Morning Forex Briefing

The USD was weaker overnight as the expected follow-through selling emerged after Wednesday’s sharp reversal from the recent USD highs.
Putting in some interesting technical patterns, traders are looking for the USD to continue under pressure to the next level of reported demand for USD. Cross spreaders were caught wrong-footed on their Yen pairs the past 24 hours and some volatility has been apparent from both liquidation and non-USD crosses under pressure.

Trader’s note that the EURO/GBP cross has been particularly active overnight suggesting that GBP cross trading has interest near-term in addition to the Yen crosses. Traders report that a US Commercial Bank was active on the bid in USD/JPY but that pair is lower to start New York; analysts remind that no real technical damage has been done to the long-term studies in the USD/JPY so possibly some traders are still buying breaks in that pair.

Cable continued higher from Wednesday’s close but has found offers on the approach to 1.9700 handle. Traders report strong offers layered to 1.9720 with stops above suggesting that GBP may be at the high for the week. In my view the rate has a much higher upside potential even if sellers are at the 1.9700 area; Wednesday’s price pattern on the daily GBP is an inverted hammer from Fib defense. In my view, this pattern has a high potential to follow-through and the hourly shows a very credible inverted head & shoulders pattern for yesterday’s trade as well. These two potentially bullish formations in different timeframes complementing the same potential I think suggests that the GBP has finished correcting to the downside and may be ready to tackle a new high for the year near-term; perhaps this quarter.

EURO remained less aggressive to the upside and is actually slightly lower to start New York; traders say cross-spreaders have been active for GBP and Yen in addition for USD suggesting that the rate will remain lagging the complex on a continued rally. EURO has solid support under the 1.3000 area so a close for the week above 1.3000 would be seen as very bullish in my view. Look for a buy on a pullback in EURO near-term. To finish out this week I would look for the USD to continue lower into Friday. Today’s data likely to be less important than tomorrow’s NFP so look for consolidation the next 24 hours into Friday.


R3: 1.9780

R2: 1.9720

R1: 1.9690/1.9700

Current Price : 1.9665

S1: 1.9620/30

S2: 1.9600

S3: 1.9580

Inverted hammer formation and long wick from Fib defense suggest a rejection of the 1.9500 handle in solid trade. Volumes not impressive during the move but that is likely because traders are still sidelined ahead of Friday data (?), 50 bar MA supports near-term so a solid case for continued uptrend is there in my view. BUY or ADD to open longs, upside target likely to be over the 1.9900 area.


R3: 121.50

R2: 121.20

R1: 120.80

Current Price : 120.37

S1: 120.00/10

S2: 119.80

S3: 119.20

Pair at Fib defense for recent rally but reversal from highs on good volume suggest that a deeper pullback is more likely near-term. Weekly traders are watching the lows with good interest; a close below the 120.10 area creates an outside week key reversal pattern on the weekly charts—