Daily Analysis Thread

[ForexPros]

Overnight Asia/Europe

• USD firmed in Asia on G7 comments
• Faltered in European trade

Today’s Economic Reports
• 7:30 AM CDT Retail Sales forecast +0.1%, no factor

Looking Ahead
• 7:30 AM CDT Tuesday PPI forecast +0.4%, core +0.2%
• 8:00 AM CDT Tuesday TICS

Summary
The USD is softer to start New York after initially starting higher in Asia. Traders say the G7 wording invoking a change to the communiqué’s verbiage was seen as USD supportive but the Greenback was unable to add to early gains seen in Asia. Gapping higher across the board the USD began to fall in European trade eventually opening New York on the lows for the session so far; technical levels in a few pairs are again being tested and if the USD can’t hold the current lows more downside is expected before the London fix. Today’s data will likely not be a factor as the market appears focused more on the employment and growth data but a large decline might accelerate the USD’s fall. Cable initially started softer but held last week’s low at 1.9648 for a technical double-bottom. The rate began to trade higher on lighter volume and some close in stops were seen again as the rate lifted into the 1.9720/30 area; the release of UK data helped push the GBP higher during late European trade. UK output prices hit a 17 year high and combined with a firmer EURO the GBP rallied through stops higher at the 1.9800 area and currently is on the highs in New York at 1.9875; rate almost putting in a reversal. EURO remains firm after a slow start, lows in Asia at 1.5671 attracted large names traders say and the rate recovered quickly. Mid-East buying was seen in the rate around the 1.5780 area as was also seen last week in that area; high prints in NY at 1.5876 still unable to lift through the offers resting in the 1.5880 area. Forex Traders note that the rate is building a fairly obvious rising wedge into the lifetime highs and expect at least one try for stops said to be in the 1.5920/30 area; option defense expected to be solid at 1.5920. USD/JPY is reversing hard with two-way volatility rising as well; high prints at 101.52 offered by exporters and the rate is on the lows in early NY at 100.32. Traders note that the rate is poised to find large stops that are in the 100.00 area just under the lows from last week. Should the rate break into stops it would make a rather poor showing on the charts and will likely attract additional selling on a close under the 100.00 handle. For the most part, the USD is starting the week on the defense with traders disappointed the USD couldn’t hold the early gains. Look for more downside if US data tomorrow disappoints.

USD/JPY Daily
R3: 101.80
R2: 101.50
R1: 100.80
Current Price: 100.33
S1: 100.00/100.10
S2: 99.80
S3: 99.50
Rate fails hard at recent resistance making the 102.00 area firm overhead cap; stops under the lows from last week likely growing in size. Support under the 99.50 area likely to give at least one bounce so aggressive traders can sell the next rally. Look for stops above the market to be lowered into the 101.50 area as aggressive shorts likely to think that the high for the week is in should stops under the 100.00 area get triggered. Potential for higher prices is lower after rejection of G7 upside help.

EUR/USD Daily
R3: ?
R2: 1.5915
R1: 1.5880
Current Price: 1.5873
S1: 1.5820
S2: 1.5780
S3: 1.5740/50
Rate up against offers at this moment, size said to be on the offer but bids so far able to absorb. Stops likely over the recent lifetime high but the speed of the recovery overnight suggests that those bids are the last of the stops; lots of close-in action from daily traders some desks report. If hook reversal is negated by a close over the 1.5915 area upside target is easily the 1.6080 area in my view. Look for a lot of volatility near term as traders cope with a potential breakout.

Analysis 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]

Today’s US Dollar Trading

• USD has range-bound trade despite news
• CPI as expected, Housing data worse
• EURO scores a lifetime high

Overnight Preview
• Look for the USD to consolidate with weaker tone
• Book-squaring ahead of US data tomorrow likely
Looking Ahead
• 9:00 AM CDT Thursday Philly Fed forecast -14.0

