Morning Forex Briefing

The USD is trading mixed this morning in New York; higher against the GBP, EURO and CHF but lower against the JPY.
Traders note that the USD/JPY pair is choppy and prone to weakness ahead of the G7 finance ministers meeting later in the week where the issue of Yen weakness will likely be addressed. All the Yen crosses suffered a liquidation sell-off overnight when Japanese Broadcaster NHK confirmed that the G7 will discuss Yen weakness but traders are still taking a “wait and see” attitude and expect that the Yen crosses will remain very two-way for this week. Against the other majors the USD is firmer but still range bound. Previous S/R is holding across the board and traders expect a technical week as far as potential action is concerned. The economic calendar is very light in the US ad overseas so most likely rhetoric and statements from policy makers will likely drive trading into technical areas creating a solid two-way week for most everybody.

Overnight the GBP found sellers at the opening ranges and began to slide off as close-in stops were triggered at Friday’s low; low prints n Europe at 1.9554 just ahead of the New York open and the rate remains heavy traders say. EURO slippage also overnight but still holding above last weeks lows, trader’s note that the weekly opening range in EURO is also today’s low print to start the week at 1.2919. Should EURO attract buying at this level a strong technical “buy” signal would be seen by chart watchers if the opening range held through the day today.

USD/JPY is weaker to start New York on follow-through selling from Asian weakness. Traders expect support at the 120.50 area to hold near term but strong offers again are expected at 121.20 area so the USD/JPY may have a solid two-way start on the week. In my view, the USD is following-through from Friday’s rally but is still holding previous ranges suggesting that the greenback will have a technically-driven week; I don’t think the USD has what it takes to encourage additional buying with such a light economic calendar this week. Look for the USD to rotate lower into the next 48 hours or so. Aggressive traders can look to buy EURO today under the 1.2930 area.


R3: 1.9700

R2: 1.9660

R1: 1.9600

Current Price : 1.9559

S1: 1.9520

S2: 1.9480

S3: 1.9450

Rate down into support on follow-through, sympathy with EURO slippage also, but holding trendline for potential uptrend. Close over the 1.9620 area today ideal for a rotation higher, need a close above the 50 bar MA to maintain bullish enthusiasm. Stops said to be under the 1.9520 area with bids layered under 1.9550 area suggesting a further drop will be slow-going.


R3: 121.50

R2: 121.20

R1: 120.80

Current Price : 120.62

S1: 120.20

S2: 120.00

S3: 118.80

Pair nervous ahead of G7 so expect solid two-way volatility, stops above the 121.20 area said to be thick but offers extend to 121.50 traders say. Stops also layered under 120.10 area and large overhang of IMM futures shorts may make a run on the stops very likely near-term. Technical trade also likely this week. Sell on any strength.

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Jason Jankovsky

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