Afternoon US Dollar Wrap-Up
The USD continued to climb against the majors
today despite positive news for the majors and neutral news for the USD.
Residual buying interest remains strong enough to push the USD into the next
touted level of S/R; largely driven by stops overnight and into today’s New
York trade suggesting that most traders are looking for at least a near-term
top in the USD. Model and Momentum accounts were noted liquidating early longs
on stop-driven trade in the EURO and GBP some desks reported overnight, in
Asia the main move was the USD/JPY which firmed again testing the 119.40/50
area twice before opening weaker in the US. After the release of US Balance of
Trade data the USD again was hit by ways of buying but the offers were
certainly there and by large names traders say. On the move lower for Cable,
stops were triggered under the 1.9350 area all the way into the lows around
the 1.9320 area but sovereign demand again supported the rate on the break.
EURO saw sellers on stops initially overnight in early Asia but the 1.2970
area was not as thick with stops as expected and the rate firmed all the way
to US data this morning but was unable to hold the 1.3000 handle. After the US
data the rate fell sharply into stops again under the 1.2950 area and made a
low print at 1.2930 thoroughly discouraging the bulls.
USD/JPY continued to grind higher on US
investment buys, hedge funds and even a few trust accounts but offers were
thick all the way to the 119.75 area traders report. Capping the move on solid
volume were the exporters so it is reasonable to think that finally a cap is
in place because the only traders NOT selling USD/JPY are the option defense
crowd expected on any move over the 119.80 area. In my view, the USD is really
reaching for additional upside; I don’t think the bulls have it for a lot of
reasons but price action is always correct. Look for this rally n the USD to
falter anytime now but caution is still a good move due to the fact that the
Greenback may rally another handle before the market cracks. Look for the USD/JPY
to lead overnight tonight; tomorrow is BOE and ECB rate announcements with no
change in rates expected. Watch rhetoric for clues but the majors can’t give
much more back with out at least a consolation rally to correct the oversold
condition.
USD/JPY Daily
R3: 8500/10
R2: 8480
R1: 8460
Current Price : 8436
S1: 8420
S2: 8400
S3: 8350
Rate continues to grind lower, support levels
keep testing and failing suggesting that the bulls keep quitting while the
bears sit tight. Look for another test of the 8400 handle but be ready for a
short-covering rally off the next support level. Potential sideways trade
developing but bears remain in control under the 8500 area in my view.
EURO/USD Daily
R3: 1.3080
R2: 1.3040
R1: 1.3000
Current Price : 1.2977
S1: 1.2950
S2: 1.2900
S3: 1.2850/60
Rate now completing a 50% retracement from 2006
highs and testing region of breakout from 2006 consolidation. Textbook buy in
my opinion but MAN what a headache on the way down. With no correction to
satisfy the bulls the rate could free-fall on stops for another handle but the
1.2890 area would be a strong bounce I think. Look for consolidation around
1.2980; rally needed bad I think.
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