Summary
The USD was under pressure most of the trading day today after a quiet two-way start in Asia that saw the highs for the day. Remaining inside established ranges on the highs, the Greenback continued to probe for serious buyers but found none as today’s inflation data and housing data disappointed USD bulls quickly. Although benign, the CPI numbers suggest that producers are holding back some of the pain that the inflation pressures seem to be giving the economy at this time; PPI yesterday showed that inflation was certainly being seen at the manufacturing level while today’s “as expected” CPI numbers show the cost is not being passed to the consumer very quickly. That leaves a lot of room for the Fed to stimulate growth and most analysts are upping the forecasts to include a 25 BP rate cut at the April 30 FOMC meeting. In my view, the lack of hard downward pressure on the USD despite the bad housing data suggests that the jury is still out as to the extent of the potential for a housing rebound. Still declining the housing starts fell 11.9% while permits continued to lag. Traders took the opportunity to sell USD across the board but the lack of downside follow-through argues for continued two-way trade. The one exception was EURO which scored another lifetime high at 1.5980 and ends NY near the highs suggesting more upside on the way. Aggressive traders can look for the 1.60 area of psychological “big-figure” resistance to offer a selling opportunity. Likely to see a “first through the even” scenario and I suggest a short from above the 1.6000 handle. Cable rallied along with EURO but found resistance at the 1.9800 handle; high prints at 1.9809 before falling back with the rate dropping under the 1.9720/30 area “sell-zone” on the close. More selling expected in GBP so hold shorts if you have them. USD/JPY continued to trade two-way with high prints at 101.94 in Asia going unchallenged in NY; lows at 100.81 also unchallenged leaving most of the day mid-range. Firmer stocks were a big help for the rate and traders expect offers between 101.80 and 102.00/10 to cap further gains should the Nikkei open firmer. In my view, a sideways selling opportunity today; look for the USD to suffer more tomorrow.

GBP/USD Daily
R3: 1.9800/10
R2: 1.9750
R1: 1.9720/30
Current Price: 1.9710
S1: 1.9680
S2: 1.9650
S3: 1.9620
Although reversal pattern is active for the bounce off the 1.9600 area the long selling wick is more significant as the stops above the 1.9720/30 area “sell-zone” failed to include fresh buying. Close under the 1.9700 handle ideal but with a few minutes left to run a close under 1.9720 is still technically viable for a “head-fake” up day. Look for stops to build under the 1.9680 area in range for late longs today adding to volatility. 50 bar MA offered resistance today and as long as rate hold below; stay short.

USD/JPY Daily
R3: 102.20/30
R2: 102.00/10
R1: 101.80/90
Current Price: 101.66
S1: 101.20/30
S2: 100.80
S3: 100.50
Overhead resistance continues to remain thick with lots of offers reported between 101.80 and 102.00/20 area (?) suggesting that the rate will remain range-bound at least through Philly Fed tomorrow. Look for stops above the 102.30 area to build as well as under the 100.50 area with more at 100.00/10. If rate can hold under the 101.50 are by Friday’s trade I think a downside test of support is in the works for next week. Stops likely large under the trend line for the small up channel.

Analysis 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]

Overnight Asia and Europe

• USD two-sided and consolidates
• No real market moving news

Today’s Economic Reports

• None in the US today

Majors open New York mixed
The USD is trading sideways in a reasonable pattern of consolidation this morning after a quiet two-way overnight session. No real market moving news was on tap and the majors are both sides of yesterday’s New York close. Currently at the start of New York trade the majors are mixed as light volumes and technical trade start the day. The USD is higher against the GBP; overnight highs on light volume were 1.9976 and after the release of BOE MPC minutes the rate sold off for a low print at 1.9866 on better volume. Traders say the split vote was seen as bearish and sentiment continues to be neutral to bearish long term; cross spreading for EURO continues to increase volatility some say. EURO fell back from the all-time high yesterday as traders remain cautious ahead of US data due tomorrow. Desks report thin order books but also a Swiss private bank on the bid around the 1.5960 area; highs overnight at 1.6002 with low prints at 1.5939 during European trade. Stops are likely building under the 1.5920 area and aggressive traders can look to add to shorts on a break into the 1.5800 handle; a close under the 1.5880 area argues for a deeper pullback in my view. USD/JPY is on the defense this morning as no bids were seen in Asia for a high print at 103.34 before offers took over; low prints just ahead of New York at 102.74 making the day an inside range day so far. Traders note that tensions with China ahead of the Olympics and trade talks with the Eurozone are making trade “nervous” which often is seen as USD bullish; potential will likely keep USD/JPY two-way and within established ranges making for good opportunity on the short time-frames. Swissy is also locked inside range today with very little action; traders expect support at the bottom of the range near-term. In my view, today will likely remain a consolidation day with the GBP sliding around for the most part; I don’t think the EURO has another high in mind this week and I think the USD will remain range-bound through the data tomorrow. Look for data to be USD neutral-to-bearish on Thursday and for the weeks’ range to extend to the downside for the Greenback during Thursday.

