Afternoon US Dollar Wrap-Up
As expected, the USD remained inside established
ranges for most of the trading day today after a quiet start overnight.
Trades note that most of the major currencies appear “listless†for the most
part and technical trade appears to be dominating near-term direction. With
only two major reports due out this week from the US traders expect that the
USD will consolidate recent gains in solid two-way trade through the end of
the week. Getting a bit of a boost early in the New York session the USD
scored brief new highs in CHF and JPY but immediately fell back on rumored
sovereign demand; cable and EURO also fell into areas of support where
sovereign demand was noted. Close in stops placed by short sellers were
flushed to the upside on a brief rebound making a bit of a frustrating day for
the momentum players.
Although the USD/JPY continued to trade between the 118.10 and 118.80 area
of S/R, traders note that the unwinding of carry trades appears to be
underpinning Yen and expect more consolidation in the rate. High prints in
EURO at 1.3038 included two attempts at stops rumored to be resting around the
1.3040/50 area but so far EURO bulls don’t have the firepower to put the rate
back into the recovery mode. Cable has had the best day of the majors scoring
a high during New York trade at 1.9407 and severely denting the bearish point
of view. A close around the 1.9380 area likely to look very bullish on the
charts and rumors of possible BOE rate hikes coming in Q1 are certainly
helping to underpin. In my view, the USD will continue to range trade and
buying dips in the majors will provide your best opportunity ahead of US trade
data on Wednesday. Retail Sales on Friday is not a closely watched report but
in this thinner week for data it might carry more weight. Look for the USD to
rally a bit overnight into Tuesday but you would want to sell that rally or
buy that dip in the majors.
GBP/USD Daily
R3: 1.9600
R2: 1.9520
R1: 1.9420
Current Price : 1.9387
S1: 1.9320/30
S2: 1.9280
S3: 1.9220
Rate posts inside range day and very close to a close over the 50 bar MA
suggesting a potential reversal and head-fake on the sell-off. Close back
above the 1.9420 area likely to attract bulls and stops under the 1.9200 area
may now be out of range. OK to BUY anytime on weakness, I like the 1.9340 area
on intraday volatility ahead of Wednesday.
USD/JPY Daily
R3: 8600
R2: 8580
R1: 8550
Current Price : 8502
S1: 8480
S2: 8450
S3: 8420
Pair inside range with “doji†close suggesting that pair is at a point of
indecision. Likely to remain two-sided overnight but expect higher prices
should cross-rates and carry trades continue to be unwound. Close over the
8580 area likely to attract solid buying. Stops under the 8420 area likely out
of range near-term. US data likely to disappoint the bears so a rally late in
the week is ideal. Stay long.
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