Morning Forex Briefing

The USD is sharply lower overnight as the majors continue to power higher; Yen crosses correcting lower but not until EURO/JPY has made a new lifetime high in Asia. Traders note that although the majors are higher volumes have not been impressive enough to suggest a full-blown rout of the USD is in the works. Desks are reporting that option barriers are in play across the board and stops have been elected across the board suggesting that long-liquidation is leading the rates into S/R to start New York trade.

GBP is actively trading the 1.9800 handle this morning after a high print overnight at 1.9889 with option defense active at 1.9900 traders say. Stops are said to be positioned at 1.9920 area and above which should make for exciting action if triggered; GBP near an 18 year high above that area. EURO is probing the 1.3550 area in two-way trade and stops are reported above the 1.3560 area; traders note that the EURO has a very strong support area at 1.3300 area and that may have been the support area for a push to over 1.3700 near-term.

EURO/JPY set a new lifetime level and with the G7 meeting this weekend any discussion on FOREX rates will be highlighted by the Yen situation. In my view, the major pairs are showing that the USD is on the defensive for at least the medium term. EURO has attracted so sellers and appears to be headed for a test of the record high.

Cable is poised for a solid attempt at the 2.00 area and USD/JPY has the greatest potential to fall as the China Yuan reform begins to take more of a headline role. I would look for the US data today to disappoint the USD; after an initial volatility the USD is likely to make a run for new lows. Look for the major pairs to have a strong finish this week and a follow-through week next week.

USD/JPY Daily

Rate breaking down as USD comes under threat across the board, look for US data to disappoint the USD bulls and possibly extend the downside into stops reported to be resting at 117.80 area or so. Close below the 118.40 area effectively terminates upside potential near-term. Look for volatility early in the day but a weak close you can ADD to open short positions.

EURO/USD Daily

Pair making a run for lifetime highs, look for stops above the 1.3550 area to be triggered if US data disappoints. Close over the 1.3550 area sets up a run to the 1.3700/50 area target in my view. Potential sell-off is coming so be ready to liquidate longs soon. Buy the dip when it comes, EURO could see 1.4000 this year.

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Jason
Jankovsky

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