� USD recovers in Asia, falls in late Europe
� German ZEW better than expected, EURO rallies to new high
� Cable follows EURO higher
Today�s Economic Reports
� 7:30 AM CDT Balance of Trade forecast -59.5B
Looking Ahead
� Friday CPI forecast +0.3%, core +0.2%
Summary
The USD is softer this morning after staging an early recovery in Asia. Initially trading to highs for the week against Cable and showing signs of potential upside against the other majors the USD came under selling pressure in late European trade after the release of German ZEW Sentiment date. Although the number was lower at -32 vs. -39.5 last month it was above median forecasts of -40.0 giving traders a boost to buy EURO. EURO rallied on the news first finding stops above the 1.5400/10 area and then with active buying rallied above the previous highs last Friday for a new lifetime high at 1.5496 before offers expected ahead of the 1.5500 figure capped the move. Russian names, US investment names were seen on the bid traders say; offers were from profit-taking by longs and option defense ahead of the 1.5500 number. EURO remains firm ahead of today�s Balance of Trade data due out this morning but traders don�t see any surprises in the works. The slowdown in the USD economy will likely have slowed the trade deficit so even a better-than-expected number is actually �expected�; traders suggest that another round of USD short-covering may result but sentiment remains almost 100% bearish�which is scary in my view. When the EURO finally corrects it could be an absolute blood bath in my view. Cable followed EURO higher with Middle-Eastern names seen buying as the pair rallied into stops at the 2.0150 area for a high print at 2.0214 before falling back. Opening New York at 2.0270 area suggests a bit of selling pressure is coming on as the rate hold below previous printed high and below the 50% fib defense. Traders note that volumes in both GBO and EURO were average so far today. USD/JPY has found good support after seeing a break lower in Asia. Low prints at 101.41 were bought by semi-official names and real money account and the rally extended into the 102.20 area just ahead of the New York open. Stops were seen close in at 102.20/30 for a high print at 102.33 with more stops said to be resting at 102.50. Today�s US data is most likely going to be a non-event although a very good number could spark a modest USD rally; most traders are watching CPI on Friday. Speculation that the US Fed will cut rates by 75 BP remains high and a strong inflation number may stifle that enthusiasm.
EURO/USD Daily
R3: ?
R2: ?
R1: 1.5490/1.5500
Current Price: 1.5473
S1: 1.5400/10
S2: 1.5380
S3: 1.5340/50
Rate powers higher in a relentless march to score high after high; all this bullish sentiment is an accident waiting to happen in my view. A correction is long overdue and a liquidating break is inevitable sooner or later; be very careful holding longs. Aggressive traders can sell 1.5450 area. Stops likely rolled-up under the 1.5350 area and late longs likely to have their in range. If option defense can�t cap the move for a correction the rate has stops from shorts likely at the 1.5520 area.
GBP/USD Daily
R3: 2.0280
R2: 2.0250
R1: 2.0210/20
Current Price: 2.0160
S1: 2.0120
S2: 2.0080
S3: 2.0040/50
Rate finds offers capping strength in the 2.0200/20 area as expected and is falling back to test support at or around the 2.0100 area; look for a reversal later should stops be found under the 2.0080 area from late longs. Strong sell signal given today also suggests rate is topping, aggressive traders can sell above the 2.0180 area if we get it again today. Stops above the market at 2.0240/50 area likely out of reach today. Close under the 2.0080 area opens the door for a test of the 2.0000 area in my view.
Analysis by: Jason Alan Jankovsky in Association with The Forex Edge
Publisher:
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.
� USD initially firmer in Asia, breaks lower in Europe
� Traders note stop-driven trade
� Demand for EURO from Middle-East accounts noted
Today�s Economic Reports
� None of note in the US
Looking Ahead
� All eyes on US CPI Friday forecast +0.3%, core +0.2%
� Speculation growing for 75 BP rate cut next week by FOMC
Summary
The USD is lower to start New York after a firm start in Asia evaporated into European trade. Despite firmer equities overnight and follow-through from Tuesday�s strong rally the Green back failed to hold onto gains and the majors reversed back into their highs on mostly stop driven trade. Overnight desks report that demand for EURO was seen by Middle-Eastern accounts and rumors of some semi-official buying off the lows around the 1.5350 area helped push the rate into stops at the 1.5390 area. Once those stops were triggered the rate saw waves of stops layered between 1.5400, 1.5430, and 1.5450 for a high print at 1.5479 before offers capped the move again under the 1.5500 psychological barrier. Stops being triggered close-in within range is often a sign of weak hands liquidating suggesting there is a lot of early interest in the short side from the highs; I think the two-way action and covering the same ground twice is a good sign of a top trying to form. Aggressive traders can ADD to short EURO positions from the 1.5450 area. In my view, the EURO continues to be severely overbought and a top is inevitable sooner or later. If this is the top forming for the correction then there should be more clues by the end of the week and with US CPI on Friday. Market tops don�t need much of an excuse to break so be nimble if you are on the long side of EURO. Cable followed EURO higher into strong resistance at the 2.0200/20 area and found it tough going at the triple-top; high prints at 2.0218 were quickly sold and the rate is on the 2.0160/60 area to open New York. USD/JPY held firm most of the overnight session first holding on to the 103.20/30 area through Asia and resisting the sell-off seen in the other pairs until late in the European session; lows eventually found at 102.43 after stops under the 102.80 area were triggered. Traders note that across the board the interest in the majors appears thinner than previous highs suggesting that large names may be staying away from the long side or trying to buy dips; in either case that argues for a more limited upside near-term. Look for the USD to continue two-way ahead of CPI on Friday as the news is light until then. Expect a bout of profit taking by the shorts soon.
EURO/USD Daily
R3: ?
R2: 1.5490/1.5500
R1: 1.5470/80
Current Price: 1.5466
S1: 1.5420/30
S2: 1.5400
S3: 1.5380
Rate technically still an inside range day, highs at 1.5479 drawing good selling and overhead resistance is getting thicker with the 1.5500 figure drawing a lot of protective option defense. In range stops to the upside seen as the main driver overnight suggesting lots of early sell interest. Stops under the market likely to be close in also due to late buyers or short-term buyers. Look for a sharp break on �Fed-Speak� from Bernanke this week or Trichet overseas; the market is looking for direction in my view.
R3: 2.0250
R2: 2.0210/20
R1: 2.0180/90
Current Price: 2.0160
S1: 2.0120
S2: 2.0100
S3: 2.0080
Rate tries for highs one more time and is turned back at the triple-top at the 2.0220 area making the resistance a quadruple-top; very strong resistance in my view. OK to ADD to shorts from the 2.0180 area looking for a break back to the 100 bar MA again. Close under the 2.0070/80 area likely to draw a long-liquidation break. Stops likely close-in and in-range again on the way down from late longs; likely building in the 2.0130/40 area as that was good resistance on the way higher.
Analysis by:
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.
[B][U]Summary[/U][/B]
The USD took it on the chin again today giving back all of yesterday�s hard-won gains and breaking to new lows against the EURO late in the session. Traders note that although the price action was two-way and seemed to be technical in nature, the volumes were lighter and stops did most of the work. Most of the chatter was concerned with who was on what side of the stops desks report and there seemed no shortage of people selling into the highs across the board; but it was not enough to overwhelm the residual bids. All the major pairs started on the defense in Asia but where quickly reversed by Middle-Eastern demand for EURO and Cable traders say. Most of the action was fairly subdued until the start of European trade when light stops were elected in EURO and GBP. Cable rallied along with EURO as stops were elected in layers; noticeably absent was the usual suspects on the Yen crosses as a technical correction was expected after the Yen�s reversal yesterday. Cable continued to climb into the 2.0200 handle by the start of New York following EURO into a high print at 1.5493 in early New York. After a brief selloff the rates got down to wrecking balance sheets as first a sharp rally followed by a sharp break followed by a sharp rally happened up to the London fix; then it was high after high washing out any selling interest into the end of New York. High prints in EURO at 1.5560 and 2.0280 in GBP. USD/JPY made a show under the 102.00 handle for a low print at 101.67 but not before bids tried to lift the pair on each break from 102.50 all the way down to 101.80; traders note that both bulls and bears are thoroughly confused at this point and liquidation was seen from both sides. In my view, the lack of follow-through selling in the majors after such a nice head-start on Tuesday underscores the euphoric nature of trade at this point. In my view, traders need to be flat and wait for more clues before switching sides or again looking for the highs. No matter how you slice it, when price action begins to create more questions than it answers it is best to be sidelined until you get some answers. Until you get better clues to price direction instead of this whipsaw, stay flat and enjoy the madness.