GBP/USD
Resistance 3: 1.9980/2.0000
Resistance 2: 1.9940/50
Resistance 1: 1.9900
Latest New York: 1.9845
Support 1: 1.9820/30
Support 2: 1.9800
Support 3: 1.99750
Rally yesterday was indeed a head-fake so far this next 24 hours. Offers are thick ahead of the 1.9980/2.0000 area again, stops said to be under the 1.9850 and 1.9820 areas today.

Comments
Rate back below the 1.9900 handle on the day; look for continued pressure back to the support zone around the 1.9750 area.
Stops likely to drive trade lower today and rate is making lows in early New York action. Close below the 1.9800 handle opens the door for a test of the 1.9700 handle.
Upside is limited in my view but ranges can be wide as evidenced by the past 48 hours of trade. Sell rallies if not short; buying dips dangerous in my view.
Aggressive traders can sell over the 1.9880 area during the day.

EURO/USD
Resistance 3: 1.6020/30
Resistance 2: 1.6000
Resistance 1: 1.5980
Latest New York: 1.5940
Support 1: 1.5920/30
Support 2: 1.5900
Support 3: 1.5880
Rhetoric from ECB to remain hawkish, Wednesday German manufacturing news, Thursday IFO.
4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.6100
Hold and look to add on a close below 1.5900 area

Comments
Market is failing at resistnace, be patient on the potential break
Overhead resistance is heavy above the 1.5980 area; traders say offers extend into the 1.6000/30 area with stops above.
Looking for a “first through the even” scenario; a strong long-liquidation break is coming and aggressive traders can look to sell into a sharp rise.
Sell zones today are 1.5980, 1.6000, 1.6020; buy zones 1.5850, 1.5830, 1.5800
Watch for two-way volatility; expect a sell signal on the hourly charts. Hook reversal still valid. Be ready to add quickly if this rally fails.

USD/JPY
Resistance 3: 104.00/10
Resistance 2: 103.80
Resistance 1: 103.50/60
Latest New York: 103.05
Support 1: 102.70
Support 2: 102.40/50
Support 3: 102.20
Yuan still marching higher taking the Yen with it.
04-21-08 SHORT USD/JPY 103.60/80 Stops @ 104.80
Look to ADD Wednesday/Thursday on a close under the 102.50 area.

Comments
Drop under the 103.00 area still labored as conditions are thin.
Traders note that the market is still trading technically and expect stops to be run in both directions near-term; expect some volatility. Day traders may get a lot of opportunity as the rate will likely cover a lot of the same ground twice on the hourly time-frame.
Need a close back under the 50 bar MA today before the start of Tokyo, REALLY making us wait for it.
Balance of trade number no factor overnight Tuesday; close under 103.00 likely to attract more selling.

USD/CHF
Resistance 3: 1.0180
Resistance 2: 1.0140/50
Resistance 1: 1.0100
Latest New York: 1.0087
Support 1: 1.0050
Support 2: 1.0010/20
Support 3: .9980
If short from 1.0180/1.0200 area hold and look to ADD on a close below the 1.0050 area today.
2-22-08 SHORT 1.0030 Stop @ 1.0130

Comments
Rate still two-way and consolidating, waiting for US housing data tomorrow most likely. Stops a risk above the 101.40/50 area; also under the .9950 area
look for a test of the lower portion on the range within 48 hours (Wednesday AM)
Expect a bounce from .9950 so OK to cover shorts and go long from that zone. Be nimble though as a break below there likely to draw aggressive selling.
No follow-through is to be respected; look for inside range day closing higher tomorrow 4-22-08 with no action over the 1.0140/50 area.
ADD on the close 4-22-08; should be Short 1.0180 Stop @ 1.0280, more on at 1.0030 Tuesday.

USD/CAD
Resistance 3: 1.0220
Resistance 2: 1.0200
Resistance 1: 1.0160
Latest New York: 1.0122
Support 1: 1.0070
Support 2: 1.0020/30
Support 3: 1.0000/.9990
04-21-08 SELL 1.0060 Stops @ 1.0160
BOC cuts rates 50 BP; slightly surprises market.
Stop was missed; OK to ADD on further weakness.

Comments
Sell signal overnight, OK to hold through the close as stops are out of range from last week. Close below 1.0000 sets up break into the bottom of the range in my view.
Massive head-fake on the news this morning but rate misses our stop; OK to ADD more on a break of the 1.0000 handle
Tested downside for light support at the 50 bar MA,
Nothing to do but continue to wait in my view.

