Tuesday’s Forex Briefing
The USD is mixed this morning after
firming up a bit against the majors’ overnight Asia. The Greenback
is softer against Yen, firmer against Cable and flat against EURO to start New
York with the pairs off their overnight lows against the USD. Chatter
overnight Asia saw traders focused on the rhetoric announced between BOJ Head
Fukui and MOF Minister Abe’s luncheon meeting in Tokyo. Traders are looking
for clues to the timing of the next BOJ rate hike and what the bank will be
watching ahead of time. Although both men did not say anything new it was the
tone of the meeting that suggested the BOJ will most likely surprise the
markets; USD/JPY sold off later in the day as traders took comments to mean a
rate hike could happen at any minute; the pair broke through support at 115.20
area to trade down to a low print at 114.55 completing a 50% retracement from
the 2006 lows to highs. Buyers into the break were Japanese banks and
semi-official names traders note.
Cable is off the 2006 highs but only marginally, currently
around 1.9760 area to start New York as weakness in non-USD pairs spills over
in the GBP/USD. Traders note that semi-official names have been seen with
adequate supply suggesting that a near-term top may be forming as real money
accounts buy USD. EURO is firm, about unchanged from Monday’s close but under
pressure early. Analysts say that EURO is tracking GBP as non-USD pairs are
under pressure from profit-taking; support at the 1.3290 area is said to be
firm but stops are building below. Most analysts are suggesting that the USD
is a bit over-extended to the downside at this point but remind that
short-timeframe studies remain neutral to bearish. Larger timeframe studies
are only “slightly†overbought at current levels but technical trade may not
last long as large fundamentals are in play later in the week. In my view, the
time is right for the USD to pull back a bit and offer some great short
potential.
Aggressive traders can short the majors anytime looking for
a correction of several handles to end this month. Short term traders will
have good opportunity as well as it looks like the USD is setting up for a
correction that may be very two-sided. Look for the USD to rally into the end
of the week and cover a lot of the same ground twice.
USD/JPY Daily
R3: 116.20
R2: 115.70/80
R1: 115.10/20
Current Price : 114.56
S1: 114.20
S2: 113.80
S3: 113.50
Pair weaker on comments RE: timing of BOJ rate hikes,
falling through last support area and tripping stops reported at 115.10 area
and below. Completing a 50% retracement the rate is ready for a corrective
bounce of some amount as technical traders look for an opportunity to cover
shorts or initiate longs. Retracement to the MA at 117.00 is in the works
near-term. Look for sellers at 116.80 area also.
GBP/USD Daily
R3: 1.9900
R2: 1.9850
R1: 1.9820
Current Price : 1.9763
S1: 1.9720
S2: 1.9680
S3: 1.9550
Potential for corrective pullback larger after lack of
bullish follow-through into new highs at 1.9850 area. Volatility is growing as
well so look for larger price swings this week. Stops said to be resting
close-in around the 1.9680/90 area which if triggered puts the rate in
corrective mode. Bulls need to see a push into 1.9860 area to find stops but
offers are getting thick traders say.
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