[B][U]EURO/USD Daily[/U][/B]
R3: ?
R2: ?
R1: ?
Current Price: 1.5549
S1: 1.5520
S2: 1.5480
S3: 1.5450
Rate continues to give the bears no quarter and powers to three separate attempts at highs attracting sellers all the way. Rhetoric from ECB governors today did nothing to help the bullish momentum. Lots of reasons to stand aside and in my view it might be a good move to flatten out before switching to the long side or looking for a top. This market will not act rationally at this point and it is WAY overdue for a correction. Look for more upside to the �Oh my god!� level.
[B][U]USD/JPY Daily[/U][/B]
R3: 102.70/80
R2: 102.30/40
R1: 102.00
Current Price: 101.76
S1: 101.40/50
S2: 101.20
S3: ?
Pair retraces buying pressure from yesterday completely negating upside potential, two-bar continuation pattern likely means further declines; no chance of a rally without a change in sentiment or a �surprise� in my view. Bulls completely demoralized I think and they will likely not be looking to buy without a strong reversal pattern. Stops under the ten-year lows likely to be moved up to the 101.50 area as a break looks inevitable. No bottom in sight and a test of the 100.00 level looks next.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B][U]Disclaimer:[/U][/B]
[I]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.[/I]
� USD starts the week sharply lower
� Fed injects liquidity and also lowers discount rate
� BOE adds liquidity
[B]Today�s Economic Reports[/B]
� 7:30 AM CDT Empire State Index forecast -5.0
� 8:00 AM CDT TICS
[B]Looking Ahead[/B]
� 7:30 AM CDT Tuesday Housing Starts and PPI, forecast 995K and +0.3%, core +0.2%
� FOMC rate announcement on Wednesday
[B][U]Summary[/U][/B]
The USD is sharply lower this morning after starting firmer in Asia initially overnight. An emergency rate cut by the US Fed as well as the announcement that JP Morgan would buy troubled Bear Sterns for $2.00 a share sent the markets into a panic; USD falling to record levels against most pairs with the exception of GBP. Cable is weaker this morning on cross-spreading and liquidity issues, the BOE added roughly 5.0B GBP as liquidity concerns engulfed the European markets after the slide in Asia. Equities are sharply lower this morning and further losses are expected in the US session but cooler heads will prevail in my view, the panic that is hitting the markets right now is a great sign of a turn coming soon. GBP highs at 2.0231 were quickly sold by cross-spreaders and the rate dropped to a low print in early New York at 1.9990; the GBP/JPY cross losing over 700 points as the panic spread. EURO opened a bit higher in Asia on follow-through strength from last week and as the buying steeped up the rate soared to a high print at 1.5905 before the offers capped the move. Semi-official names and some sovereign selling were seen traders say and rumors of coordinated central bank intervention to halt the rise of EURO and Yen were making the rounds as well. Officially, there has been no intervention as of this moment excepting the US Fed action to add liquidity, USD/JPY saw heavy selling during both Asia and European overnight action and lows were seen at .9576; highs in Asia were actually better than Friday�s close at .9912 but the rate easily succumbed to panic selling. All the pairs have recovered off their lows and are looking very much like an exhaustion break has just occurred. EURO has fallen back to make lows during New York at 1.5726; overnight Asian lows at 1.5675 still holding. With today�s emergency moves by the US Fed and the BOE I think the markets are losing confidence in the banking system near-term. By moving aggressively so close to a regularly scheduled FOMC meeting I think the Fed is telegraphing that the problems are worse than discussed. Get ready for some big volatility this week.
[B][/B]
[B][U]USD/JPY Daily[/U][/B]
R3: .9880
R2: .9820
R1: .9750/60
Current Price: .9648
S1: .9570/80
S2: ?
S3: ?
Rate plummets to a new 12-year low and now is in panic mode. In my view, panic don�t pay so aggressive traders can look for a buy point soon as the rate reaches for one more low when US data for today is out. People think that the world is ending and cooler heads know to take advantage of this near-term. Look for a bounce out of this .9500 handle today and for volumes to suggest that the shorts covered into the break. Take a lesson from history: �Buy when there is blood in the streets��JP Morgan
[B][/B]
[B][U]EURO/USD Daily[/U][/B]
R3: ?
R2: ?
R1: 1.5900/10
Current Price: 1.5802
S1: 1.5720/30
S2: 1.5670/80
S3: 1.5620/30
Rate extends rally on the panic overnight and is likely to be experiencing an exhaustion top. Look for aggressive jawboning of the EURO�s excessive price and some steps to lower the value this week. Sellers are there traders say but the market is in the grip of panic traders say. Once things settle down the rate will likely see some profit taking. A fall back likely to be seen as a �dead cat bounce� so be careful if looking for the top; you need a high volume sell-off.
� USD takes another plunge on Fed action and liquidity fears
� Equities have violent day, end positive
� Lots of jawboning for a better USD
Overnight Preview
� Expect volatility and more rhetoric
� Traders expect the majors to pullback soon to correct
Looking Ahead
� Fed has FOMC meeting starting tomorrow, traders expect 75 BP cut
� 7:30 AM CDT Housing Starts and PPI forecast 995K and +0.3%, core +0.2%
Summary
The USD got slammed again overnight trading to some of the worst levels in history against some pairs. The US Fed added liquidity and so did the BOE and traders fear the worst is yet to come in the liquidity �crisis� now panicking Wall Street. JP Morgan agreed to buy Bear Stearns today for $2.00 a share which amounts t around five cents on the dollar leaving investors furious; it�s only a matter of time before the lawsuits, Federal Probes and fines start happening. Traders note that the Greenback was sold heavily on high volumes during the overnight sessions but has stabilized during the New York sessions leaving some to suggest that the majors are going to take a breather for a short time; other desks report that their order books are wiped clean expect for stops on winning positions and the major pairs are less than tradable at this point. Apparently the market needs a correction of some kind or a word from someone who has the credibility to support the �crisis� and stabilize the USD. The only exception to the USD crash was the GBP; cable broke sharply along with the USD today. Making an early high at the 2.0231 number the rate started to sink on cross-rate liquidation breaking over 700 points against the yen and trading to a 1.9990 low for USD; traders note that the rate has closed below the 100 bar MA again making for a technical reversal. Aggressive traders can ADD to open shorts for additional weakness into the next level of support around the 1.9750 area. EURO rallied to an overnight high at 1.5905 before reversing but holding the overnight opening range at 1.5675 area. Traders note that the rate is technically ready to advance again to the 1.5950 area but the large wick and head scratching suggest that the rally was used by longs to get out. USD/JPY and Swissy too both traded to significant lows; but both pairs have signs of reversals beginning. Low prints in USD/JPY at 95.76 were bought hard and the rate rallied to 97.70 area into the close; Swissy same story rallying off .9640 lifetime low back to the .9870 area into the close. Potential reversal in the works I think. Look for a Fed cut to be factored in.
