Although the USD has been heavily sold over the past several weeks and now resides in oversold technical territory, market participants have been unfazed, and consistently look to build on existing shorts on any form of a rally. Traders now see Tuesday’s 1.3860 low in the Euro as the key level to watch, with a break to trigger some more significant stop-losses and potentially suggest a short-term top in place by 1.4050.
MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
Although the USD has been heavily sold over the past several weeks and now resides in oversold technical territory, market participants have been unfazed, and consistently look to build on existing USD shorts on any form of a rally. Initially, we had seen some USD buying early on following the very disappointing MBA mortgage applications, but these USD rallies were easily digested by bears to force yet another wave of currency buying into the 14:00GMT existing home sales and home price index releases. Existing home sales were mixed while the home price index was significantly weak, to put in the first monthly decline this year. Meanwhile, German CPI came in softer than expected. This prompted another round of profit taking in currencies into the London fix, with the Euro trading back towards session lows below 1.3900. Traders now see Tuesday’s 1.3860 low in the Euro as the key level to watch, with a break to trigger some more significant stop-losses on Euro longs and potentially suggest a short-term top in place by 1.4050. In the face of the current USD selling, we have seen a number of names come out in support of the Greenback, including Pimco El-Erian and S&P Kraemer who both have reaffirmed the USD status as the reserve currency of choice. In other news, US banks have been upping their capital post the stress tests including, Bank of America, PNC and KeyCorp. The DJIA and S&P trade flat while the Nasdaq leads the way, up some 0.75%. On the commodity front, crude remains well bid by $63, while gold trades flat.
ANALYSIS OF SELECTED RATES
Gbp/Usd: With daily studies so remarkably stretched, we continue to look for opportunities to establish counter-trend short trades on overdone intraday rallies. The market has finally broken above critical psychological barriers at 1.6000 and any gains beyond this barrier are seen limited with the greater risk for a more significant corrective pullback. As such, we will apply daily ATR (Average True Range) analysis which projects a daily high just over 1.6100, to isolate our ideal entry point. Strategy: SELL @1.6120 FOR A 1.5520 OBJECTIVE, STOP @1.6270.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel’s reports in a more timely fashion, e-mail [email protected] and you will be added to the “distribution” list.
Joel Kruger publishes 6 daily pieces:
“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)
“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)
“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)
“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
Monday-Friday (between 10:30am-11:30am EST)
“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact [email protected] if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)
“Daily Classical” – A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)