Afternoon US Dollar wrap-up
For the fifth consecutive trading
day the USD climbed higher against most of the major pairs, with
only the USD/JPY range-bound but still firmer through the end of the week.
Traders note that large stops were triggered again this morning after the
start of New York trade with the USD firming late in European trade setting
the stage for another US session rally. Overnight saw the USD soften a bit in
listless trade but fresh fundamental news from Asia helped to convince USD
bulls they had one more resistance level to break before the week was out. The
BOJ held rates steady and Governor Fukui clearly stated that any rate changes
would come “slowly†as the BOJ continues to monitor the pace of inflation in
Japan.
Giving a brief burst of USD strength was the comment that FX
rates will be discussed at next weeks’ G-7 summit but the USD/JPY pair was
unable to clear stops reported to be resting above the 117.10 area; the pair
drifting after a brief rally to the 116.70 area and remaining range-bound into
the close. A very narrow 153 pip range for the pair for the whole week but the
weekly opening range was never violated to the upside suggesting to technical
traders that the 117.10 area will be a tough nut to crack early next week.
Cable broke through downside support at the 1.8700 handle and hit waves of
stops under the market for an eventual low print at 1.8626 before finding
buyers.
Cable unable to trade higher than the 1.8680 area after that
with a soft close traders say; analysts are wary of further GBP losses but
remind that today’s low was just shy of the 100 bar rising MA and completes a
fib retracement of 50% from the June low to the August high. The long time
frame uptrend is still very much intact and traders warn that “someone was
buying†against today’s sell orders. EURO also remained under pressure
breaking support at 1.2700 area and falling in sympathy will cable in early US
trade. Buyers were on the bid for size at the 1.2650 area and include
sovereign names some desks report. EURO has just barely completed a 61.8% Fib
retracement of the July lows to the August highs and some analysts are
suggesting that this move may have finally cleared the stale longs that were
set last week. In my view, the USD has made a very sharp up move in a very
short time compared with the current trading range and prevailing long-term
trend. It is possible that current USD pricing may be about as high as the
Greenback can go under current sentiment so I again look for a USD pullback
from these areas into next week.
EURO/USD Daily
R3: 1.2820
R2: 1.2780
R1: 1.2710/20
Current Price : 1.2681
S1: 1.2650/60
S2: 1.2600
S3: 1.2500
Pair completes retracement and fib number offers some
support but follow-through selling into stops was the rule of the day. Look
for an inside range day closing higher on Monday as next week has a lot of US
data to digest; shorts likely to cover in a big way if US data disappoints.
Stops rumored to be more under the 1.2650 area but a lot of stops were cleared
today traders say.
USD/JPY Daily
R3: 8720
R2: 8690
R1: 8600
Current Price : 8561
S1: 8540/50
S2: 8500
S3: ?
Pair looking weak again but continues to respect downside
support and bottom of range; look for a massive short-covering rally soon. BOJ
rate announcement completely as expected and the upcoming G-7 meeting will
likely create some volatility around the 8600 area. Rate still being pressured
by cross-spreaders but unwinding those spreads likely to spill over into USD
weakness.
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