Morning forex briefing
The USD is trading a bit firmer
this morning after trading two-sided in an average range overnight;
traders note that technical trade is dominating for the most part. Japanese
data released overnight included revisions to Japan’s GDP and CPI forecasts as
well as the regular BOJ rate policy meeting; data was as expected and the BOJ
held rates steady as expected creating little real interest either way in the
USD/JPY pair. USD/JPY traded inside yesterday’s ranges for the most part but
upside drew light protective stops as “carry trades†were unwound when the
rate traded to the 117.80 area; high print 118.05 where technical resistance
capped the move. Additionally, the BOJ announced that no FX intervention was
done in October to support the Yen; traders sold into the 118.00 area after
the news.
Cable is lower this morning after failing to get a firm hold
on the 1.9000 handle the last 24 hours. Upside stalled again under Friday’s
highs at 1.9031 where offers were said to be resting; next band of resistance
is said to be 1.9050/60 area and traders feel the GBP has put in a near-term
top above 1.9000. Weaker-than-expected UK CBI data gave traders a reason to
sell cable taking the rate to lows around the 1.8960 area where technical
support found bids from early shorts; traders note that range trading may be
the rule ahead of more closely watched data later in the week. EURO is holding
at the 100 bar MA hovering in the 1.2680-1.2700 area with little push either
way to start New York. Mostly moving in sympathy with cable, EURO seems
uninspired to break one way or the other and traders say volumes are light. US
data today is minor and not expected to be market moving unless sharply beyond
expectations either way.
Analysts remind that NFP data on Friday will likely be on
the weak side again given recent months so corrections in the majors may be
buying opportunities. In my view, the majors pairs are trading technically and
will likely cover a lot of the same ground twice until late in the week when
“real†data will be seen. The USD is set to recover a bit after this recent
sell-off so use standard retracement ratios to find your best place to enter a
new USD short. Wildcard remains North Korea but they have agreed to return to
six-nation talks so it is more likely that the “flight to quality†USD buying
is gone for now leaving the USD more vulnerable on the short side.
EURO/USD Daily
R3: 1.2820
R2: 1.2780
R1: 1.2730
Current Price : 1.2696
S1: 1.2660
S2: 1.2600
S3: 1.2550
Pair holding above the 100 bar MA for now but volumes are
lighter and upside appears limited near-term. EURO may be setting up for a
slight correction and bids are said to be in the 1.2660 area and 1.2630 area.
Look for sellers to emerge on a close below the 1.2700 area; 50% correction of
recent run-up is the 1.2620 area so a reasonable long from there is likely.
USD/JPY Daily
R3: 118.80
R2: 118.40/50
R1: 118.00/10
Current Price : 117.87
S1: 117.40
S2: 117.00
S3: 116.60
Pair a bit firmer but volumes are lighter, some support from
50 bar MA holding rate inside range from Friday. Rallies likely to be sold so
adding to a working short for the objective is possible this week. Look for
sellers to begin topping the pair at the 118.00 area with more at 118.40 area.
Stops under 117.00 said to be building, next tech level 116.60 area.
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