Morning Forex Briefing

The USD is firmer to start New York after trading both sides of unchanged overnight. Starting in Asia the USD remained in tight ranges as traders waited for the release of European data; German IFO sentiment survey forecast at 106.6 was released at a better-than-expected 107.7 giving the EURO a bit of a boost. Sellers emerged in the majors and despite a brief flurry of USD selling around the news the Greenback bounced back and is now tackling offers near the recent highs. Traders note that volumes are modest but are wary of stops above where shorts will likely bail.

Stop-hunting overnight in USD/JPY found light sell-stops below the recent 117.90 area but the low print at 117.86 suggests that for the most part the bulls are happy with their positions. Highs in USD/JPY are still capped by exporter sell interest and general technical selling at 118.50 area; overnight high prints at 118.40 leave stops above that area untouched for now. Traders say that the recent bear pennant formation in the USD/JPY appears to be fading and the rate is well-supported on breaks the past 72 hours. Analysts note that the USD/JPY has little resistance after 118.50 area until the 119.00/10 area suggesting that the rate could have an aggressive round of short-covering. GBP tracked EURO both higher and lower and opens New York 1.9650 area, off the overnight lows of 1.9618. Traders say the rate fee’s heavy and are bracing for another round of selling if stops said to be resting under the 1.9610 area are triggered; support at 1.9550 area said to be firm.

EURO is firm after a quiet session ahead of the German IFO index and traders note that the interest remains in the Yen crosses for the most part leaving the EURO to languish on the bullish news. Offers extend from current levels around the 1.3360 area all the way to 1.3420 area traders say making the upside slow going near-term. In my view, the USD is rebounding and sellers are hesitant to offer the market arguing for an additional advance before the majors firm. I would look to be a buyer of GBP on a break to the 1,9550 area and a buyer of EURO on a break to the 1.3180 area. From current levels this represents more of a break for EURO than Cable so I would watch volatility closely should the majors break down but I don’t think this weeks’ data will be USD supportive; there may not be much time to set USD shorts this week despite today’s near-term firmness.

GBP/USD Daily

Rate firms after first retreat from the 1.9700 handle last week and tests the bears’ resolve overnight. Low prints at 1.9618 suggest sellers are getting ready to offer the rate aggressively but stops on the break under 1.9650 were on the lighter side. Expect two-way consolidation but a break to the 50 bar MA is in the works I think. Aggressive traders can short 1.9690/1.9700 and buyers go long 1.9550 area.

USD/JPY Daily

Pair attempting to negate bear pennant, recent firmness suggests the bulls still have fire-power; stops above the 118.50 area are building traders say. Upside test appears to be developing, cover open shorts and look to sell into rally initially at 119.00 area should stops trigger above 118.50. Aggressive traders can go long on dips expecting the upside breakout.

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Jason
Jankovsky

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