Analysis 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]

Today’s US Dollar Trading

• USD mixed
• EURO fails at highs

Overnight Preview

• Look for more booksquaring
• Quiet ahead of US data in the morning

Looking Ahead

• 7:30 AM CDT Durable Goods forecast +0.1%
• 9:00 AM CDT New Home Sales forecast 490K

Summary
The USD is mixed to end New York today after a correction overnight driven by rhetoric and stops. Traders note that the Greenback traded two-sided in Asia vesting both sides of the New York close and volumes were light suggesting that technical trade was dominate. Once the European session opened the USD began to climb a bit led by a drop in EURO as enthusiasm for an ECB rate hike faded. German manufacturing data was on the lighter side and the failure of the EURO to score another high after the psychological 1.60 handle traded yesterday added to a bout of profit-taking by nervous longs. Opening lower in NY the EURO ran for lows and printed at 1.5860 during the day; a close under the 1.5900 handle appears to have solidified the bears argument that a correction is in the works. Aggressive traders can add to shorts on a close under the 1.5880 area. Cable rotated lower for a low print at 1.9771 and found stops all the way down layered 1.9880, 1.9850, 1.9820 and 1.9800 but support ahead of the 1.9750 area suggests that the rate will bounce; look to sell a 1.9880 area bounce in my view. MPC minutes showed a split vote at the last meeting and the doves are not agreed moving forward; seen as mildly bullish the rate was unable to hold and remained under pressure all day. USD/JPY had a brief bout of short-covering and a rally to 103.50 area but as expected the rate found offers on the approach and fell back for lows at 102.74 before bouncing again for a short-squeeze to 103.80 area; close around 103.50 suggests the top of the range. In my view, the USD has had a low-volume rally that has kept prices within established ranges. I would look to sell the rally and expect a break lower on US data due out tomorrow. Look for poor housing to push the Greenback tomorrow but tonight expect a quiet overnight session.

Analysis 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]

Overnight Asia/Europe

• Greenback starts firm then falls in Europe
• Lots of rhetoric from Europe
• Technical trade dominates

Today’s Economic Reports
• None in the US

Summary
The USD is slightly weaker this morning after a quiet start in Asia last night; traders note that firmer equities in Asia had no impact on USD/JPY this time and most feel that the market is sidelined ahead of FOMC rate announcements on Wednesday. Desks report some early demand for USD/JPY but once the European markets opened the demand fizzled; high prints in USD/JPY at 104.83 after a slow start. Exporters are noted to be ready on the offer at 105.00 with stops resting above traders say. GBP had a slow start as well but follow-through bids from Friday lifted the rate into early stops at the 1.9850/60 area and a high print in Europe at 1.9913 before dropping back when selling emerged in the EURO-Sterling cross; lows in Asia currently unchallenged at 1.9780 in early NY trade. Lots of rhetoric out during European trade and some data; traders note that the EURO seems heavy at the highs after the release of CPI data but the rate is still firmer on the day; high prints at 1.5694 with lows at 1.5592 making for some volatile trade early. ECB Mersch had no comment on the report but did emphasize that the bank is still concerned with upside risks to inflation; traders note that the market is braced for no ECB rate cut until at least Q4 2008 but note that dips are bought at key technical levels suggesting that at least for the near term the EURO will remain more two way even in a correction. Traders holding open shorts in EURO and GBP can sit tight for now as it appears that the technical S/R levels will contain dips and rallies; stops on the other side of those levels likely to be growing in size as the market is looking for a decisive move by the Fed with more rate cuts to come; if that is not the impression the markets get on Wednesday then the USD may rally hard against the European currencies. Other major pairs remain range-bound and technical in nature this morning; USD/CAD has had a volatile morning so far and buying dips seem to be the favored move to start the week. Look for the Greenback to consolidate today and into tomorrow; it’s a light calendar until then. Aggressive traders can trade from both sides as the USD is likely to cover a lot of the same ground twice.

GBP/USD
Resistance 3: 1.9980/90
Resistance 2: 1.9950/60
Resistance 1: 1.9910/20
Latest New York: 1.9883
Support 1: 1.9750
Support 2: 1.9690/1.9700
Support 3: 1.9650

Comments
Rate bounces nicely on lighter volume, should be a “dead cat bounce” Closing under the 1.9800 the next 24 hours likely set the stage for a return to lower prices early in the week.
Upside is limited in my view but ranges can be wide as evidenced by the past 72 hours of trade. Sell rallies if not short; buying dips dangerous in my view.
Drop to under the MA’s very important in my view. Long selling wick makes sell side attractive for further losses. Need down bars with higher volume to confirm.