EURO/USD Daily
R3: 1.5900/10
R2: 1.5850
R1: 1.5780
Current Price: 1.5745
S1: 1.9670/80
S2: 1.9620
S3: 1.9550
Rate takes the path of least resistance on the news but as the day wore on no follow-through was seen. Long selling wick on the day is the largest wick on daily action in over a year suggesting that volatility is being sold near-term. Late longs likely have stops under the daily low and bids may have been pulled after the highs so far away were hit; traders note that longs likely selling out into the highs. Expect volatility but a top is certainly forming near-term.
GBP/USD Daily
R3: 2.0200
R2: 2.0150
R1: 2.0080
Current Price: 2.0011
S1: 1.9990/2.0000
S2: 1.9940/50
S3: 1.9900
Rate falls back from resistance at the 50% fib defense area, close under the 100 bar MA argues for a near-term continuation of down trend. Look for the rate to open and stay weaker overnight and suffer intraday volatility around FOMC announcement and overseas data. Wait for the close before adjusting positions as I think the volatility will all be small day-traders; not big money accounts. Aggressive traders can add to open shorts and roll protective stops to B/E.
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.
[B][U]Today�s US Dollar Trading[/U][/B]
� Big news is Fed rate cut, 75 BP
� Markets are �disappointed�
� USD begins rally
[B]Overnight Preview[/B]
� Look for more USD short-covering and book squaring
� Volumes likely to surge if close-in stops hit in Asia
[B]Looking Ahead[/B]
� No real news until Friday�s Philly Fed forecast -18.0
[B][U]Summary[/U][/B]
The USD is gaining ground making highs on the day against several pairs as the markets react to a �disappointing� 75 BP rate cut by the FOMC. Market gurus were touting a 100 BP rate cut due to the liquidity �crisis� but in my view, that was a reactionary point of view after the USD�s decline on Monday and the panicky nature of the market. Cooler heads are prevailing as a bout of short-covering is lifting the USD into the best levels of the day; Cable is dropping to new US lows as the selling takes hold. GBP highs just prior to the rate announcement at 2.0276 making for a huge range in the pair but heading into the close the rate is trading back under the 2.0150 area leaving a large selling wick on the day�s action and generating a �strong sell� signal. Traders note that the buying ahead of the news was e-platform accounts and CTA type accounts who are traditionally late to the party; stops close in under the 2.0200 handle helped break the rate lower. EURO has completely reversed from earlier highs above the 1.5800 handle; traders note that official and semi-official selling above the 1.5800 handle helped keep the rate in check until the news. Making lows on the week under the 1.5700 handle for a low print at 1.5666; EURO has found stops close in as well but a slight bid tone remains most likely from stubborn longs traders say. Most technical indicators in all the majors are over-bought and EURO making lows on the week after the news is an obvious clue that a correction is beginning in my view. USD/JPY is roaring back making a two-bar reversal and high prints back over the 99.00 handle at 99.51 as stops are triggered. The rate looks set to regain the 100.00 handle later today and in Asia you can expect more follow-on buying as the Japanese have been large buyers of USD the past two week on the break lower. In my view, the Fed easing was �baked in the cake� and the USD rally after the news confirms that the oversold USD is starting a relief rally. Look for the USD to continue firming up overnight and to end the week stronger across the board. Aggressive traders can buy USD across the board on a minor dip the next 24 hours.
[B][U]EURO/USD Daily[/U][/B]
R3: 1.5820
R2: 1.5780
R1: 1.5720/30
Current Price: 1.5685
S1: 1.5650/60
S2: 1.5600/10
S3: 1.5580
Rate completes an inverted hammer formation and marks new weekly lows from an inside range day; classic images of a failed high in my view. Close in stops under the Monday low triggered but bids mixed in for an initial bounce. Aggressive selling likely overnight as late longs are forced to cover back and early shorts press their advantage. More downside is likely and aggressive traders can sell the rate on any bounce. Look for continued weakness ahead of Philly Fed Friday.
[B][U]USD/JPY Daily[/U][/B]
R3: 100.80
R2: 100.30/40
R1: 100.00
Current Price: 99.36
S1: 98.80
S2: 98.20/30
S3: 97.80
Rate completes a two-bar reversal adding an exponential reversal signal; good signs of an extended correction in the works. Rally on stop driven trade likely to take a few days as late shorts will need time to take their beatings. Stops likely over the 100.50 area in large size as that was where the sentiment turned �really negative� last week. Rhetoric likely to drive additional buying as early longs are encouraged by BOJ and other Asian officials �welcoming� the fed move.
Analysis by:Jason Alan Jankovsky
[I][B]Disclaimer:[/B][/I]
[I]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.[/I]
Summary
The USD ended the day mixed in New York after giving back a lot of the previous day�s gains overnight; traders note thin conditions may have exaggerated the moves. Initially following through firmer in Asia the Greenback came under renewed selling as Europe got underway as many late sellers continued to stick with the �sell rallies� approach to recent price action. Large names were seen on the offer for USD and for a time it looked like the Greenback may not hold the gains but after New York got started the USD short covering continued to absorb offers. The GBP was the big mover on the day dropping through several layers of support and finding a lot of stop-driven trade; overnight highs at 2.0153 were never challenged and once the weekly lows gave way the rate never looked back dropping to a low print after the London fix at 1.9805 near the end of the day. Traders note that although stops were mostly providing the selling interest traders do say that aggressive new selling was seen under the 1.9850 area as late longs threw the towel in once the rate passed the �major� near-term support levels. EURO also found stops as expected at the 1.5600/10 area and quickly dropped to a low print at 1.5581 before bouncing smartly back to the 1.5640 area and traders thought that the EURO was not going to follow cable lower but the rate couldn�t hold the brief rally out of the hole; EURO dropped back under the 1.5600 area and held just off the lows making a very strong �sell� signal on the daily charts. Additionally, the rate now has an outside bar hook reversal on the weekly charts making a very bearish picture for the rate for the rest of the week. USD/JPY rallied for a high print overnight back above the 100.00 handle at 100.46 but the general selling hit the rate hard for a 300 point range and a low at 97.66; the rate recovered back to close on the 99.00 handle making a strong buying wick on the day. In my view, the correction back into the potential lows followed by a rally higher for the Greenback very clearly make the argument that the near-term USD selling is over and the relief rally is now in play. Look for more consolidation in two-way trade overnight with an upside bias for USD. Aggressive traders can add again to their open GBP shorts on a rally back to the 1.9900 area as the weekly S/R for 1.9950 should offer a ceiling.
GBP/USD Daily
R3: 2.0000
R2: 1.9940/50
R1: 1.9880
Current Price: 1.9805
S1: 1.9750/60
S2: 1.9720
S3: 1.9680
Rate breaks hard to end the bulls attempt to control the market; not much support ahead of the 50 bar MA which will likely offer a bounce. Look for a short-covering rally off the 50 bar MA but a failure at the former weekly support at 1.9950 area. Aggressive traders can ADD to open shorts on a bounce as the selling is likely to force a move to support at 1.9400 area within days or a week or so; there is a lot of stored energy on the rally that is late buyers in my view; they will likely bail quickly if they haven�t begun.
EURO/USD Daily
R3: 1.5780
R2: 1.5720/30
R1: 1.5660
Current Price: 1.5603
S1: 1.5580
S2: 1.5550
S3: 1.5500/10
Rate likely to draw active selling now that the weekly low has failed and stops were elected all the way down to the 1.5580 support area, there has been no buying and conditions are thin suggesting that the longs are standing pat and late longs are getting stopped out. Deeper stops at the 1.5500/10 area are likely to be next on aggressive selling should stops under the 1.5580 area get triggered. Upside limited in my view as technical patterns are potentially bearish.
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.
