Afternoon US Dollar Wrap-Up
Traders complained of light volumes today as the USD continued to show residual strength despite better economic data overseas and less than friendly data here in the US. Overnight in Asia the USD was relatively quiet awaiting the release of German IFO sentiment index; released at 107.7 vs. forecasts of 106.6 traders took the opportunity to buy EURO on the news lifting the rate to a high print of 1.3353 in late European trade.
USD remained firm against the rest of the major pairs into the start of New York trade. After the start of New York volumes again dropped off ahead of the US Consumer Confidence number; forecast at 109.0 the released number was below expectations at 107.2 giving a reason to sell USD. Traders saw light stops elected across the board but the USD remained firm after the initial flurry of selling and continues firm into the New York close. Traders are bemoaning the lack of volume in either direction today but believe that stops are beginning to build and near-term the USD looks poised to follow-through again to the upside overnight.
GBP fell back from yesterdays’ close and never challenged the highs all day today; high prints overnight at 1.9706 before selling in Europe took the rate to the 1.9618 low; traders see the rate consolidating but on the weaker side suggesting that more downside is building. Although EURO got a boost from German IFO numbers, the fact that the rate had no volume on an up day and closed mid range suggests that the EURO may be at a point of indecision. Lower prices in sympathy with GBP are likely in that case but I think the underlying strength of the rate will hold it firm near term. Look for the EURO to hold the 1.3250 area on a retracement from closing levels.
USD/JPY held firm above the previous area of resistance at 117.90 area all day after a brief drop into very light stops around the 117.80 area; high prints at 118.40 left stops at 118.50 area untouched for today. Traders expect a return to that area near term. In my view, the USD is continuing to base for higher prices into the remaining data we have this week but it is strongly suggested that any strength in the USD been seen as a selling opportunity. Fundamentally weak, the USD
is on borrowed time.
EURO/USD Daily
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R3: ?
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R2: 1.3450/60
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R1: 1.3420
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Current Price : 1.3391
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S1: 1.3340/50
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S2: 1.3300
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S3: 1.3260
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Higher price action on lighter volume argues for weak rally and setback near-term; look for rate to fall back and test support again at the 1.3300 area. Failure there opens the door for further losses to fib defense at 1.3250/60 area. Stops said to be think under there but look for 50 bar MA to offer support if stops under the 1.3250 area triggered. Pullback is a hard buy in my view, BUY dips.
USD/JPY Daily Futures
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R3: 8690/8700
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R2: 8620/30
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R1: 8600
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Current Price : 8573
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S1: 8550
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S2: 8490
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S3: 8420
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Points of indecision are lining up and stops must be building close in; argument for carry re-loads providing most of the downside pressure. Stops under the 8550 area said to be thick; look for a test of the downside before further gains. A healthy retracement is a buying opportunity in my view. Look to BUY on a pullback to the 8550 area or slightly lower.
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Jason
Jankovsky
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