EURO/USD Daily
Resistance 3: 1.5750
Resistance 2: 1.5720/1.5730
Resistance 1: 1.5690/1.5700
Latest New York: 1.5633
Support 1: 1.5590/1.5600
Support 2: 1.5550
Support 3: 1.5520

Comments
Market has failed at 1.6000 area resistance with confidence now, be patient on the potential break.
Overhead resistance is heavy above the 1.5750 area; traders say offers extend into the 1.5800/30 area with stops above.
Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works.
Strong long-liquidation break is still coming; look for a test of the lows again within 24 hours. Watch for two-way volatility. Be ready to add quickly if a rally happens; likely to fail quickly.
Today a close back under the 1.5600 handle very important; look for a test of the 1.5550 area early this week, offers likely on a rally to 1.5700 area.

Analysis 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]

Today’s USD Trading
USD ends mixed
GBP falls through support

Today’s Economic Reports
Consumer Confidence out at 62.3

Looking Ahead
All times EASTERN (-5 GMT)
8:15am USD ADP Nonfarm Employment Change -60K 8K
8:30am USD Advance GDP q/q 0.2% 0.6%
10:45am USD Chicago PMI 47.5 48.2
2:15pm USD FOMC Statement
2:15pm USD Federal Funds Rate 2.00% 2.25%

USD mixed, GBP and EURO fall through support
Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY.
Many traders get so absorbed in trying to find the “best” entry point that they completely lose focus on the really important things.The most significant thing to always remember is that price action needs to be exploited from the point of view that you need to buy low and sell high in order to profit.It doesn’t matter if you are shorting the market or going long—you ALWAYS must have a buy execution lower than your sell. Anything else is a loss. Therefore, you must always be selling strength; whether or not you are covering a long or going short. Same for the other way around. It doesn’t matter if you are covering a short or going long; you must buy weakness. In the final analysis, your trading results are determined by your willingness to buy when everyone else is selling…and buy when everyone else is selling. Don’t look for the perfect place to enter. Rather look for a buy zone after a break and vice-versa.
Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY. The rate found stops under the 103.50 area for a low print at the 103.21 number before rallying hard to re-gain the 104.00 handle; sympathy buys along with equities as well as cross-spreading likely lifted the pair. Looking ahead to US data tomorrow you can expect a volatile day in my view. First up is ADP private payrolls which have added a lot of two-way forex action. Next is GDP and last is FOMC—all things considered tomorrow is the day to set the tone for the rest of the week. Look for the Greenback to be quiet overnight.

GBP/USD Daily
Resistance 3: 1.9820
Resistance 2: 1.9750
Resistance 1: 1.9720/30
Latest New York: 1.9683
Support 1: 1.9650/60
Support 2: 1.9600
Support 3: 1.9550
Other Things to Watch/Open Trades/News
Currently flat—stopped out of short yesterday.
Rate has strong buy signal but top is at
resistance; possible “late” conflicting signal.
Rate under 1.9720 area important, major stops likely under the 1.9600 handle; likely to be challenged soon but given conditions a bounce is coming first.
Closing under the 1.9600 the next 24
hours likely set the stage for a return to 2008 lows near-term.
Upside is 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 in my view.
Drop to under the MA’s very important in my view. Long selling wick makes sell
side attractive for further losses. Need down bars with higher volume to confirm
Overnight data unfriendly with more to come, Some pressure from EURO also.
Data due Wednesday All times EASTERN (-5 GMT)
Tentative GBP Nationwide House Prices m/m -0.5% -0.6%

EURO/USD Daily
Resistance 3: 1.5680
Resistance 2: 1.5650/60
Resistance 1: 1.5600/10
Latest New York: 1.5565
Support 1: 1.5630/40
Support 2: 1.5600/10
Support 3: 1.5480
Other Things to Watch/Open Trades/News
4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.6100
4-24-08 SHORT EURO/USD 1.5650 Stops @ 1.5750
Look to add to shorts again soon.

Comments
Market has failed at 1.6000 area resistance with confidence now, be patient on the
potential break. Overhead resistance is heavy above the 1.5750 area; traders say
offers extend into the 1.5800/30 area with stops above. Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works. Strong long-liquidation break is still coming; look for a test of the lows again within 24 hours. Watch for two-way volatility. Be ready to add quickly if a rally happens.
Data due Wednesday All times EASTERN (-5 GMT) Forecast Last
3:55am EUR German Unemployment Rate 7.8% 7.8%
5:00am EUR CPI Flash Estimate y/y 3.4% 3.5%
5:00am EUR Consumer Confidence -13 -12

USD/JPY Daily
Resistance 3: 105.00
Resistance 2: 104.80
Resistance 1: 104.20/30
Latest New York: 104.00
Support 1: 103.50/60
Support 2: 103.20/30
Support 3: 103.00
Other Things to Watch/Open Trades/News
Still Flat but aggressive traders can sell on a test
of the 105.00 area;
Looking at the sell side early this week.

