Morning forex briefing
The USD traded mixed and two-sided during overnight trade with technical support/resistance dominating action through the New York open. Against the majors the greenback continues to consolidate losses and volumes remain modest ahead of potentially market moving fundamentals later in the week. Inside range day so far with little impetus seen to push the pairs beyond near-term support/resistance and traders say solid two-way trade should be expected for the next 24 hours or so.
Today’s ISM index might have potential to add a bit of volatility but dips into support are said to hold bids and rallies into resistance said to hold offers analysts note. Yesterday, Bank of America issued a “buy†recommendation in the USD/JPY at “current levels†citing several technical reasons suggesting that this recent dip in USD values is being seen as corrective by major players however strong semi-official names and custodial accounts have been seen on the offers the past several sessions suggesting that large names are selling USD for the pull while speculators are on the bid near-term; volatility is usually the result so expect two-way action to maybe be a bit larger in range than typical.
GBP tested the high end of the range looking for a solid fix on the 1.9100 handle but offers capped the move at 1.9107 creating a double-top on the daily charts; analysts remind that a pull-back is likely before a run for new 2006 highs. EURO under pressure to start New York as the technical 1.2780 area continues to offer tough going to the upside; high print 1.2770 with official interest on the offer.
USD/JPY continues to draw support from the 100 bar MA and has some good trade over the 117.00 handle with exporters seen around the 117.10 area overnight Asia. In my view, the USD is set to rally for a day or two and this move higher should be seen as a selling opportunity. The markets appear very focused on the technical picture ahead of the NFP report on Friday and that will likely create a bit of short-covering by technical short-sellers and of course a bit of technical buying as well. Look for the pairs to retrace a bit of their up move against the USD today and possibly overnight tonight with volumes on the lighter side.
GBP/USD Daily
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R3: ?
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R2: 1.9180
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R1: 1.9120
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Current Price : 1.9077
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S1: 1.9020
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S2: 1.8980
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S3: 1.8900/1.8880
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Pair forms a double top at the highs of the recent four-month range on latest attempt to score 2006 highs, look for a modest pullback before another attempt. Traders say volumes dropping off a bit suggesting that the buying interest is over until Friday perhaps. Aggressive traders can short GBP anytime now looking for a retracement to the 1.8800 area near-term.
USD/JPY Daily
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R3: 118.20
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R2: 117.80/90
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R1: 117.40
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Current Price : 117.03
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S1: 116.60
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S2: 116.00
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S3: 115.40
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Pair holds base of secure uptrend after failure to elect stops rumored to be resting under the 116.60 area, traders note that short-covering likely ahead of Friday but offers appear thick and layered between 117.80 and 118.50 areas, support also offered from 100 bar MA on dips. Traders should cover shorts and look to re-set above 118.00 on a short-covering rally.
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