Morning Forex Briefing

The USD continues to consolidate inside tighter
ranges as the combination of holiday trade and thin conditions continue to
keep traders wary of taking positions.
Overnight action remained
subdued and traders had little to focus on and technical levels continued to
cap rallies and support breaks. Some overnight comments by BOJ Governor Fukui
help to support the Yen but the USD/JPY remains inside established ranges for
the past 72 hours.

Traders say real money accounts are on the offer above the 118.20 area
along with exporters who were active in that area recently but stops remain a
risk above; support has been on dips into the 117.70/80 area and overnight was
the same story. Cable saw some brief selling on the release of the BOE MPC
vote tally; the MPC voted unanimously to hold rates steady at the last
meeting. Traders say that the 1.9720/30 area will offer some resistance today
but stops are said to be resting at the 1.9750 area. EURO has built a bit on
yesterday’s strength rising to the 1.3250 area before technical sellers capped
the move; US funds noted buyers on the break above the 1.3220 area but if
those are model/momentum accounts the question of a near-term pullback remains

For the most part, the USD is showing a bit of near-term weakness heading
into the end of the year at the holiday season. Volumes and liquidity will
begin to drop off even more into next week so place your trades carefully
should you intend to open new positions ahead of the full return of the
trading community after the new year. Today is the last AM broadcast for the
year and I would like to wish everyone a very Merry Christmas and a happy
holiday season. The next AM newsletter and AM Broadcast will resume at 7:45 AM
CST Tuesday Jan. 2, 2007. Thank you for attending during the year and I look
forward to providing commentary next year for you. I think the next year will
have some very strong opportunities that will develop due to the China
situation and the potential for a US slowdown. 2007 could be a very good year
for FOREX trading and I look forward to offering you quality analysis to help
you find the right trades for you. Have a great rest of the year.


R3: 118.80

R2: 118.60

R1: 118.20/30

Current Price : 118.05

S1: 117.70/80

S2: 117.10/20

S3: 116.80

Pair holding steady at resistance established at the 118.20 area, traders
note large players active on the offer but bids able to support suggesting
that the market is going nowhere until volume and liquidity return after the
new year. Resistance above the market is said to be thick so expect a lot of
volatility on attempts into 118.60 area and above. Stops a risk below the
117.60/70 area again.


R3: 1.3350

R2: 1.3280/90

R1: 1.3230/40

Current Price : 1.3213

S1: 1.3160/70

S2: 1.3120

S3: 1.3090

Pair seeing some selling at the 1.3230 area suggesting a near-term top
after yesterday’s sharp rise on light volume; holiday trade is making a mess
of balance sheets from both sides I think. Stops cleared above the 1.3220 area
most likely so look for a pullback of some amount near-term. US data due later
in the week may disappoint the EURO bulls, stops a risk under the 1.3160/70

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