Morning Forex Briefing
The USD is generally firmer after a
two-sided overnight session and opens New York today on the highs against the
Yen. Currently at 117.12, USD/JPY is pricing in a rate hike by the
BOJ but traders say the pair is stronger on cross-spreading and technical trade.
The rate has completed a 50% fib retracement between the October highs and the
December lows which is drawing technical traders on the sell side. Although the
BOJ has not signaled a rate hike at the December 18th meeting analysts see
potential and some traders don’t want to be caught by surprise.
Cable is weaker today on follow-through and has fallen through
an important technical level overnight drawing additional selling; traders say
the 1.9520 area is significant and stops were found on a break below there.
Current low prints at 1.9463 are holding for now but longer-term studies are
looking more bearish analysts say suggesting that there is more room to the
downside. EURO weakened in to European trade but has staged a modest recovery
from the lows; traders say that cross-spreading for Yen has been active
suggesting that the rate may have support at this level. In my view, the USD is
staging a corrective rally and today’s start to the week is a technical
opportunity to short; although I feel a few more days may be needed for optimum
price levels. Only the USD/JPY has completed a 50% retracement of recent
weakness and the other majors need to at least complete a 38.2% for the USD to
be correlated well enough to sell aggressively. This week we have some important
fundamentals and I feel that once these are out of the way the USD can continue
to fall off.
Look for the FOMC to leave rates on hold this week but some
analysts are saying there is a 5% chance of a 25BP rate hike. I feel that is
remote and that the USD will need to get through this week on a stronger note
before resuming the downtrend. If you are currently long USD, look to take gains
at the 38.2% fib number for this rally. Aggressive traders can sell USD/JPY over
117.00 for the pull in my view.
USD/JPY Daily
R3: 118.20
R2: 117.80
R1: 117.40
Current Price : 117.13
S1: 116.50
S2: 116.00
S3: 115.50
Pair completes 50% fib retracement, look for consolidation
near this area. 100 bar MA also offering some pressure but pair seems content to
stay firm. Upside is most likely limited to 117.40 area as traders are not
looking to aggressively buy the rate with the BOJ rumors out RE: a rate change.
Aggressive traders can sell the rate anywhere over the 117.00 area for the pull.
GBP/USD Daily
R3: 1.9620
R2: 1.9580
R1: 1.9520
Current Price : 1.9493
S1: 1.9450
S2: 1.9400
S3: 1.9340
Break back to 1.9340 area now in play after a fall through the
1.9520 area; stops said to be large on the move suggesting that the rate is in
the corrective mode near-term and it is safe to trade from the short side. Look
for a bounce from the 38.2% fib number; if short look to lighten up at that
level. Close under the 1.9480 area likely to extend move lower faster in my
view.
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