Afternoon US Dollar Wrap-Up
The USD is firmer this afternoon at the close
as the markets prepare for a potentially violent start to next week. After a
slow start at unchanged in Asia overnight, the USD came under buying pressure
in European trade as poor UK data gave traders a reason to be concerned with
potential rate hikes by the BOE moving forward. Traders saw the GBP find stops
under Thursday’s low area at 1.9550 with additional stops under the 1.9500
handle. Low prints at 1.9450 were not expected in follow-through trade at the
US open and buyers quickly came in to support cable near the London fix.
Rebounding into the 1.9510 area gave a brief pause to the bearish enthusiasm
and the rate remained well-bid for the remainder of the day for a lower week
net heading into G7 this weekend. EURO fell in sympathy but was unable to find
stops under the 1.2980 area and rallied back above the 1.3000 handle during
New York trade.
G7 will likely not be a factor in EURO analysts
say having the JPY as the major focus but traders note that the technical
picture is very much USD neutral to bearish for all the majors with the
exception of USD/JPY. Traders are bracing for a slew of USD neutral to
unfriendly data next week so if the G7 data disappoints the Yen bears; the US
data may create quite a liquidation break in the USD/JPY. Remaining well bid
for most of the day and scoring a high print at 121.76 before offers capped.
Traders say the rate appears “toppy†above the 121.50 area and offers are said
to be layered from 121.80 to 122.20; it may be very slow going on an attempt
at highs. In my view, the USD is becoming over-extended again to the upside.
The established range has not been violated either way across the board giving
the technical bears a reason to start offering the USD. I am looking for a
pullback in early Monday trade for the USD after the release of the G7
communiqué. Look for rhetoric to “talk†the Yen higher so most likely the USD/JPY
will break ahead of US data next week.
EURO/USD Daily
R3: 1.3100
R2: 1.3080
R1: 1.3060
Current Price : 1.3023
S1: 1.3000
S2: 1.2980
S3: 1.2950
Pair rotates lower ahead of G7 weekend largely
in sympathy with GBP weakness I think. Holding near-term channel range and
looking to find support on a further dip to 1.2980 area. Look for bounce off
100 bar MA near-term, no stops reported to be thick until the sub-1.2950 area.
Stops said to be above the market at the 1.3050/60 area also.
GBP/USD Daily
R3: 1.9620
R2: 1.9580
R1: 1.9550
Current Price : 1.9504
S1: 1.9480
S2: 1.9450
S3: 1.9400
Pair closes outside confirmed uptrend line and
below recent fib defense suggesting at least the possibility of additional
follow-through weakness; long wick and lighter volume the past two days argues
for a head-fake sell-off and a bear trap. Look for volatility around the G7
data. Stops on a further break likely to be 1.9430 area. Close back above the
1.9650 area likely to encourage bulls.
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