Morning forex briefing
The USD is range-bound but firm
against the majors to start New York after remaining mixed in Asia;
solid two way trade the case for most of the overnight session. Trader’s
report that stops might be building on either side of the recent trading
ranges and that the USD is vulnerable to a correction after Tuesday’s failure
to post gains; most notably against the Yen. USD/JPY is well off the Tuesday
high of 118.15 opening in New York near the overnight lows at 117.64. Failure
to trade higher suggests that the near-term top is in place in that pair;
traders say stops are layered below the 117.40 area with light bids reported
at 117.50 area. EURO is firm at 1.2680 area after briefly trading the 1.2700
handle overnight but offers above the market appear to be adequate to contain
any attempt at a rally near-term.
Analysts remind that the EURO is still reading neutral in
the hourly studies suggesting that the rate will likely have a two-sided and
range-bound day today. GBP is firmer near the top end of the overnight range
and within striking distance of Tuesday’s highs around the 1.8775 area. Recent
trade suggests that cable is vulnerable for a short-squeeze today and stops
are said to be layered about 1.8780 to 1.8820 area which if triggered could
provide enough of a lift to target reported offers in the 1.8880 area. In my
view, the USD is setting up for a nice correction lower and the lighter volume
at this area suggests that the potential buyer is sidelined for now.
Particularly of note is the USD/JPY pair that has been subject to such extreme
moves from non-USD cross-spreading. Each rally to the high end of the 117.00
handle as well as the brief showing at the 118.00 area was met by exporter
selling. Today the pair has been drifting lower and the crosses continue to
consolidate below their recent highs.
With the G-7 meeting coming up this weekend it is likely
that USD bulls will move to the sidelines; any hint that a weak Yen was
discussed and rhetoric suggesting steps need to be taken will likely create a
liquidating break in the USD/JPY. I don’t believe the Yen has moved lower
against the USD due to USD strength; it is more a case of pressure from non-USD
pairs. I think the highs for the pair are in for the week yesterday; look to
sell strength in the USD/JPY for a correction lower.
USD/JPY Daily
R3: 118.50
R2: 118.10/20
R1: 117.90
Current Price : 117.64
S1: 117.30
S2: 116.80
S3: 116.40
Pair at the high end of the recent resistance area going
back several months. Note the failure from the highs overnight has placed the
lows today under the main body of the candle; pair likely to test lower end of
the resistance area within 24 hours. Downside target is 50 bar MA around the
116.00 area, stops said to be layered under the 117.40/50 area, more under
117.00.
USD/CHF Daily
R3: 1.2650
R2: 1.2600
R1: 1.2550
Current Price : 1.2524
S1: 1.2500
S2: 1.2460
S3: 1.2400
Pair at the top end of the resistance area, look for a
liquidating break to take the pair sharply lower near-term, stops layered
under the market with bids mixed in around the 1.2450 area but 100 bar MA is
still trending lower and sellers appear willing on rallies. Range will likely
hold near-term so SELL anytime and wait for a rotation lower in the coming few
days.
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