Afternoon US Dollar wrap-up
The USD is range-bound and
two-sided to start the week, initially weaker in Asia then firming
into Europe before scoring intraday highs in US trade. Firming slightly past
the European close, the USD got a bit of selling pressure early after the
release of an “as expected†US existing home sales data; traders had a
forecast at 6.25M units but actual numbers a bit better at 6.30M units. Light
stops were seen on both sides of the market as the USD hovers near near-term
lows from last weeks late sell-off against the majors.
Traders note that some large fund buying of USD was seen
possibly from those caught wrong-footed with shorts from over the weekend.
Asian concerns kept a lid on the USD/JPY pair as analysts remind that the
China Yuan situation may see some developments near-term now that the G-7
meeting and US Treasury Secretary Paulson’s visit has wrapped up; PBOC-watchers
remind that often the central Bank will make a move within two-weeks of a
significant world event that impacts on FX rates. Traders note that USD/JPY
has fallen to a recent low but is firm at support around 116.10 area on
importer buying; more bids said to be resting around the 115.80 level. Upside
may be limited to the 117.00 area or slightly higher as rumors of
semi-official offers made the rounds in Asia overnight. GBP is in a narrow
range to start the week but managed a high print at 1.9076 before attracting
good selling; support at 1.8980 appears firm as well suggesting that cable may
remain in a tighter range ahead of better US data mid-week.
EURO traded in sympathy with GBP today and traders note that
the upside appears thick with offers ahead of the 1.2830 area; initial
stop-loss buying lifting the pair through European trade into that area but
now the buying pressure is off a drop into support at the 1.2720 area seems
certain. In my view, the majors are starting out the week “as expected†after
the USD’s fall late last week. A period of consolidation and two-way trade
would be reasonable for a day or two; this week’s data will likely not be
considered USD-friendly so additional USD strength will likely be sold giving
short-term traders good two-way action. Longer time frame traders will need to
sit through retracements as the USD will likely cover a lot of the same ground
several times before settling on a direction later in the week.
USD/JPY Daily
R3: 8790
R2: 8760
R1: 8690/8700
Current Price : 8682
S1: 8640/50
S2: 8600
S3: 8550
Pair at a point of indecision, double “doji†star at
potential resistance indicating a potential sell-off of some amount; look for
buyers at the 8740 area to support initially as there remains a large overhang
of open shorts I believe. Upside resistance at 8760 area of 100 bar MA also
likely to cap any rally. Should US data disappoint the USD Bulls then the
potential for a sharp rally is increasing in my view.
GBP/USD Daily
R3: 1.9180
R2: 1.9100/20
R1: 1.9060/70
Current Price : 1.9034
S1: 1.8980
S2: 1.8880
S3: 1.8800
Pair looking to find resistance above the 1.9070 area
near-term I think; look for selling pressure to come on should US data
encourage USD bulls. Support at 50 bar MA should be solid as that would be
“fair value†for the longs and they would likely add to open positions there.
Potential sideways range developing with a downside around 1.8600 area; be
careful on new longs above 1.8880.
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