Comments
Extra effort by the bulls cleans out stops and makes the 105.00 area in view now.
Don’t expect a rally over the 105.00 area to last, need a failure on good volume but
rate continues to trade firm; no failure on Friday sets the tone for a test of 105.00
today at some point.
Traders note that the market is still trading technically and expect stops to be run in
both directions near-term; expect some volatility. Day traders may get a lot of
opportunity as the rate will likely cover a lot of the same ground twice on the hourly time
frame.
With rate back under the 104.00 handle expect a bounce from the 103.20/30 area if
stops accelerate the move; look to sell that bounce the next 48 hours.
Data due Wednesday All times EASTERN (-5 GMT) Forecast Last
1:00am JPY Housing Starts y/y -6.5% -5.0%
Tentative JPY BOJ Governor Shirakawa Speaks
2:00am JPY BOJ Monthly Report

USD/CHF Daily
Resistance 3: 1.0450
Resistance 2: 1.0420
Resistance 1: 1.0380
Latest New York: 1.0373
Support 1: 1.0320/30
Support 2: 1.0300
Support 3: 1.0270/80
Other Things to Watch/Open Trades/News
SHORT USD/CHF 1.0380 Stops @ 1.0480
Aggressive traders can sell 103.70/80 area and
hold over the weekend (Higher risk so trade accordingly)

Comments
Rate clears stops above near-term resistance. Rate now at very top of range; look for
a sell-off from here but news is needed. Pullback was bought after the fix on Friday
and the rate is firm now for a test of the 104.30/40 area again.
Test of the lower range now expected if rate can fail again at resistance.
Expect a bounce from 1.0250 now so be nimble though as a break below there likely
to draw aggressive selling. Rate has set up to attract dip buying so we need to see if
that is a head-fake. Need a failure at 1.0420 near-term to go short in my view.
No follow-through is to be respected; look for offers to show up higher than the1.0400
handle now that the bounce followed through higher.
Data due Wednesday All times EASTERN (-5 GMT)
5:30am CHF Leading Index m/m 1.46 1.54

Analysis 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]

Today’s USD Trading
• USD quiet in Asia, firms in Europe
• GBP and EURO rally after rate cut
• Whipsaw in the majors
Today’s Economic Reports
All times EASTERN (-5 GMT)
• 8:15am ADP Private Payrolls, Actual+ 10,000
• 8:30am Advance GDP q/q 0.2%0.6%, Actual +0.6, -0.2%
• 8:30am Advance GDP Price Index q/q 3.0%2.6%
• 8:30am DECI q/q 0.8%0.8%
• 9:45am Chicago PMI 47.548.2 Actual 48.3
• 2:15pm FOMC, actual 25 BP cut
Looking Ahead to Thursday
All times EASTERN (-5 GMT)
• 7:30am Challenger Job Cuts y/y 9.4%
• 8:30am Personal Spending m/m 0.2%0.1%
• 8:30am Core PCE Price Index m/m 0.1%0.1%
• 8:30am Unemployment Claims 363K342K
• 8:30am Personal Income m/m 0.4%0.5%
• 10:00am ISM Manufacturing Index 48.048.6
• 10:00am ISM Manufacturing Prices 83.583.5
• 10:00am Construction Spending m/m -0.8%-0.3%
USD two-way again, GBP rallies back, Fed cuts
As expected the FOMC cut interest rates 25 BP today and changed the wording of the statement suggesting that the Fed is taking a more neutral course in the coming months. Analysts are debating that the Fed would like to see the effect of both the new liquidity windows and the government rebate-stimulus package before weighing in on further rate cuts. The Fed made clear that it is still considering the inflation pressures seen recently and the bottom line to the rate cut is a “wait and see” attitude. In response the USD whipsawed trader’s on the news; initially rising against some pairs and then getting slammed later. Traders note that the rally in GBP as well as EURO are “knee jerk” responses to trade volatility and don’t expect a serious change in trend; most agree the USD “squeezed” weak longs initially. For the record, the GBP rallied on news starting this morning as other US news was not USD friendly but popped higher on stops and short-covering above the 1.9800 handle for a high print at 1.9897 before finding offers at technical resistance around the recent developing down trend. Traders note that cable has been exceptionally volatile the past several weeks and today was no exception; if the rate follows suit the next 24 hours we should see a return to the 1.9600 handle by the end of the week. EURO rallied initially on the news for a high print at 1.5645 and looks set to continue higher but offers in the 1.5650 area and 1.5680 area are said to be getting thicker so this rally off the lows may be a dead-cat bounce. Look for a lack of follow-through overnight. USD/JPY broke under the 104.00 handle in heavy trade for a low print at the 103.68 number at last look; traders note that the rate has had good selling from CTA types and exporters around the 104.60/80 area this morning. USD/CAD and Swissy also taking their lumps but not nearly as aggressively as other pairs; OK to hold open shorts across the board and let the overnight action work for us. Tomorrow is a light day for news so expect a rotation in the USD; especially against GBP.
GBP/USD
Resistance 3: 1.9950
Resistance 2: 1.9900/10
Resistance 1: 1.9820/30
Latest New York: 1.9883
Support 1: 1.9820/30
Support 2: 1.9780
Support 3: 1.9750
Other Things to Watch/Open Trades/News
4-30-08 SELL GBP/USD 1.9820 OB Stops@ 1.9920
(Should be short from this afternoon)
Whipsaw still evident, selling into the top of the trend line and volatility.
Comments
Rate under 1.9720 area important but rally back clears weak shorts. major stops likely under the 1.9600 handle; likely to be challenged soon but given conditions a bounce is coming first (which happened after FOMC)
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 in my view.
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.
Overnight data unfriendly with more to come, Some pressure from EURO also.
Rate attracting bids from momentum players so look for stops close-in overnight.
Data due Thursday: All times EASTERN (-5 GMT)
2:00am GBP Nationwide House Prices m/m -0.5%-0.6%

