Morning forex briefing
All eyes are on the US Fed’s FOMC
meeting today but overnight action saw the USD weaker in moderate
trade ahead of the rate announcement this afternoon. The USD had solid two way
trade starting in Asia overnight with the Greenback firmer to start in Tokyo
with Japanese investors selling Yen but reversed when German and US names sold
USD as the morning wore on. Technical traders were watching the 119.00 area
closely with stops said to be large in the 118.90 area but bids from various
sources halted the slide during European trade. Making a show briefly under
119.00, USD/JPY is struggling to hold the 119.00 handle as New York opens as
traders say profit taking and book squaring ahead of today’s data continue to
pressure the pair.
EURO is also firmer against the USD this morning as an
unexpected rise in the German IFO data surprised traders and gave a boost to
EURO during European trade. Initially under pressure ahead of FOMC on lighter
volume, EURO rallied into reported offers said to be in the 1.2580 area but
bids from a US name and European names absorbed the selling; book squaring
likely offering support as well and EURO is firm at the 1.2580 area after a
high print at 1.2592. Traders say that offers are reported to be resting at
1.2620 area but stops are likely to be close-in also making for potentially
volatile trade at some point today. Cable is firmer this morning as well;
holding gains against USD, Yen and EURO. Cross spreaders active on the buy
side of GBP during European and Asian trade lifting the GBP/USD pair to a high
print at 1.8791 just ahead of New York.
Traders say that short-covering evident across the board
today as uncertainty surrounding today’s data remains. Although analysts
expect the Fed will leave rates unchanged today, speculation as to the wording
of the statement is keeping many traders sidelined. In my view, the near-term
direction of the USD will likely be lower as the market needs to clear stale
USD longs before fresh trading can either ignite further USD gains or reverse
current near-term strength. The USD has remained in a broad trading range for
months and only recently has sentiment climbed to such strong bullish
consensus. In my view, it is the current overly-bullish enthusiasm for USD
that is the clue for lower prices. I think today will likely surprise USD
bulls and further long liquidation will result putting the USD lower for the
week by Friday. Look for violent trade today; lower USD net.
USD/JPY Daily
R3: 120.00
R2: 119.80
R1: 119.50/60
Current Price : 119.14
S1: 118.80/90
S2: 118.40
S3: 118.00
Pair continues to sketch out a topping formation with a low
volume rally the past several sessions with a “doji†star at resistance.
Today’s lower pricing is to be expected and a break into new lows likely.
Stops said to be building in range under the 118.80/90 area, look for a larger
break into support at the 118.00 area. Close under 118.00 likely to draw
selling. Offers said to be huge above 119.70/80.
GBP/USD Daily
R3: 1.8880
R2: 1.8820
R1: 1.8800
Current Price : 1.8771
S1: 1.8740
S2: 1.8700
S3: 1.8680
Pair continues to draw support from the 100 bar MA and
pressure from the 50 bar MA creating a potential breakout scenario as
competing time frames look for control of the market. Bears likely to cover on
a close above the 1.8850 area but offers said to be strong at 1.8820 ahead.
Stops on either side of 1.8750 likely to create near-term volatility but look
for dips to be bought.
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