USD/CHF. GBP has been higher against the USD and remains the firmest while the other pairs have not really followed suit yet. If a coordinated move by the USD is in the works near-term; the Yen and Swissy may move very sharply and quite a distance so be nimble and ready to move.
GBP/USD Daily
R3: 1.8990
R2: 1.8940
R1: 1.8880
Current Price : 1.8804
S1: 1.8780
S2: 1.8700
S3: 1.8660
Pair holding an inside range so far today but support is rumored to be solid at the 1.8800 handle, traders expect high volatility this morning around US data and ahead of G-7. New highs for the week likely if US data disappoints. BUY GBP between 1.8800 and 1.8820 for a re-test of the highs. Late sellers are in I believe.
USD/CHF Daily
R3: 1.2700
R2: 1.2650
R1: 1.2600
Current Price : 1.2586
S1: 1.2520
S2: 1.2440
S3: 1.2380
Pair at the high end of the absolute range and a screaming sell in my view. 100 bar MA tracking lower when pair at a monthly double top is a strong sell single in my view. Hourly and daily oscillators also signaling bearish divergence suggesting the pair is significantly overbought heading into US data. Sell with both hands in my view.
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