� USD two-sided
� Volumes light
� Most of Asia closed, Europe closed for Easter Break
[B]Today�s Economic Reports[/B]
� 9:00 AM CDT Existing Home Sales forecast 4.86M
� 9:00 AM CDT Consumer Confidence forecast 75.0
[B]Looking Ahead[/B]
� Durable goods on Wednesday
� Educational Broadcast on Wednesday
[B][U]Summary[/U][/B]
The USD resumed trading after the three-day Easter holiday on the offense in a very light session overnight; most of Asia was closed and Europeans are on their Easter break. Most large banks had light staff on the desks and the Greenback is trading mostly in a technical consolidation traders say. News overnight was sparse with today�s US data likely to cause little price action most agree. Overnight ranges were mostly within existing ranges from last week and the tone of the majors appears to remain more consolidative and possibly defensive. The USD was two-sided overnight as light volumes kept everybody on the sidelines most desks were reporting. GBP had a narrow 94 pip range and opens New York near the highs; high prints at 1.9851 and lows at 1.9757. Although the GBP continues to trade with a weak tone the 50 bar MA is offering some support while the 21 day MA is offering resistance suggesting that the rate is trapped in a consolidation sideways. In my view, any rally is a sell and aggressive traders can add to open shorts on a pop above the 1.9900 handle. EURO is two-way also with a more reasonable range of 117 pips but is unable to find buyers in size despite the rally into the 1.5450 area; high prints at 1.5457. Lows in the rate were at 1.4340 and traders report light stops on the break into new lows below last week�s lows but fib defense at 1.5330/40 area appears to be offering a bit of support near-term. Traders note that volumes in the EURO are very light as Europeans take a break also. In my view, the EURO has put in a top for an expected correction and I would look to sell strength into the 1.5550 area; anything over the 1.5480 area is a solid sell I think. Overnight USD/JPY regained the 100.00 handle again looking like a more aggressive rally could result. Lows at 99.38 followed by highs at 100.17 making for a tight range but that is due to thin conditions no doubt. Lack of news from Asia likely to keep the USD two-way but news from the US may help the rate into stops likely to be around the 100.50 area or slightly higher. For the day; look for the USD to continue sideways.
[B][U]EURO/USD Daily[/U][/B]
R3: 1.5500
R2: 1.5480
R1: 1.5450/60
Current Price: 1.5434
S1: 1.5400
S2: 1.5380
S3: 1.5330/40
Rate finds some support at 38.2% fib defense but light volumes and thin conditions may exaggerate the bounce; so far holding a �doji� pattern after attempt to rally failed early. Likely that stops are now rolled up under the 1.5330 area for a weekly low; should the low be broken a deeper correction to the 1.5280 area likely. I think the rate continues to soften as the worst in the USD is over for now and look for the 1.5000 handle to fail as the correction deepens in the next few weeks.
[B][U]USD/JPY Daily[/U][/B]
R3: 100.80
R2: 100.50
R1: 100.10/20
Current Price: 99.75
S1: 99.20/30
S2: 99.00
S3: 98.80
Rate continues to build on early bid interest on the potential rejection of the exhaustion break. Exponential reversal still valid and building credibility for a sustained rally to the 105.50 area of the 50 bar MA; look for stops to be massive layered in the 101.50/60 area through the 102.20 area; that was where the panic selling started from. Sellers likely to get scarce as the rising wedge pattern gains security. In my view, the rate is set to rally and dips are a great buy.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B]Disclaimer:[/B]
[I]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.[/I]
Summary
The USD is ending New York a bit mixed in Two-way trade as holiday-thinned markets and lack of volume keeps the majors trading sideways. Overnight action was a bit on the buy-side early for USD as there was a slight bout of follow-through buying in Asia but with most of the Asian markets closed the action was light. Into European trade the USD continued to trade two-way and remained in tight ranges until the release of US data. Existing Home Sales were better than expected coming out at 5.03M units sold beating the forecast at 4.86M; inspiring a brief rally in the Greenback. USD/JPY rallied for new Monday highs finding stops over the 100.50 area as expected for a high print at 100.75 before going two-way; most of the day the USD continued to grind higher setting a few highs for a final high print just ahead of the New York close at 100.91. Traders note the rate looks ready to continue advancing in technical action the next few sessions or until resistance at the 102.50/60 area is tested. The Japanese are behind schedule picking a new BOJ chief and that may be adding to the corrective nature of the USD/JPY of late. Cable dropped into the 50 bar MA support area for the second time overnight for a low print at 1.9757 which went unchallenged all day. Briefly touching highs at 1.9879 the rate appears stuck in a sideways consolidation. Aggressive traders can look to add to open shorts above the 1.9900 handle looking for further strength to fail on a test of the S/R area of 1.9950. EURO fell into stops overnight under the 1.5380 area for a low print at 1.5340 making a solid retracement from the highs. A �dead cat bounce� is likely from the 1.5340 area but expect a rally to fail at the 1.5480 area ahead of 1.5550; a short will gain credibility on a test and failure of the 1.5500/50 area in my view. For the most part today the USD remained two-way and consolidative. Traders expect more of the same overnight and with the release of Consumer Confidence tomorrow the Greenback may get another push in the upward direction; but don�t count on it. I think the majors will continue to consolidate and cover a lot of the same ground twice. Expect quiet trade overnight.
USD/JPY Daily
R3: 101.80
R2: 101.50
R1: 101.00/10
Current Price: 100.82
S1: 100.40/50
S2: 100.20
S3: 99.80
Rate continues to gain a foothold for a relief rally but light volumes hamper the potential and are a bit of a warning. Look for volumes to pick up in the coming days as traders continue to debate a recovery; stops likely to be rolled closer to the market. Late shorts will fuel advance short-term so look for offers at technical levels then buy the dips. Rally to the 102.50 area likely to attract a round of early long-liquidation but a correction under the 100.00 area should be short-lived.
GBP/USD Daily
R3: 1.9950
R2: 1.9900/10
R1: 1.9880/90
Current Price: 1.9852
S1: 1.9800
S2: 1.9740/50
S3: 1.9710/20
Rate has a very clear technical pattern and a slight rally is very likely but should hold the 1.9950-2.0000 area on a bounce. Traders note the rate is attracting cross-spreaders who are buying for Yen which should keep the upside pressure on near-term. Look for a test of the 1.9950 area to fail as that level is previous major S/R which has turned resistance. Stops likely under the 50 bar MA and a close under there likely to cause the longs to bail. Bears trying to get control and when they do it�s new lows I think.
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.
� USD falls but holds important S/R
� US data worse-than-expected but volumes still light
� Traders note that stops were the rule today
[B]Overnight Preview[/B]
� Look for reasonable USD follow-through selling
� Book-squaring again ahead of more US news
[B]Looking Ahead[/B]
� German IFO index overnight
� 7:30 AM CDT Wednesday Durable Goods forecast +1.0%
� 9:00 AM CDT Wednesday New Home Sales forecast 580K
[B][U]Summary[/U][/B]
The USD has fallen back today after a firm start overnight that gave way to stop-driven trade. Traders note that a lot of New York action was stops placed �after the bell� suggesting that some accounts were trading on the sharply worse than expected Consumer Confidence number and placing their exit orders in range. After the initial flurry of action that saw the Greenback remain within overnight ranges the USD started to slowly erode and by the end of the day had made new lows across the board making a mess of the technical potential for a rally. Picking off �hail Mary� stops above the 2.0000 handle in Cable the GBP saw a high print at 2.0028 as late shorts got squeezed after the London Fix. Traders note that volumes were light and thin conditions may have exaggerated the move but the fact is the rate is above the 1.9950 area with some authority; a fall back must happen soon or the rate will possible look to extend gains and the pullback may have been over. Aggressive traders in GBP need to be nimble and not give back gains on the short position. EURO has once again scored the 1.5600 handle as stops layered from 1.5550 were triggered all day into the close; high print at 1.5619 left resting stops above untouched for now but technically the rate looks poised for an attempt overnight. Volumes were light on the move and traders expect that the rate could try to push for a brand new lifetime high if the market thickens up a bit this week. In my view, the rate is again overextended to the upside and our liquidation stops in the short position are not hit yet so I suggest holding the trade one more day. USD/JPY gave back a lot of hard-won gains today dropping back to trade the 99.00 handle after the disappointing US data but firmed up into the close; lows at 99.62 still above key support and the rate looks to rotate higher to find close-in stops. Volumes light as well. In my view, the USD is testing the confidence of the bulls. Look for some light follow-through tonight; US data likely to help tomorrow.