EURO/USD
Resistance 3: 1.5700/10
Resistance 2: 1.5680
Resistance 1: 1.5650
Latest New York: 1.5615
Support 1: 1.5580
Support 2: 1.5540/50
Support 3: 1.5520
Other Things to Watch/Open Trades/News
4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.5750
4-24-08 SHORT EURO/USD 1.5650 Stops @ 1.5750
ROLL Stops to 1.5750 on entire position; look to add to shorts again later today.
Close under the 1.5550 area sets up a test of stops.
Comments
Market has failed at 1.6000 area resistance with confidence now, be patient on the potential break. Overhead resistance is heavy above the 1.5750 area now with 1.5660 first; traders say offers extend into the 1.5800/30 area with stops above. Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works. Strong long-liquidation break is still coming; test of the lows as expected Wednesday. Watch for two-way volatility. Be ready to add quickly if a rally happens; rate has BIG stops under the 1.5520 area and a break under the 50 bar MA could be swift. Rally after FOMC is a “head fake”; look for retreat within 24 hours.
Data due Thursday: All times EASTERN (-5 GMT)
All Day EUR Holiday: Labour Day

Analysis 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]

Overnight Asia/Europe

• USD very quiet
• Holidays in Asia and UK

Today’s Economic Reports
All times EASTERN (-5 GMT)
• 10:00am USD ISM Non-Manufacturing Composite forecast 49.6

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
The USD is trading sideways to slightly lower to start New York after a very quiet overnight start to the week. Asian trade was very subdued with Japan, Korea and Thailand market centers closed; traders noted good demand for USD/JPY from a UK momentum fund as well as order driven trade in EURO. With the UK closed also for a minor holiday European trade was also on the quiet side; traders note that volumes were very light and trade remained technical in nature. For the most part the USD remained within a few pips either way of the Friday New York close; cable saw downside pressure from light selling around the 1.9720 area and more in sympathy from a weaker EURO. High prints in Cable at 1.9786 were a few pips shy of the 100 day MA suggesting that larger offers are willing to sell rallies despite the thinner conditions. Stops elected under the 1.9700 area gave GBP one more push lower ahead of the NY open for a low print at 1.9660; traders expect a slight bounce from this support area and today’s ISM services may provide the impetus. EURO is a bit better than Friday’s close but still trading two-way and respecting the 1.5500 area of current resistance. Traders note no real market-moving news but mention the cross-spreaders for Yen and Sterling have been active on the Buy side overnight. EURO not expected to extend gains today and rallies are seen as a selling opportunity. USD/JPY continues to hold the 105.00 handle in light trade with the lack of follow-through buying a concern for the bulls. In my view, the fact that momentum accounts were on the buy side of USD to start the week is a great clue the rate is about to reverse; aggressive traders can sell USD/JPY over the 105.20 area if not short already. Swissy and Loonie are also slightly lower but still within established ranges from last week. Looking for a solid break in both pairs this week so any strength will likely be a selling opportunity. After ISM this morning look for the markets to have a brief “Knee-Jerk” reaction to the news and then settle back to pre-report numbers. Without real news in the US until Wednesday and the holidays overseas today should remain fairly quiet without major action.

