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Forexpros Daily Analysis - 06/05/08
DailyForex Analysis
Today’s US Dollar Trading
• Major pairs two-way, end stronger
• Volumes light due to minor holidays
• USD ends near lows
Overnight Preview
• Look for more two-way and consolidation trade
Looking Ahead
All times EASTERN (-5 GMT)
• None in the US, very light start to the week; housing data Wednesday likely to carry more weight.
Summary
A very quiet two-way session left the USD slightly lower from Friday’s closing levels against the forex trading majors; traders note that the holiday thinned conditions contributed to the lack of interest either way. On the day, after what would have been the London fix, the USD fell into some active selling as the rate cleared below initial opening levels seen in Asia; traders suggesting that model and momentum accounts were liquidating late long positions when the USD saw no follow-through after the initial push higher on the day seen around the release of the ISM Services numbers this morning. Coming out a bit better than forecast the USD rallied on the news but was unable to hold gains and quickly fell back to test lows. EURO was able to clear above the 1.5500 handle for a high print in late trade at 1.5520 recovering a full handle off the 1.5422 low print; traders say there was no real reason for the move other than short-covering and that was likely exacerbated by the thin conditions. Cable initially broke to fresh lows at 1.9653 but then began a slow-steady march until reaching the opening range before popping higher on technical trade; closing above the 1.9700 handle leaves a “doji” point of indecision today suggesting the rate is poised to rotate higher near-term. If short the GBP; I would cover and re-set shorts after the rally that seems sure to happen overnight. USD/JPY tried again for the 105.60/80 area with a post-news high print at 105.63 but was again turned back; even with Japan closed today exporters were no doubt on the offer. The rate fell into support at the 105.10/20 area for most of the day before falling to pressure seen in other rates; low prints at 104.72 continue to support the 104.80 area but traders feel confident the stops seen under the 105.00 are only the early longs getting out. Traders feel bids extend to 104.50 area with large stops likely in the 104.30/40 area; look out below if those trigger this week as a technical top would form in the USD. Swissy and Loonie both lower as well with Loonie holding above the 1.0100 handle again despite good offers all the way down to the lows at 101.18; most likely stops are under the 1.0100 area. Swissy is well off the overnight highs of 1.0598 making lows in New York at 1.0509 and closing near the lows. In my view, the USD is off to a defensive start and if you are holding shorts from last week look to add on any strength; it’s my view the Greenback is headed for support by the end of the week.
GBP/USD Daily
Resistance 3: 1.9820
Resistance 2: 1.9780
Resistance 1: 1.9740/50
Latest New York: 1.9722
Support 1: 1.9650/60
Support 2: 1.9600
Support 3: 1.9550
Comments
Rate drops under the 1.9700 handle to start, look for a test of the 1.9600 area within 24 hours. Close under the 1.9700 handle again needed to wash out the longs. Bounce back to trade at or near the 1.9720 area into the close suggests a rally is coming. Upside remains limited in my view but ranges can be wide as evidenced by the past few days of trade. Sell rallies if not short; buying dips dangerous. Drop to under the MA’s very important, long selling wick makes sell side attractive for further losses. Need down bars with higher volume to confirm; not getting that today. Some pressure from EURO remains. Cross-spreading for Yen, Swissy and EURO evident; look for additional sell-off to end the week. NFP today increased volatility and negative close is great for follow-through Monday
Data due Tuesday: All times EASTERN (-5 GMT)
4:30am Services PMI 51.7
7:01pm Consumer Confidence Index 74
EUR/USD Daily
Resistance 3: 1.5600/10
Resistance 2: 1.5550/60
Resistance 1: 1.5520
Latest New York: 1.5492
Support 1: 1.5400/10
Support 2: 1.5350/60
Support 3: 1.5300
Comments
Additional selling to new low early, Rate clears stops again and attracts active selling after 1.5400 area falls; Strong long-liquidation break is still coming; test of the lows as expected. Watch for two-way volatility. Be ready to add quickly if a rally happens; close under the 50 bar MA could attract active selling. Continue to hold shorts and look for a short-covering rally to stall around the 1.5550/1.5600 area; look to add to open shorts in that area.
