Morning Forex Briefing

As expected the USD is very quiet ahead of the NFP number this morning in pre-holiday trade.
Analysts note that illiquid markets and a surprise number could ignite huge volatility this morning but due to the fact that most market centers are closed or will be closed within a few hours, most traders expect that the day will be mostly over within just a few minutes of the release. Traders looking to initiate new positions are strongly cautioned to use limit orders and wait for the market to come to them; some great opportunities may come along but chasing the market would be very dangerous in my opinion. Despite thin conditions the USD is firm this morning after a slow overnight session.

Asia was limited to very tight ranges with very low volume ahead of today’s number and regardless of the recent interest in resetting the Yen carry traders stayed away for the most part. Yesterday’s impressive rally in the EURO continued to be watched but overnight European trade saw the pair slowly drift and deflate to the 1.3410 area from the high print seen yesterday at 1.3442; analysts suggest that the market tone is buoyant but two-year highs will be tempting to sell into by the bears. GBP continues to range trade within yesterdays lower half and is currently on the overnight lows at 1.9695 area but residual bids are reported layered into the 1.9660/80 area suggesting that support may offer an opportunity early in the day but downside risk for a correction is evident; stops said to be building at 1.9640 area traders say.

USD/JPY remains in a very tight range ahead of NFP; rate is currently both sides of the 100 bar MA overnight and traders note that short-term studies are neutral leaving the pair vulnerable to two-way action. In my view, the NFP will likely create a large price swing but I wouldn’t look for the markets to offer any large net move. I think the illiquid conditions will exaggerate initial moves but net buying/selling for the USD will likely be even due to the pre-holiday jitters. I would look for an “unchanged” day or perhaps a slightly lower USD but I would not look for a significant correction or breakout for the majors on a day like this one. Have a great holiday.


R3: 1.3500

R2: 1.3480

R1: 1.3440

Current Price : 1.3417

S1: 1.3400

S2: 1.3380

S3: 1.3360

Two-year highs yesterday remain firm into NFP today suggesting that the rate is preparing to advance on a breakout from the news. Sellers yesterday capped at 1.3440 area but have very little lead on a pre-holiday Friday leaving the rate vulnerable to a small bout of short-covering. Support is firm at 1.3380 traders say, close over 1.3440 today may extend rally next week.


R3: 119.50

R2: 119.20

R1: 118.90/119.00

Current Price : 118.79

S1: 118.40/50

S2: 118.201

S3: 117.80

Rate continues to find resistance at the 100 bar and 50 bar MA near-term, offers rumored to be thick at the 119.00 area and even with a low-volume day are expected to remain viable. Support at 118.20 likely to be firm today but stops are rumored under the 118.40 area suggesting that two-way volatility is possible on a break. Close below 100 bar MA likely to encourage the Bears.

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