Morning Forex Briefing

The USD ended mixed against the majors today after a round of economic data overseas and here in the US slowed the bullish enthusiasm for the greenback. Initially firm in Asia the USD came under a bout of selling pressure for Yen when it was reported that the North Koreans will agree to give up their nuclear ambitions; a compromise treaty being reached yesterday. Seen as Yen-positive, traders sold USD into reported support at the 121.10 area; low print at 121.08 in early New York trade. Reported stops in the rate are said to be resting in the 120.80 area and traders feel confident that with today’s weak close in the USD/JPY further declines are likely if US data due out later in the week is USD neutral-to-negative.

German ZEW sentiment was about as expected but the expectations number was a bit higher making the report EURO bullish on the day; high prints for EURO overnight at 1.3045 and the rate was firm above the 1.3000 handle all day in New York trade. Analyst’s remark that EURO has held inside a very tight range for almost six weeks and is now looking very much like a breakout is coming. Comments from Eurozone officials the next few days will be closely watched for signs that the ECB will continue hiking rates past this March General Council meeting; speculation that the ECB will hike past 4.0% has been growing near-term.

UK CPI data was unfriendly to the GBP leaving cable the only pair on the board unable to make gains against the USD today. Although the rate held the important 1.9390 area of technical support the rate was unable to stage a reversal after the release of US data this morning. US Balance of Trade data was -61.2 B deficit and after the sharp rally by the other pairs it was disappointing to see GBP hold near the lower end of the 24 hour range. Should GBP rally out of the hole this week it likely will be as cross-traders reenter carry trades. All the GBP crosses today were down suggesting that the GBP is merely correcting a bit on the news but against the USD the rate will need a bit more to recover I think. Look for US data Thursday to disappoint USD bulls and the Greenback will continue to fall into the end of the week.


R3: 1.3120

R2: 1.3100

R1: 1.3080

Current Price : 1.3053

S1: 1.3000

S2: 1.2950

S3: 1.2900

Textbook range trade in my view, expect a pullback from the 1.3110/20 area should rate continue to the top of the range. 50 bar MA likely to offer near-term resistance but stops said to be over that area in size. Close over the 1.3100/20 area argues for a recovery to the 1.3200 area near-term as shorts get squeezed. Stops under 1.2920 area said to be large as well; close under 1.2950 argues for potential break.


R3: 8380

R2: 8350

R1: 8320

Current Price : 8290

S1: 8250

S2: 8220

S3: 8200

Potential short squeeze developing, watch V/OI carefully for the rest of this week for clues to short-covering. Close over the 8380 area argues for recovery attempt but offers layered above 8320 area will be tough going; carry trades still in demand. Look for a quiet technical two-way day on Wednesday. Stay Long; OK to ADD to positions.

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Jason Jankovsky

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