Forexpros Daily Analysis

Overnight Asia/Europe
• USD higher overnight
• No real news driving trade
• Two-way action with stops helping to firm USD

Today’s Economic Reports

• None of note in the US

Looking Ahead

• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes

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. 


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.


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.

Analysis by: written by Jason Alan Jankovsky

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