Afternoon US Dollar Wrap-Up
The USD continued to consolidate inside
established ranges for the most part today, making a slight attempt
for new highs against the JPY and CHF but meeting with solid resistance at
previous technical areas. Although analysts are divided for near-term
direction for the greenback, most traders are resigned to see the major
currencies stuck in established areas until more economic news is released.
Getting the most from sovereign buys in the majors, Cable and EURO remained
well-bid overnight but suffered a bout of long-liquidation at the New York
open today. Rising to the 1.9450 area GBP looked poised to tackle stops
rumored to be resting near that area but offers from a UK clearer and a US
investment house kept the rate under pressure most of the US session
eventually pushing GBP under 1.9400 once again. EURO also rallied into European
trade but saw sellers emerge at the 1.3040 area and broke back to lows during
the US session; traders note that sovereign demand was heavy in EURO at the
1.3000 area but offers from US investment houses again capped the move.
Traders say that 1.2970 area is thick with stops and should that area fail
near-term the door is open for the 1.2880 area or so on further corrective
pressure.
USD/JPY rallied back above the 119.20 area today for a high print at 119.56
driven by large stops and model/momentum accounts on the bid. Offers were also
heavy from exporters and Japanese names ahead of the BOJ policy meeting next
Thursday. Economic news this week falls largely on the US side of the equation
with Balance of Trade tomorrow and Retail Sales on Friday. Should US data
disappoint the USD bulls the bottom for the majors may be in near-term as
sentiment appears to be waning for USD strength heading into the rate
announcement for Thursday; although no action by the BOE is expected and the
market is already factored in a 25 BP hike by the ECB. Rate announcements may
be “no factor†near-term but it is important to remember that technical trade
only goes so far. USD is overbought in my view and once the current longs
decide to lighten up; a rotation to the bottom of the range is certain. Look
for the USD to fall back a bit overnight and for US data to disappoint on
Wednesday.
EURO/USD Daily
R3: 1.3150
R2: 1.3100
R1: 1.3060
Current Price : 1.3042
S1: 1.3000
S2: 1.2960/70
S3: 1.2920
Although the close is a lower close from yesterday, the high is higher and
the low is higher suggesting that the rate is beginning to bottom around the
1.3020/50 area. OK to go long at current pricing, look for a close above the
1.3080 area to hold past the weekend. Low for the month may be in, look for a
short covering rally by Friday.
USD/JPY Daily
R3: 8520
R2: 8500
R1: 8480
Current Price : 8457
S1: 8420
S2: 8400
S3: 8380
The bears just don’t want to let go of this market it seems but most of the
recent USD strength is by default from Yen carry trades; look for continued
two-way confusing trade. In my view, the rate is directionless and needs to
move above the 8580 area or below the 8380 area to convince one side or the
other to throw in the towel. Until then, expect sideways trade and choppy
action.
Trading Futures, Options on Futures, and off-exchange Foreign Currency
transactions involves substantial risk of loss and may not be suitable for all
investors. You should carefully consider whether trading is suitable for you
in light of your circumstances, knowledge, and financial resources. You may
lose all or more of your initial investment. Opinions, market data, and
recommendations are subject to change at any time. The information contained
on this email does not constitute a solicitation to buy or sell by Infinity
Futures, Inc., and/or its affiliates, and is not to be available to
individuals in a jurisdiction where such availability would be contrary to
local regulation or law.