Morning forex briefing
The USD is slightly lower overnight after a slow start in Asia. Initially firm and trading in a very tight range, the USD slide off on comments from San Francisco Fed Governor Yellon suggesting that overseas investors would want to reduce their investment in USD-denominated assets; traders quickly sold the Greenback off the opening range in most pairs.
Adding fuel to the USD break were comments from BOJ Chairman Fukui saying that the BOJ will act “preemptively†if needed on interest rates; traders took this to mean that the amount and timing of rate hikes could accelerate if needed. USD/JPY sold off to lows at 117.66 before finding bids; a UK clearer and US investment names seen on the offer. Some momentum funds were seen selling USD traders say and it might be the same group who were buying USD on Monday’s trade.
EURO managed a high at 1.2774 before sellers emerged; stops were triggered around the 1.2740 area after the Yellon comments. Cable also firmer this morning after some light buyers emerged and stops were triggered. GBP has offers layered ahead of 1.9100 traders say but with a potential BOE rate hike coming this week cable is expected to be quiet ahead of the rate announcement. In my view, the USD is continuing to trade in a two-sided consolidation after recent strength the past 72 trading hours. Stops are likely close-in for late players and volatility will likely remain as traders await the outcome of US elections before taking larger or longer-term positions. I think aggressive traders would be able to capture recent range-trade from either side as I think the USD has one or more attempts at recent lows and recent highs; USD likely to cover the same ground more than once ahead of US data. Look for the Greenback to weaken into Asia ahead of US election results. Remember that election results in the US will be coming in as Asia is open; with the bulk of reports in as Europe gets started. Use limit orders and resting stops in case your numbers trade during overnight action tonight. Later in the week is Balance of Trade data which will likely note be friendly to the USD. Rallies in USD will likely be good places to consider a short position.
USD/JPY Daily
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R3: 119.00
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R2: 118.60/80
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R1: 118.20/30
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Current Price : 117.91
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S1: 117.50
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S2: 117.20
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S3: 116.80
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Offers said to be layered up to the 119.00 area and traders expect two-way action near-term suggesting that the pair will cover a lot of ground twice. Aggressive traders can try both sides of the market but be nimble on longs. Resistance is offered by the 50% fib number from recent high/low but support is offered from 50 bar MA leaving a tight 40-50 PIP range near-term traders are fighting over.
EURO/USD Daily
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R3: 1.2820
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R2: 1.2800
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R1: 1.2770/80
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Current Price : 1.2755
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S1: 1.2720/30
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S2: 1.2700
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S3: 1.2680
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Pair finds support off the 50 and 100 bar MA but volumes are on the lighter side; upside rally on minor comments from US Fed Yellon suggests rate is under net upside bias with shorts a bit more nervous. Stops above 1.2800 said to be building but also below 1.2680 leaving a small range for trade ahead of data; sharp move in either direction likely but favor upside. Buy dips, look for new weekly high.
Please see www. ProEdgeFX.com for details
Jason Alan
Jankovsky
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