[B][U]GBP/USD Daily[/U][/B]
R3: 2.0100
R2: 2.0080
R1: 2.0050
Current Price: 2.0017
S1: 1.9980
S2: 1.9950
S3: 1.9900
Rate rallies into stops between the 1.9900 and 1.9980 area and maybe follows higher on active buying in sympathy with EURO; 100 bar MA offering resistance near term and no test of the 2.0050 area so far which is major resistance in my view. Longs likely have stops close-in so watch for a pull-back to gain momentum should the rate fall back to the 1.9950 area; traders note light volumes on this rally so it could be a classic bull trap. If not stopped out of the short�sit tight another 24 hours.
[B][U]USD/JPY Daily[/U][/B]
R3: 101.00/10
R2: 100.80
R1: 100.40/50
Current Price: 100.14
S1: 99.70/80
S2: 99.50/60
S3: 99.20
Rate technically has a net positive day with a higher high and a higher low; rate apparently testing the bull�s conviction on the day but no real selling effort threatens the recovery in my view. Look for more two-way action the next 24 hours and an upside bias may remain should stops above the 101.20 area get triggered. News tomorrow likely to help as today�s data spooked the USD bulls; a positive reading may help with a reversal higher. Dips likely to be bought around the 99.50/60 area again.
[B]Analysis by:[/B] Forexpros written by Jason Alan Jankovsky
[B]Disclaimer:[/B]
[I]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.[/I]
� US data positive but USD falls
� EURO rallies past resistance and is again �euphoric�
� Sentiment returning to the bearish side traders say
Overnight Preview
� Look for the USD is firm in Asia and then come under pressure in Europe
� Some book-squaring likely ahead of US data
Looking Ahead
� 7:30 AM CDT Thursday Q4 GDP forecast + 0.6%
Summary
Despite positive news from US data today the Greenback continued to remain on the defense all day building on European weakness from the start. Although the USD started in Asia on the firmer side the firm USD was short-lived as general bearish sentiment has returned to haunt the USD bulls. Trading softer all morning, traders expect the USD to continue on the defense through tomorrow�s GDP data. Today�s New Home Sales were better-than-expected and included a revision higher to last month�s numbers but the majors refused to trade lower and in fact continued to make highs all day into and after the London Fix. The one exception was USD/JPY which never revisited the morning lows but continued to build on the 99.00 handle. Low prints at 98.87 were never challenged and despite USD weakness elsewhere the rate was able to extend gains during the day for a New York high of 99.61 before settling back a bit. Obviously volatility was the rule today as the majors first rallied then fell then rallied again to end the day; most noticeable was Cable. First scoring highs overnight against the 2.0100 handle before dropping back to the 1.9900 handle then recovering to the middle 2.0000 handle to make a mess of balance sheets from both sides. No one had a winning day in Cable I am sure of it as the rate crossed a 200 plus point range three times. EURO continued to shrug off news and continued to march higher all day; highs late in New York at 1.5832 after grinding higher all day with no let-up. Traders say that the bearish USD sentiment has returned in force and the fact that the EURO has recovered so fast after the potential top was in only underscores that the rate will likely test the 1.6000 area near-term. A double-top or perhaps a new lifetime high will likely cause a lot of jawboning but Trichet�s comments today left no doubt in the minds of traders that the ECB will not lower rates anytime soon. In my view, you need to be ready for another round of USD weakness. The USD is set to challenge lows I think.
USD/JPY Daily
R3: 100.00/10
R2: 99.80
R1: 99.50/60
Current Price: 99.26
S1: 98.80
S2: 98.50
S3: 98.20
Rate continues to soften from highs the past 48 hours; traders note that stops under the market helped drive into the lows today but bids as expected at the 98.80 area. Upside is limited for now after the rate failed to build on the 101.00 trade earlier in the week. More likely the rate will consolidate with a lower bias near-term. Tomorrows� GDP data likely factored-in to prices already so unless a surprise is in the works expect the rate to fall briefly on Wednesday.
EURO/USD Daily
R3: ?
R2: ?
R1: 1.5900/10
Current Price: 1.5830
S1: 1.5750/60
S2: 1.5700
S3: 1.5650/60
Rate powers higher with absolutely no offers in sight; traders expect the rate to test 1.6000 by the end of the week. In my view, the market has gone �euphoric� again and likely will ignore fundamentals as complete bullish fever takes over. Model and momentum accounts active on the bid all day traders say, look for continued volatility and a �but the dip� mentality. Aggressive traders can look for a failure at a new high on huge volume and turnover but 1.60 looks almost certain.
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.
� USD two-way
� Opens New York better
� Year-end drives Tokyo trade
Today�s Economic Reports
� 8:45 AM CDT Chicago PMI forecast 46.7
Looking Ahead
� 9:00 AM CDT Tuesday ISM Index forecast 48.2
� 7:00 PM CDT Tuesday Japan Tankan report
Summary
The USD is firmer to start New York this morning after opening on the weak side in Asia. USD/JPY rallied briefly as year-end needs favored short-covering and book-squaring but once the year-end buying was over the Greenback feel back to unchanged; the other majors were firmer into the start of European trading. Traders report volumes were light but it was still enough to help the USD extend its range against GBP; Cable falling back to the 50 bar MA at 1.9812 low print on the back of disappointing UK data. Trader�s note that the Sterling crosses were under pressure overnight and that contributed to the weakness in GBP to start the week. Many traders also note that the sentiment is turning to �sell rallies� in Cable suggesting that the rate will suffer more losses ahead. EURO is two way inside established ranges with the �usual suspects� on the bid/offer. Traders note that hawkish rhetoric the past few days has emboldened the bulls even with the rate sitting within a short distance from all-time highs. Sellers were at the 1.5830 area again with a high print to start the week at 1.5836 coming after a cross-driven rally from the Asian lows at 1.5758; stops are likely building in the 1.5850 area and ahead of the previous lifetime high at 1.5880 area. Look for a massive rally to the 1.60 handle if stops above the 1.5920/30 area are triggered; in my view the rate is poised for 1.6100 on an extended technical play but that would be the place to short the rate. Aggressive traders can sell EURO on a rally into new highs. For the most part the USD is trading sideways with a slightly firmer tone to start Monday but I think that caution is advised on the long side. I don�t think the Greenback is recovering just yet; I think there is simply a lack of selling. Today�s Chicago PMI data will likely be USD negative and the USD could fall back from the firm open. This week�s data is also expected to be weak so I would be a cautious buyer of USD on the break into the recent lows if we get them. I think the USD is trying to bottom in here and that when it does it will make the turn. In the meantime, expect two-way action and stops on both sides to get triggered over the next 72 hours.
GBP/USD Daily
R3: 1.9980
R2: 1.9930/40
R1: 1.9880
Current Price: 1.9845
S1: 1.9810/20
S2: 1.9780
S3: 1.9750
Rate finds some support as expected at the 50 bar MA; look for a technical bounce the next 48 hours but as long as the highs remain under the 1.9950 area on a closing basis the shorts are gaining control. Strong sell signal on the daily will need a day or two to confirm so sells strength into the 1.9980 area in my view. Close under the 50 bar MA argues for further declines and large stops likely under the 1.9780 area; big money traders likely to work with �stop close only� orders under the 50 bar MA.
