Morning forex briefing
With a light economic calendar ahead this week until Balance of Trade Friday, traders are keeping the USD firm in light follow-through action from last Friday’s solid rally. Technical trade appears to be the rule with general demand for USD at existing support levels and general selling at existing resistance levels and traders don’t expect too much in the way of large swings in price ahead of Friday’s data this week.
A slightly weaker than expected UK manufacturing data put some pressure on cable which so far to start New York is lower against the USD and holding support at the 1.8950 area. A major US investment house was seen in London buying cable overnight and reports from some desks suggest that model and momentum accounts were active on the buy side early.
EURO is holding inside existing ranges but under the 1.2700 handle mostly with momentum accounts active on the sell side; traders note that bids seen to be a bit lower in the pair at around the 1.2660/50 area leaving the EURO vulnerable to further weakness should sellers attempt to press their near-term advantage. Analysts remind that EURO under the 1.2680 area has seen strong demand from Middle-Eastern names lately so any dip lower likely to see professional buying again from at least those names.
USD/JPY is firmer above the 118.00 handle to start New York in solid two way action overnight, traders say model and momentum accounts buying USD/JPY around the 117.90 area overnight and the rate is firm up near the highs countering supply from a US bank selling USD/JPY. Volumes are moderate; analysts suggest that USD/JPY will likely find technical sellers around the 118.60/80 area and warn of a pullback as that area was aggressively sold in prior weeks. In my view, the USD is following through from Friday’s action and is likely to range trade ahead of US elections Tuesday. Some technical trading is likely between now and then so if you have no position on it is advisable to place limit orders at significant support/resistance areas as you see it; wait for the market to come to you so to speak. Volatility is likely ahead of or during the election so if you have a lead I think the USD will continue to cover the same ground more than once; you might have the opportunity to trade your numbers more than once the next few days. Look for a quieter two-sided day and through Tuesday; USD to range trade I think.
USD/JPY Daily
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R3: 119.20
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R2: 119.00
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R1: 118.60/80
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Current Price : 118.37
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S1: 118.00
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S2: 117.60/80
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S3: 117.20
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Pair recovers 50% of the recent weakness suggesting the sell zone is now back in play between 118.30/60 area of fib retracement. Support at both 50 and 100 bar MA will attract near-term buying but that is absorbed on the move over 118.00 I think. Model and momentum accounts active on the buy side suggests market nearing a corrective break. Look for sideways to higher trade to attract selling.
USD/CHF Daily
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R3: 1.2650
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R2: 1.2600/20
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R1: 1.2580
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Current Price : 1.2565
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S1: 1.2500
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S2: 1.2460/80
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S3: 1.2420
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Pair bounces nicely from 100 bar MA as near-term support and finds offers at the 23.6% fib retracement numbers, look for two-way trade but long-term sellers active on the sell side. Up channel remains intact but stops will be building under a “failure†point so a hard/fast break is building in my view. Aggressive traders can look to place shorts between 1.2660/80 in my view.
Please see www. ProEdgeFX.com for details
Jason Alan
Jankovsky
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