Morning Forex Briefing
The USD is trading mixed to start New York after a range-bound overnight.
Existing technical levels continue to be respected and traders see little to inspire new price direction until Friday’s US data. Heavy interest in the Yen crosses overnight has kept USD/JPY firm this morning but volumes are light and traders note that the 117.20 area in the pair continues to draw protective selling by option traders and exporters. Some analysts remind that the USD/JPY will be pressured should China make any unexpected moves to revalue the Yuan and with the US visit this week rhetoric could increase volatility easily and create some choppy conditions. Also, model accounts may be on the buy side should the rate trigger stops said to be resting above the 117.30 area.
GBP is higher against the USD this morning after matching Friday’s high at 1.9730 creating a technical double top; analysts note that the rate has not gone “overbought†as yet but some selling was seen on technical factors into the highs. Traders say Cable will continue to draw support from GBP/JPY cross action but doubt the pair will continue to rally without some fundamental news to shake out weak longs.
EURO is two-sided and range bound as well, 1.3290 high print ahead of New York trade but traders say stops are building over the 1.3320 area as well as under the 1.3250 area. Should EURO break out one way or the other, due to the lack of fundamental news until Friday, the rate may suffer large volatility and large swings in price. Analysts remind that EURO is tracking GBP more often than not when technical trade is evident so a EURO breakout likely will draw aggressive EURO/GBP cross trading as traders attempt to profit from unexpected volatility. In my view, the USD is trapped in existing ranges and will remain that way for another 24 hours. There is little fundamental news until Friday for the Greenback to focus on and until traders can see where the near-term direction is headed, technical support and resistance will likely dominate trade. Remarks from China officials and the US representatives will certainly create volatility and the short term trader may have some good two-way trade to exploit. Look for the USD to weaken today and rotate back into support ahead of Friday.
GBP/USD Daily
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R3: 1.9840/50
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R2: 1.9760
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R1: 1.9730
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Current Price : 1.9714
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S1: 1.9660
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S2: 1.9600
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S3: 1.9530
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Pair completely
erases losses from last week and forms a technical hourly double-top
at 1.9730; stops said to be thick above with offers mixed in making
upside progress difficult. Close over the 1.9730 area likely to draw
fresh buying but cross-spreaders may liquidate as Yen crosses have
been at significant highs; two way trade may cover a lot of ground
twice. Look for a rally higher on US data Friday.
USD/JPY Daily
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R3: 117.80
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R2: 117.60
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R1: 117.20/30
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Current Price : 117.11
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S1: 116.60
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S2: 116.00
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S3: 115.80
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Pair hitting significant resistance at the 117.20/30 area and volumes are thinner traders say; heavy selling of Yen for non-USD pairs overnight supporting into New York but traders say option defense is thick above 117.00 capping the move. Long-term studies are neutral to bearish but shorter terms are leaning to bullish suggesting that the market will continue in two-way trade. Close over 100 bar MA likely to draw buyers.
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Jason Alan Jankovsky
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