USD/JPY Daily
R3: 100.80
R2: 100.50
R1: 100.20/30
Current Price: 99.57
S1: 99.10/20
S2: 98.50/60
S3: 98.00
Rate continues to consolidate and range-trade within established S/R; rate could be coiling for a sharp move in either direction but the bias is downward in my view. Look for stops above the market to be thicker at 100.50 area and below the market at 98.50 area; I think the bears are willing to cut and run on any strength and the early bulls will bail on any weakness, both sides are nervous I think. Close over the 100.00 area argues for upside break; close under 99.10 for downside.
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.
� USD remains two-sided
� US data no factor
� EURO attempts new high
[B]Overnight Preview[/B]
� Look for more consolidation
� USD likely to remain two-way near-term
[B]Looking Ahead[/B]
� 7:00 PM CDT Monday Japan Tankan report
� 9:00 AM CDT Tuesday ISM Index forecast 48.2
[B][U]Summary[/U][/B]
The USD continued to range-trade today for the most part initially rising in Asia then falling into European trade. Briefly lower on the day the Greenback started New York close to Friday�s closing levels in technical two-way action until the release of Chicago PMI data. Although better-than-expected the report failed to lift the USD any higher than the overnight prints and in fact once the news was out of the way the USD began to falter into the London Fix. Falling hardest against the EURO the USD looked as if it might drop convincingly but bids under the market supported and the majors headed south for the most part leaving the USD trapped within existing ranges and out of the really big stops. Traders suggest that today�s action in EURO may be close to a topping signal as the market ran for new highs above the 1.5905 lifetime high but ran into offers to cap the rally at 1.5895 before falling a full handle as the day wore on. EURO actually closed negative on the day and traders argue that volatility and a lower close all point to a near-term top again. In my view the rate is indeed looking to top but there is most likely one more lifetime high in the works; the sellers today were covering longs I think. Short-term gains aside, longs are still lightening up on their positions leaving the early shorts chasing the drops. I think the close-in stops set today will fall soon as did stops at the 1.5860 and 1.5880 area did today. Early sellers are still at risk because the volumes have been light. Light volume sell-offs are not a good sign for a price decline in my view. I think aggressive traders will use the pullback to get long again as no real technical damage was done to the EURO. Cable tracked the EURO both higher and lower with lots of interest from cross-spreaders overnight. I think the GBP is set to remain whippy the next few sessions so be nimble if you are trading GBP. USD/JPY continues to hold under the big stops at 100.30/50 area and above the 98.50 area. Trapped in a range the rate is looking a lot like it did in February; look for traders to remain less-patient in that pair tomorrow. Tankan out tonight so expect some volatility.
[B][U]GBP/USD Daily[/U][/B]
R3: 1.9920
R2: 1.9880
R1: 1.9860
Current Price: 1.9828
S1: 1.9800/10
S2: 1.9780
S3: 1.9750
Rate holds below the 1.9950 area after rallying into that area today, look for the rate to bounce from the 50 bar MA again overnight with large stops likely out of reach at the 1.9780 area. Bids said to be at 1.9800/10 again with offers again on the approach to the 1.9880 area suggesting the rate will remain range-bound the next 24 hours. Aggressive traders can sell the next attempt at the 1.9880 to 1.9950 area for the next leg lower; I think the rate is due to follow-through sooner-or-later but is two-way now.
[B][U]EURO/USD Daily[/U][/B]
R3: 1.5890/1.5900
R2: 1.5860
R1: 1.5820/30
Current Price: 1.5786
S1: 1.5740/50
S2: 1.5700
S3: 1.5660
Rate tries for new lifetime high and is rejected on the first attempt; I think that is long-liquidation and early shorts capping the move but volumes were light. Stops above the 1.5900 area left untouched for now and stops above the 1.5950 area are said to be huge. Bids under the 1.5740 area layered with stops to the 1.5700 area traders say with more stops sub-1.5700. Rate looks ready to challenge for a new high the next 24-48 hours; aggressive traders can look to sell that high.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B][U]Disclaimer:
[/U][/B][I]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.[/I]
[B][U]Summary[/U][/B]
The USD rallied hard today as traders covered shorts on stop-loss buying and fresh buying was seen during US trade. Initially overnight the USD was two-sided and steady as Japan Tankan report was released. Traders saw large names on the bid for USD/JPY as the report was considered bearish for Yen and the initial rally faltered into the start of European trade. Stops across the board were elected as the day wore on into the start of New York and the Greenback continued to climb as ISM index data showed a favorable move higher from expectations. Although not a positive report the news was enough for shorts to begin covering and the majors went one-way into and after the London Fix. USD/JPY climbed into waves of stops and fresh buying as technical levels fell for a high print into the end of the day at 102.17; right up against Fib defense for the recent decline. Expectations for a USD pullback before a drive higher were effectively tabled once the rate cleared the stops at the 101.00 handle earlier in the day. Cable fell into near-term support again after initially attracting bids at the triple-bottom monthly low at 1.9728 low prints. The rally was a full handle higher before cross spreaders began to liquidate the GBP side of their trades and the GBP could not hold above the 1.9970 area. Leading the two-way action lower was the EURO falling through stops at the 1.5660 area and eventually putting in a low print at technical support around the 1.5550/60 area; low prints at 1.5562. Traders say that the general tone of the action today was �surprise� that the Greenback was able to push so much higher. Traders note that spec accounts were buying USD today and judging from the sort of action they were seeing earlier last week they likely were covering shorts for a loss. In my view the USD was due for a rally but not before a correction lower. Due to the surprising nature of the move that no doubt cleared a lot of order books I would look for a lack of follow-through to inspire the shorts to re-enter their positions as the rally is still a bounce within a bear market. I think with the next few days of data expected to be USD-neutral to negative the prospects of aggressive buying I think are smaller. Aggressive traders can sell USD/JPY over the 102.00 area looking for a classic bull trap.
[B][U]USD/JPY Daily[/U][/B]
R3: 103.20
R2: 102.80
R1: 102.20
Current Price: 102.00
S1: 101.50
S2: 101.00
S3: 100.80
Rate has a two-Yen rally during New York trade as stops were cleared and aggressive model/momentum/spec accounts attempted to ride the rally. Fib defense at 102.20 area likely to hold for a modest pullback at least as this number was where sell stops were residing for early bottom pickers on the way down. In my view the rally was welcome but a bit overdone; look for a pullback to accelerate if US data the next two days is USD-negative. Stops from buyers likely in range. Expect volatility.
[B][U]GBP/USD Daily[/U][/B]
R3: 1.9920
R2: 1.9880
R1: 1.9850/60
Current Price: 1.9761
S1: 1.9720/30
S2: 1.9680
S3: 1.9660
Rate respects monthly low on two attempts today and three over the last month suggesting that there is good support at the 1.9720/30 area near-term. A rally back over the 50 bar MA would be a solid selling opportunity in my view as the 1.9900/50 area is becoming solid resistance. Stops likely building for a further move lower under the 1.9700 area with likely bids to support around there to 1.9680 area. Look for two-way action to remain through the overnight session ahead of ADP.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B]Disclaimer:
[/B][I]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.