Data due Tuesday: All times EASTERN (-5 GMT)
4:00am Services PMI (r) 51.8
5:00am PPI m/m 0.6%
In association with Forex Trading Edge
Analysis by: Forexpros.com written by Jason Alan Jankovsky
DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
Forexpros Daily Analysis - 08/05/08
Read the Daily Forex Trading Analysis
Today’s US Dollar Trading
• USD firms, sideways after Housing Data
• Pending Home Sales as expected
• Speculation BOE might cut rates Thursday
Overnight Preview
• Look for book-squaring ahead of BOE meeting
Looking Ahead to Thursday
All times EASTERN (-5 GMT)
• 8:30am USD Unemployment Claims forecast 370K
• 10:00am USD Wholesale Inventories m/m forecast 0.5%
• BOE MPC Rate Announcement no change forecasted
Summary
The USD has had a strong Forex Trading day after another slow start in Asia overnight. Equities softened which kept some pressure on the USD/JPY pair but the Greenback was able to stay on the offensive against most of the pairs throughout the day. Cable broke hard on poor UK data and speculation that a rate cut is coming from the BOE MPC tomorrow; highs at 1.9740 in Asia were never challenged and once the rate broke back through the New York lows form Tuesday stops drove the rate lower until active selling added additional weight. Low prints in early New York at 1.9501 making a show for big stops said to be under the 1.9400 handle but the rate firmed and by afternoon was trading back above the 1.9530 area. USD/CAD tested lows at parity again overnight but was unable to attract additional selling. High prices for gold and oil continue to pressure the rate as the Loonie is seen gaining against the USD while oil remains on the offense. Look for that rate to test the 1.0050/60 area again overnight but to fail as this is previous support area now working as resistance. EURO fell through stops again under the 1.5500 handle overnight and made a show for the support area at 1.5350; low prints at 1.5365 attracted a bit of short-covering but the rate is still weak at the 1.5400 handle. If you are holding shorts in the EURO you have reached a technical objective from the reversal at the 1.6000 handle. It might be wise to lighten up a bit on your shorts and wait for a correction higher to add again. With the BOE meeting tomorrow any “surprises” might rally the pair back to test the 1.5500 handle easily; banking some of the gain might be advisable. In my view the USD has had a great rally to test S/R across the board but today’s data and what is to come still don’t build a case for a strengthening USD long-term. I see today’s strength as a chance to book gains on some positions; aggressive traders can get long the majors short-term if you wish.
GBP/USD Daily
Resistance 3: 1.99680
Resistance 2: 1.9620/30
Resistance 1: 1.9580
Latest New York: 1.9535
Support 1: 1.9500
Support 2: 1.9480
Support 3: 1.9450
Comments
Rate falls through 1.9650 support area and stops drive trade lower, support at 1.9500 area now in play. Bounce likely from here. Look for a re-test of the 1.9600 area within 24 hours; likely after the news Thursday from BOE; failed to rally after the fix today. Close under the 1.9700 handle today likely washed out longs; shorts will cover before the weekend. Bounce back to trade at or near the 1.9720 area by the end of the week suggests a rally is coming. Upside remains limited in my view but ranges can be wide as evidenced by the past few days of trade. Sell rallies if not short; buying dips dangerous.
Closes over the MA’s likely not to last so a rally over the 100 bar MA a good sell in my view. Some pressure from EURO remains. Cross-spreading for Yen, Swissy and EURO evident.
Data due Thursday: All times EASTERN (-5 GMT)
Tentative GBP MPC Rate Statement
7:00am GBP Official Bank Rate 5.00%
EUR/USD Daily
Resistance 3: 1.5580
Resistance 2: 1.5550/60
Resistance 1: 1.5500
Latest New York: 1.5432
Support 1: 1.5400/10
Support 2: 1.5380
Support 3: 1.5350
Comments
Two-way action overnight again but break under 1.5450 area on stops suggests more losses are coming; bounce likely first. Support at 1.5365 as expected and the rate rallied hard within 24 hours last time at this number. Look for rotation higher next 24 hours. Rate clears close in stops again and attracts active selling below the 1.5500 handle. Strong long-liquidation break is still coming; test of the lows as expected. Watch for two-way volatility. Be ready to add quickly if a rally happens; look for a short-covering rally to stall around the 1.5550/1.5600 area again; look to re-short in that area; missed it yesterday.
Data due Thursday: All times EASTERN (-5 GMT)
2:00am EUR German Trade Balance 16.9B
6:00am EUR German Industrial Production m/m -0.5%
7:45am EUR Minimum Bid Rate 4.00%
8:30am EUR ECB Press Conference
Analysis by: Forexpros.com written by Jason Alan Jankovsky
DISCLAIMER:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.