Morning forex briefing

The greenback is trading softer
this morning after a quieter evening overnight.
Initially firm at
the start of Asia the USD was offered early on follow-through volatility from
Tuesday’s wild ride; traders agree that today’s data will likely push the
majors to the next level of resistance but also expect another bout of selling
as two-way conditions are expected to remain through the end of the week.

Overnight news outside the US was benign but traders still
bought GBP and EURO in response but both pairs met with overhead resistance
during the European session. UK CBI retail sales data came in a bit better
than expected; sterling saw a slight lift to 1.9040 area where willing sellers
took charge and offered the rate back to the 1.9000 area ahead of the US open.
The Swedish Riksbank hiked the overnight repo rate 25 BP to 2.5% following the
lead of the ECB; analysts also now point to a rate hike by the ECB at the
October General Council meeting. EURO rallied briefly but found willing
sellers at the 1.2850 area of technical resistance; rate trading back at
1.2810/20 to start New York.

China revised GDP estimates upward to 10.2% from 9.9% for
this year, USD/JPY saw little response and the pair is solidly trading the
117.00 handle this morning; chart-watchers note that today’s daily price
pattern looks like a reversal day from yesterdays’ violent action. In my view,
the USD is simply setting up for another run at the highs against the majors
this week. Look for GDP data today to inspire a round of long-liquidation in
the majors but also be mindful of support levels underneath the pairs; both
buyers and sellers have good reasons to take positions so expect solid two-way
action the rest of the week. Later on Friday is Non-Farm Payrolls data and
with the last few months of lower numbers a higher-than-expected number might
panic the USD bears. Look for today’s data to be as expected.

GBP/USD Daily

R3: 1.9120

R2: 1.9080

R1: 1.9040

Current Price : 1.9014

S1: 1.8980

S2: 1.8920

S3: 1.8880

Pair hovering right at the top end of resistance area,
two-way action is keeping the price well-bid but offers are said to be thick
above the 1.9030 area; stops mixed in but traders feel that offers will likely
be larger potentially capping any rally below the 1.9080 area. Look for
volatility right after US data this morning.

USD/JPY Daily

R3: 117.80

R2: 117.60

R1: 117.30

Current Price : 117.04

S1: 116.80

S2: 116.50

S3: 116.20

Pair holding support and looking to put in a reversal day if
prices can match or exceed yesterday’s high; currently an inside range day but
looking positive for a continued rally. Fall back through support at the lows
for the day argues for a failure at the highs and a drop in price near-term.
Stops said to be on both sides today so expect volatility after today’s’ data.

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