[/I]
� USD two-sided and volatile
� Ends New York mixed
� ADP data fails to inspire
Overnight Preview
� Look for more two-way action, traders expect stops to be tagged
� Technical trade likely as news will be thin
Looking Ahead
� Paulson in China�expect lots of hot air
� AM CDT Thursday ISM Services forecast 49.2
Summary
After a quiet start to the overnight session the USD continued a slow climb in European trade to trigger additional stops at or near technical resistance helping the USD to add a little follow-through strength from Tuesday; traders note after the release of ADP data THE Greenback began to soften and the majors ended firmer on the day. The action would be considered two-way and the USD covered a lot of the same ground twice giving day-traders a bit of solid potential. Traders note that stops across the board in both directions were triggered suggesting that the late longs were set overnight and this morning and couldn�t take the heat after the London Fix. GBP opened New York around the 1.9820 area and dropped into the 1.9700 handle after ADP; sitting firm on support the pair began to rally and by the end of US trade had scored several daily highs for a high print at 1.9901. Traders note that firmness was partly due to stops above the overnight high at 1.9850 area and spillover strength from EURO. EURO rallied after low prints in Europe held at 1.5533 for a high print at 1.5700 even; traders report that Middle-Eastern names and official buying was seen suggesting a run for new highs may be in the works. In my view, both EURO and GBP are set for a solid move but in opposite directions relative to the USD at this point. Further strength in the GBP is a selling opportunity and further weakness in EURO is a buying opportunity. I think the EURO/GBP cross will provide some volatility that will result in a USD rally against Cable. I think the potential for bearish developments in USD for the early part of Q2 will keep the upside firm in EURO. Between the two there will be some confusing counter-trend action so if unsure how to play the USD potential near-term it�s OK to focus on another pair for right now. USD/JPY rallied overnight and into today finding support at the 101.70/80 area and pushing through stops at the 102.50 area for a high print at 102.84 before giving a lot back to close in the 102.20 area; traders note that a lot of the action was driven by stops. Look for a fall back across the board as the USD can�t hold gains.
R3: 1.9980
R2: 1.9940/50
R1: 1.9900
Current Price: 1.9878
S1: 1.9840/50
S2: 1.9800
S3: 1.9720/30
Rate rallies on short-covering, stops and technical bounce but traders expect move to fail around current levels; 1.9950 area most likely strong overhead resistance at this point as that still represents the pivot area the past two months. Stops under the 50 bar MA likely to be growing and a close back under there likely to open the door for a test of the 1.9720/30 area again. Look for the rate to fail on residual strength overnight and return to the 1.9700 handle by end of week.
USD/JPY Daily
R3: 103.20
R2: 103.00
R1: 102.70/80
Current Price: 102.37
S1: 102.00
S2: 101.70/80
S3: 101.50
Rate fails to close above the 102.50 area of technical S/R suggesting that the rally higher was slippage; close back under the 102.00 handle tomorrow argues for a �head fake� rally as large stops are said to be resting at 101.50 area from late longs. Upside likely to meet selling pressure from Japanese exporters anywhere ahead of 103.00 handle some desks say. Rate is tracking stocks so a weak Nikkei tonight might pressure the rate. Look for weakness tomorrow ahead of NFP on Friday.
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.
� USD higher overnight
� No real news driving trade
� Two-way action with stops helping to firm USD
[B]Today�s Economic Reports[/B]
� None of note in the US
[B]Looking Ahead[/B]
� 9:00 AM CDT Pending Home Sales forecast -0.5%
� 1:00 PM CDT FOMC minutes
[B][U]Summary[/U][/B]
The USD is a bit firmer to start New York this morning after making lows in Asia in quiet two-way trade. The Greenback was in no rush to get anywhere overnight as market-moving news was nowhere to be seen and traders focused on technical levels for the most part. Across the board the USD is high this morning with the main action coming in USD/JPY overnight. Traders note that large Japanese names were on the bid for the rate when early selling pushed the rate into a low print at 101.30; bids lifted the rate past the opening range and into stops at the 102.00 and 102.20/30 area for a high print at 102.64 before momentum faded. Additional buying helped extend the range to 102.86 in Europe where the rate rotated around the 102.50/60 area until the NY open. Currently the pair is holding under technical resistance at the 103.00 area with offers said to extend to 103.20 with stops beyond. The rate appears to be consolidating traders say and two-way action is expected to continue through tomorrow and the BOJ policy meeting starting tomorrow; no change in rates expected. Cable is softer after failing to attract bids above the 1.9950 area; high prints at 1.9956 are right in line with technical resistance and sellers were able to extend the rate into stops under the 1.9850/60 area; low prints at 1.9833 for now. Traders note that book-squaring ahead of the G7 meeting on Friday and projections for a 25 BP rate cut this week from the BOE are keeping pressure on GBP. Also of note the EURO-Sterling cross is firmer suggesting that the cross-rates may be driving some pressure on the rate also. EURO is down around the 1.5690 area after a firm close in New York last week drew sellers as the high prints at 1.5740 overnight are also technical resistance; traders note that the lows at 1.5626 drew bids from a private Swiss name. For the most part the EURO is range trading and consolidating but studies have the chart-readers looking for additional weakness. In my view, the USD is starting off firmer in two-way trade as short-time frame traders look to take advantage of potential short-covering and technical S/R areas. I don�t think the USD will hold gains easily as a lot of the fundamentals due this week are factored in.
[B][U]GBP/USD Daily[/U][/B]
R3: 2.0000
R2: 1.9980
R1: 1.9950/60
Current Price: 1.9875
S1: 1.9820/30
S2: 1.9750
S3: 1.9720/30
Rate has strong sell signal this morning after technical failure on the last rally leaves the rate vulnerable to a sell-off. Lows today supported by the 50 bar MA but stops now likely building in-range between the 1.9830/40 and 1.9780 area as short-term longs place orders. Big stops under the 1.9720/30 area still working and likely to be tested this week. BOE rate cut expectations are high and could get a �buy rumor/sell fact� rally; close today under the 100 bar MA a good sign for shorts.
[B][U]USD/JPY Daily[/U][/B]
R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.67
S1: 102.20
S2: 102.00
S3: 101.50
Big stops rumored to be under the 101.50 area were a no-show overnight suggesting that the stops for size might be under the 101.00 area, large names on the bid traders say supported off the lows for a reversal into the highs. Offers said to be thick around the 103.00 area with stops higher suggesting the upside may be slow-going. A long selling wick is needed today and a close back under the 102.20 area better for the bears. Bulls need a break above 103.00 to keep momentum.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B]Disclaimer:[/B]
[I]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.
[/I]
� USD ends a bit firmer but volumes light
� Solid two-way action all day
� Traders note that market seems sidelined ahead of rate announcements
[B]Overnight Preview[/B]
� Look for more two-way action, USD likely to stay in-range
� Look for S/R to keep rates range bound
[B]Looking Ahead[/B]
� 9:00 AM CDT Pending Home Sales forecast -0.5%
� 1:00 PM CDT FOMC minutes
[B][U]Summary[/U][/B]
The USD ended very quiet today after downside follow-through was short and sweet during Asian trade; initial USD weakness was bought by technical and long-term accounts traders say. European trade saw the USD advance a bit but overnight ranges held through the entire New York session. Traders complained of thin conditions and lackluster, directionless trade. Major accounts were seen overnight but not so much during the day many desks reported and it was apparent that the Greenback had nowhere to go at all today and remained range bound inside recent highs/lows. One interesting note regarding stops; although all pairs saw stop-driven trade at the start of NY today it was the lack of stops at the 101.50 area in overnight USD/JPY that surprised many analysts. Looking for a huge move lower should the 101.50 area give way, USD/JPY saw only a modest 101.33 low print with an immediate bounce to make highs above the 102.50 area at 102.86; highs which held all day and were never challenged. USD/JPY settled into range-bound trade after the London Fix and eased lower at the close. Sterling was softer as well but holding current S/R both ways; high prints At 1.9956 were never challenged and the rate could not hold above the 1.9900 handle at all today. Lows at 1.9833 were never challenged also but the rate managed a weak close anyway at the 1.9850 area suggesting that the technical picture of consolidation with a lower bias remains. EURO also a bit softer but not as much as GBP; traders note that the rate saw sovereign and private bank interest on the dip into the low print at 1.5626 but no big action along with them so the rate held under Fridays� highs for a high print today at 1.5740. EURO held firm most of the day but as in GBP and Yen; volumes were very light and thin. For the most part the USD consolidated slightly higher in thin volume; not a positive technical sign for the bulls but enough to take some money from the bears today. In my view, the USD is set to trade sideways through the overnight session and open mixed on Tuesday. Should be light ahead of US news.
