Morning forex briefing
The USD is modestly weaker to start
New York after a firm open in Asia with little buy interest seen
ahead of European trade; the greenback is again at support/resistance against
the GBP and the EURO. Traders note that some long-liquidation of the USD is
being seen ahead of US data due out this morning. Cable has tracked EURO
higher overnight but has found willing sellers all the way up to the printed
highs at the 1.9030 area, volumes have been moderate traders say. No real news
to support the move higher and trading appears to be largely technical this
morning with studies neutral. EURO has made a high print at 1.2841 when light
stops close-in around the 1.2820 area were triggered; again no real news to
support the move overnight suggesting that technical trade and book-squaring
are the rule ahead of US data.
A US investment bank was a conspicuous buyer of EURO during
European trade and that may be “black box†traders as the market is
range-bound and offering good two-way trade. USD/JPY is also a bit lower to
start New York with an overnight low print at 116.57; right at technical
support and quickly recovering back to the 116.80 area in quiet trade.
Analysts note that the China Yuan was set at a new high to the USD by the PBOC
last night and that may have been drawing a bit of pressure on the pair; cross
spreaders were not as active as previous sessions suggesting that the pair
will range trade also until mid-week.
In my view, the USD is still within established ranges and
now that the major pairs are at the top end of their consolidation ranges the
opportunity for a short against the USD is a lower risk trade. Look for the US
data today to create a bit of volatility and should the pairs rally a bit
against the USD I would be a buyer of greenbacks. Aggressive traders can short
GBP/USD above the 1.9000 area and above the 1.2810 area in EURO. A fall-back
to 116.40/60 area in USD/JPY would also be an excellent place to buy. Look for
the pairs to retreat from the opening ranges in New York with a firmer USD
heading into GDP data in the morning Wednesday.
GBP/USD Daily
R3: 1.9120
R2: 1.9080
R1: 1.9030/50
Current Price : 1.8996
S1: 1.8960
S2: 1.8880
S3: 1.8820
Pair rotating back to resistance at the 1.9000 area in light
trade, no real news behind the move suggesting a technical bias that will
attract both sides as resistance holds. Look for a break higher to the 1.9050
area to be sold heavily so should US data disappoint USD bulls a “head-fakeâ€
may be in the works on a rally into that area. Stops close-in under the 1.8960
area likely from Monday longs.
USD/JPY Daily
R3: 117.80
R2: 117.40/50
R1: 116.90/117.00
Current Price : 116.68
S1: 116.40/50
S2: 116.20
S3: 116.00
Interesting chart pattern in my view, previous resistance at
the 116.60 area now offering support while 117.40 area still holds as
resistance; very tight range for the pair given the large amount of
cross-spreading and potential fundamental news directly affecting this pair.
Look for a sharp move in either direction as breakout traders come to the mix;
market is in a critical phase I think.
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