Morning forex briefing
The major pairs are a bit softer
against the USD in narrow ranges overnight as many traders remained
sidelined ahead of a slew of fundamental data due up the next 72 hours. This
morning is US CPI forecast to be benign but lately the data has surprised on
the bearish side for the USD, over the weekend is the G-7 finance ministers
meeting in Singapore expected to discuss FX flexibility and specifically
address Asian currencies and Monday morning is TICS data where the speculation
is about even that foreign purchases of US debt covered the record trade
deficit announced last Monday. Recent USD strength has mainly been by default
due to non-USD cross-spreading some analysts say suggesting that the USD may
be in for a wild ride just ahead of and just after the weekend.
Overnight GBP gave back a fair amount of the recent
three-day rally to trade at a low print of 1.8802 as the USD gained ground
late in the European session and just at the New York open. Analysts say there
are signs of bull divergence on the hourly studies suggesting the GBP has more
upside today; traders note that bids are firm at 1.8800/20 area and may be the
extent of the pullback from the weekly high on Thursday. EURO provided a very
frustrating night for some, remaining in a narrow 10 pip range for part of the
European session before tracking GBP lower in thin trade as cross-spreaders
took advantage of the quiet market to leg EURO/GBP crosses. Volume was
practically nil ahead of the US open so traders remind that moves may be
exaggerated by thin conditions.
USD/JPY has remained in a narrow range as well, analysts
note that the pair has been “nervous†the past few sessions ahead of US data
and the G-7 meeting; the rate may be hyper-sensitive to rhetoric or news the
next few days because the Yen weakness is the focus of world attention
recently. In my view, the USD is overpriced and a correction lower is brewing.
Today’s data will likely be the impetus for a corrective break in the USD/JPY
and the USD/CHF. GBP has been higher against the USD and remains the firmest
while the other pairs have not really followed suit yet. If a coordinated move
by the USD is in the works near-term; the Yen and Swissy may move very sharply
and quite a distance so be nimble and ready to move.
GBP/USD Daily
R3: 1.8990
R2: 1.8940
R1: 1.8880
Current Price : 1.8804
S1: 1.8780
S2: 1.8700
S3: 1.8660
Pair holding an inside range so far today but support is
rumored to be solid at the 1.8800 handle, traders expect high volatility this
morning around US data and ahead of G-7. New highs for the week likely if US
data disappoints. BUY GBP between 1.8800 and 1.8820 for a re-test of the
highs. Late sellers are in I believe.
USD/CHF Daily
R3: 1.2700
R2: 1.2650
R1: 1.2600
Current Price : 1.2586
S1: 1.2520
S2: 1.2440
S3: 1.2380
Pair at the high end of the absolute range and a screaming
sell in my view. 100 bar MA tracking lower when pair at a monthly double top
is a strong sell single in my view. Hourly and daily oscillators also
signaling bearish divergence suggesting the pair is significantly overbought
heading into US data. Sell with both hands in my view.
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