[B][U]GBP/USD Daily[/U][/B]
R3: 1.9980/90
R2: 1.9950/60
R1: 1.9890/1.9900
Current Price: 1.9852
S1: 1.9920/30
S2: 1.9780
S3: 1.9720/30
Rate finds resistance over the 100 bar MA for the second time in two days suggesting the sellers are confident selling into rallies; close under the 50 bar MA would be preferable near-term as stops are likely building for the next leg lower inside the range from last week. Active selling needed to find stops I think; more under the 197.20/30 area for size desks say. Look for continued two-way action but strong-sell signal is valid for the next 72 hours. Aggressive traders can sell GBP over the 1.9900 area.
[B][U]USD/JPY Daily[/U][/B]
R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.40
S1: 102.00
S2: 101.50/60
S3: 101.20/30
Rate under pressure from the highs all day in New York making lows for NY action late in the day and after the London fix suggesting that the sellers and buyers have exhausted themselves in only two trading zones; Lows in Asia followed by highs in Europe. Market goes two way into the end of the day suggesting that short-time frame traders likely controlling the market. BOJ meeting starts tonight and no rate change expected but look for rhetoric RE: who will be the new Governor.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B]Disclaimer:[/B]
[I]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.
[/I]
� USD two-sided in range bound trade
� Overnight news thin but important
� BOJ holds rates steady as expected
[B]Today�s Economic Reports[/B]
� None of note in the US
[B]Looking Ahead[/B]
� 7:30 Am CDT Thursday Balance of Trade � 57.4B
� Friday Michigan Sentiment and G7
[B][U]Summary[/U][/B]
The USD is two-way to start New York after a relatively quiet overnight session that saw nothing unusual in the way of news. Starting a bit weaker in Asia the USD followed through briefly from US selling pressure but began to recover to press for highs during European trade. The BOJ held rates steady as expected which saw little initial reaction in the USD/JPY but within an hour or two the rate began to slide off as the Yen gained a bit on the news. No new Governor as of yet and that may be keeping the USD/JPY pair range-bound as the BOJ lacks direction and it is not known if a �hawk� or a �dove� will be appointed next. The Japanese economy is beginning to show signs of weakening and it is reasonable to expect that rates won�t change ahead of the end of the year. USD/JPY lows overnight at 102.16 with highs in Europe at 102.84 (again). Talk of option defense and official sales are limiting the upside this morning traders say. Cable remained inside established ranges for most of the overnight action but managed to probe for stops said to be resting in the 1.9650 area; low prints at 1.9649 but recovered after better-than-expected UK Industrial Production numbers came out. Highs in the rate at 1.9727 are right up against S/R and a failure here opens the door for the 2008 lows in my view. Aggressive traders can add to open shorts at the 1.9700 area if not already yesterday; look for the rate to close under the 1.9600 area on the week after US news tomorrow and Friday. Don�t forget the BOE meets tomorrow and a 25 BP rate cut is expected so some volatility around the news is likely. EURO continues to grind higher between the 1.5680 are and the 1.5750 area; low prints at 1.5682 and high prints at 1.5743 leaving stops on either side of consolidation untouched for now. Eurozone GDP released about as expected but showing a brief dip q/q while remaining at +2.2% overall; EURO had a muted positive response but unable to go anywhere at this point. US action today likely to keep the USD range bound one more day ahead of news due tomorrow; technical trade within expected ranges will likely make for a quiet day. Look for book-squaring at the London fix to provide some volatility.
[B][U]GBP/USD Daily[/U][/B]
R3: 1.5800/10
R2: 1.5780
R1: 1.5750
Current Price: 1.5723
S1: 1.5680
S2: 1.5650
S3: 1.5620
Rate continues to remain trapped in near-term pennant formation as the pair is coiling and likely to make a breakout within a few days. Traders note that stops are said to be in-range at 1.5750 and if triggered expect a sharp rise to the 1.5800 area where option defense and private name sales are likely. Stops under the 1.5650 area also in play but dips under the 1.5620 area likely to be bought traders say; potential to remain range-bound today is very high. Day traders may have some opportunity.
[B][U]USD/JPY Daily[/U][/B]
R3: 103.20
R2: 103.00
R1: 102.80
Current Price: 102.54
S1: 102.20
S2: 102.00
S3: 101.80
Rate remains range bound while bumping up against resistance for the fourth time in six days suggesting that the rate wants to try for stops above the 103.00 area but unable to vault offers ahead of 102.80; volumes are getting lighter and if the rate continues to coil in this area and fail there is a strong possibility for a free-fall several handle as disappointed longs bail; support at 100.00 area said to be strong. Resistance likely at the 50 bar MA should an upside break happen.
[B]Analysis by:[/B] Jason Alan Jankovsky
[B]Disclaimer:[/B]
[I]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.[/I]
� USD two-sided overnight
� Breaks lower during New York but still no new range
� Equities fall driving USD /JPY lower
Overnight Preview
� Look for follow-through selling of USD
� Book squaring ahead of US data in the morning
Looking Ahead
� 7:30 AM CDT Thursday Balance of Trade forecast -57.4B
Summary
The USD ends New York softer making fresh daily lows against most pairs after starting modestly firmer overnight. Initially firmer in Asia the Greenback remained two-sided for most of European trade and actually pressed for highs against some pairs in early New York today. Traders note that volumes were modest and flows were tight but once trade was in full swing the USD came under some light pressure. Close-in stops were seen in several pairs and once the EURO/GBP cross hit stops taking the rate into highs the USD really started to correct. Although holding previous S/R from last week and only modestly lower on the day from yesterday�s lows, traders note that the USD is more psychologically weaker due to the potential for G7 rhetoric to hurt the prospects for a recovery. Also weighing on USD today is the BOW and ECB rate announcements due out overnight. Traders are looking for no rate cut from the ECB and a modest 25 BP rate cut from the BOE. In either case, the move appears �baked in the cake� and traders expect that the USD strength leading into this week may have run its course. On the day, Cable dropped to a low print at 1.9649 overnight before bouncing higher on better UK data early this morning. High prints came after the London fix as EURO/GBP rallied to new lifetime highs and GBP was hit by stops on the way higher; high prints at 1.9798 were capped by long-liquidation traders say. EURO rallied also into highs at 1.5865 before encountering selling pressure to back off the highs; overnight lows at 1.5682 now seem a long ways away for the bears. Traders look for the rate to hold firm and attempt one more try at fresh highs; offers usually resting ahead of the 1.5880 area appear to be absent on the first round today. Stops noted above the 1.5780 and 1.5800 areas. USD/JPY rallied on BOJ rate news and potential for a new BOJ governor but high prints at 102.84 overnight were never challenged in NY trade; falling back to find stops under the 102.10 area and more at 101.80 area the rate had a low print at 101.49 before bids helped support. Across the board the majors did not reach any fresh ground so be prepared for a rotation the other way as the consolidation continues.
EURO/USD Daily
R3: ?
R2: 1.5900/10
R1: 1.5880
Current Price: 1.5825
S1: 1.5770/80
S2: 1.5720/30
S3: 1.5680
Rate powers higher on no news and short covering traders say, look for a brief try for highs and then a correction lower. Stops above the 1.5910 area said to be thicker now than last time the rate was here suggesting that the bears are more committed. Pair is in the sell zone of resistance so be ready for a pullback if no buyers show up overnight. Stops under the market likely back at the 1.5650 area which may be out of range today. Look for a quiet overnight session with follow- through to the upside early likely.
Rate holds at resistance again drawing sellers into the mix but total range still inside previous action so no real progress made by the bears or the bulls. Traders note that volumes were modest and tracking developments in other markets left the rate vulnerable to drifting. Stops likely under the 101.20/30 area in size, another stab for those orders likely overnight as equities disappoint Asian traders. Look for the rate to continue lower by the end of the week.
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.
