Morning forex briefing
The USD is lower to start New York today after a bearish FOMC rate announcement yesterday gave the bears some near-term advantage; follow-through action overnight Asia saw selling from the open. The USD/JPY fell through the Wednesday lows triggering stops but solid two-way action kept the pair grinding lower for most of the session. On the bid were Japanese importers but steady supply from a US investment bank kept the pair pressured into European trade. Traders remind that support is firm at 118.00 but caution that stops layered under the 118.50 area may be larger now due to the end of the week as longer-term traders lock gains.
EURO had a slight lift from comments made by ECB President Trichet during European trade; Trichet reiterating that a rate hike by the Central Bank is coming in December. Traders note that the EURO saw stops above the 1.2630 area for a high print at 1.2672 before slipping back a bit on residual technical selling. Analysts remind that a firm close over the 1.2620 area will likely increase bullish enthusiasm and increase odds of further gains toward the 1.2700 handle.
Cable is higher as well on stops and technical buying; traders note the “usual suspects†have been on the bid including a French name. GBP is firm over the 1.8830 area with a high print at 1.8854 just under the area of reported stops at 1.8880. All the majors appear to be well-coordinated and trade appears to be orderly with orders coming consistently. In my view, this suggests that the USD is under attack and large well-capitalized traders/banks/institutions are setting USD shorts for the first time. Sentiment may be changing a bit but one thing is certain: the USD will finish the weak lower. Today is Durable Goods data and tomorrow GDP; neither report is expected to show any surprises and most feel the data will be USD neutral. Look for the majors to trade a bit two-sided today and then continue to gain ground tomorrow.
GBP/USD Daily
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R3: 1.8950
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R2: 1.8900/10
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R1: 1.8880
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Current Price : 1.8842
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S1: 1.8800
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S2: 1.8760
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S3: 1.8720
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Pair continues to build on previous strength but offers appear to be consistent as bids come in suggesting that the pair will likely have two-sided action soon. Potential down channel forming is a caution to bulls but solid close over 50 bar MA and down trend line will likely continue short-covering. Close over the 1.8920 area a major victory for the bulls and opens the door for 1.9100 or above. Stay long.
EURO/USD Daily
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R3: 1.2780
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R2: 1.2720
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R1: 1.2680
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Current Price : 1.2652
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S1: 1.2620
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S2: 1.2580
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S3: 1.2540
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Pair approaching area of technical resistance at the 1.2680 area. Potential cross of the MA’s plus 50% fib retracement area likely to draw at least one pullback. Failure from there likely to draw buyers at the 1.2580 area but bears still in control I think. Close above the 1.2620 area is bullish near-term but a close over the 1.2700 handle is what the bulls need; stops thick above 1.2680.
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