GBP/USD Daily
Resistance 3: 1.9820
Resistance 2: 1.9780
Resistance 1: 1.9720
Latest New York: 1.9684
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.
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.
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


EURO/USD Daily
Resistance 3: 1.5600/10
Resistance 2: 1.5550/60
Resistance 1: 1.5500
Latest New York: 1.5453
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; bounce sure to happen soon but upside likely limited to 1.5520/30 area. Look to sell a bounce during the next 48 hours. 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.
Data due Tuesday: All times EASTERN (-5 GMT)
4:00am Services PMI (r) 51.8
5:00am PPI m/m 0.6%

Analysis 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]

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 to Tuesday
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 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

EURO/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%

Analysis 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]

Today’s US Dollar Trading

• USD two sided, ends flat-to-mixed
• Reverses early weakness
• Traders waiting for tomorrow’s data

Overnight Preview
• Expect consolidation.
• USD likely to range trade on light volumes ahead of data tomorrow

Looking Ahead to Wednesday
All times EASTERN (-5 GMT)
• 9:00 AM CDT Pending Home Sales forecast -0.6%, Look for weak housing data.

Summary
Aside from some early fireworks on the sell side this morning the USD was relatively subdued for most of New York trade. Starting slowly in Asia overnight as the last day of Golden Week slowed the pace of early action the USD remained two-sided in technical trade until New York got underway. A “stop-fest” in the USD/CAD as early USD weakness spilled over into all the pairs; the majors all rallying into resistance with stops the other side for almost everybody creating a near-term break in the Greenback. Loonie sliding under the 1.0050 area and finding lots of action as expected, low prints at .9996 on the second attempt at par. After the lows in USD/JPY and the highs in EURO and GBP all held resistance the USD mounted a turnaround that extended a full handle higher in Swissy and back through the opening ranges in the other pairs. On the day the USD has put in a buying wick in most pairs suggesting that today’s early weakness was only weak shorts. GBP managed a high print at 1.9775 just barely above the 1.9750 pivot area before falling back to trade through the opening range at 1.9725; Cable looks set up for a rotation lower as the EURO also failed and these two are trading in sympathy together. EURO highs at 1.5596 attracted a lot of active offers once the stops were cleared traders say; the rate stays positive on the day but with a long wick at resistance. Across the board the volumes were modest as traders complained of thin conditions due to the various minor holidays this week. With no real news on the boards today the action today is most likely random noise between existing S/R levels; most agree the recent USD strength has a bit more to go before a correction so possibly today was an opportunity to get long from some recent lows. In my view, the USD closed higher than I would like to see for an extended correction and I suggest getting out of USD/JPY shorts and waiting on selling the Greenback until after the news is out tomorrow. Price action is always correct and the drop today needed to stay under pressure if the fire was out of the rally but due to the swift turnaround in thin conditions I think the USD has a bit more to go to the upside yet.

GBP/USD Daily
Resistance 3: 1.9820
Resistance 2: 1.9780
Resistance 1: 1.9740/50
Latest New York: 1.9730
Support 1: 1.9650/60
Support 2: 1.9620/30
Support 3: 1.9600

Comments
Rate stays two-way all day, closes above the 1.9700 handle, still in the “sell zone” with existing S/R still active. Look for a test of the 1.9600 area within 24 hours; likely after the news Wednesday. 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.
Closes over the MA’s likely not to last so a rally over the 100 bar MA a good sell in my view. Still 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.
Data due Wednesday: All times EASTERN (-5 GMT)
4:30am GBP Services PMI 51.7
7:01pm GBP Consumer Confidence Index 74

EUR/USD Daily
Resistance 3: 1.5650
Resistance 2: 1.5590/1.5600
Resistance 1: 1.5550/60
Latest New York: 1.5536
Support 1: 1.5450
Support 2: 1.5400
Support 3: 1.5380

Comments
Two-way action all day, weaker close after push to resistance, look for rotation lower tomorrow. Rate clears close in stops both ways again and attracts active selling above 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; 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; missed it today unless actively watching.
Data due Wednesday: All times EASTERN (-5 GMT)
3:30am EUR ECB President Trichet Speaks
4:00am EUR Services PMI 51.8
5:00am EUR PPI m/m 0.6%

Analysis 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.