Morning Forex Briefing

The USD is mixed this morning in New York after a two-way overnight session that saw technical trading dominate in light trade. Some economic news in Europe brought a bit of pressure to the USD but the Greenback is holding steady in the middle of the past 24 hour range for the most part. UK GDP can out steady at +3.0% y/y about as expected putting a little pressure on the GBP but Cable continues to trade firm on the crosses after a run for light stops under the 1.9550 area; low prints at 1.9535 were bought and the rate is steady at 1.9580 area at the New York open.

EURO is also steady but still hovering around the 1.3110 area after offers at 1.3130 area were able to contain bids near-term. Low prints at 1.3101 leave stops under the 1.3080 area untouched for now and traders say that the rate feels firm due to continued interest in the crosses especially EURO/JPY. IFO survey was a bit softer than expectations but traders say the EURO is firm despite the push into the lows and look for a test of the 1.3160 area at least one more time near-term.

USD/JPY continues to grind higher with high prints overnight at the 121.65 area but traders note that large Japanese offers are thick above this area. Traders note that the USD/JPY has failed to lift into reported stops at the 122.20/30 area on the “buy the rumor/sell the fact” scenario after the BOJ rate announcement suggesting that the rate has run out of upside potential near-term. Traders note that the large interest in the Yen carry has prompted a huge interest from the sell side of Yen but so far the bids have been there to absorb the selling. In the case of USD/JPY, the rate has lagged the other crosses for Yen suggesting that the world interest in the carry is not for the USD but for other high yielding currencies. Should that be the case, USD/JPY could fall near-term while other Yen pairs continue to climb making for complicated and interesting trade. In my view, today’s action will likely remain two-sided and corrective.

Technical trade is likely due to the lack of fundamental news until Tuesday next week. The USD bulls have made some money this week and due to the lack of follow-through heading into Friday it would be reasonable to see a bout of long-liquidation ahead of the weekend. Look for a bit of a sell-off in the USD but hitting those stops for new highs in the majors ahead of the weekend is doubtful. A strong close in GBP and EURO is welcome and aggressive traders can ADD to longs.


R3: 1.9680

R2: 1.9650

R1: 1.9620

Current Price : 1.9600

S1: 1.9550

S2: 1.9520

S3: 1.9480

Slow going to the upside ahead of stops above the 1.9680 area suggesting that a two-way session today and Monday at the least ahead of news Tuesday. Highs on a Friday argues for more upside near-term so look for a short-covering rally should offers be unable to contain ahead of 1.9650 area. Close above the 50 bar MA will keep bulls happy.


R3: 122.00

R2: 121.80

R1: 121.60

Current Price : 121.35

S1: 121.00

S2: 120.80

S3: 120.50

Rate encountering offers capping the grind higher the past 24 hours, traders say offers are thick ahead of 122.00 with stops on the other side suggesting a break lower if longs can’t vault 121.80. Stops under the 120.50 area likely near-term and a correction lower to establish range would result if triggered. Look for a reasonable drop from here as it is a Friday.

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Jason Jankovsky

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