Forexpros Daily Analysis

Overnight Asia/Europe
• USD mixed
• EURO under pressure, IFO disappoints
• Volumes light

Today’s Economic Reports

• 7:30 AM CDT Durable Goods forecast +0.1%
• 7:30 AM CDT Initial Claims
• 9:00 AM CDT New Home Sales forecast 495K

The USD is slightly better against most pairs this morning and mixed against others but for the most part the USD is on the offensive today. Although still trapped inside previous recent S/R the majors are beginning to show signs that a breakdown is coming. The USD began the Asian session better and traders report some semi-official selling of EURO around the highs overnight. EURO high prints at 1.5817 were never challenged in Europe and the rate continued to slide after the release of German IFO data; below expectations numbers gave traders a reason to sell but good demand to buy dips persisted into the New York open. Although the EURO is on the defense traders note a lot of the same names on the bid that have been seen on the offer the past few days suggesting that the rate is still under upward bias. Low prints in late Europe still at 1.5717; traders note that a large amount of stops are under the 1.5700 handle and good numbers of stops aided the break under the 1.5780 area. Cable is lower and trading in sympathy with EURO today; disappointing retail sales didn’t help the GBP’s fortunes either. Higfh prints in Asia at 1.9817 with lows in Europe at 1.9707; traders note stops under the 1.9750 area were flushed and a close under the 1.9750 area indicates a good potential for a test of the 2008 lows is building. Aggressive traders can sell a rally in Cable but recent volatility needs to be respected. USD/JPY is back near the recent highs but still in range; high prints at 103.95 continue to attract offers from exporters. Lows at 103.29 are above the 102.80 lows seen recently and suggests that the rate wants to attempt a rally; aggressive traders can look for a sell-off hard after today’s US news and add to open shorts. The big mover is Swissy holding above the 1.0200 handle; high prints at 1.0282 and up against range top. Aggressive traders can sell the rate above the 1.0250 area in my view. The breakdown of the EURO into the low 1.5700 handle is the significant event overnight. Although today’s data is likely to be unfriendly to the USD I think the failure of the top is in play; aggressive traders can look to add to their open EURO shorts on any strength back to the 1.5820-50 area. Look for US data to disappoint but the rally in the majors to be brief.


Resistance 3:  1.9850
Resistance 2:  1.9820
Resistance 1:  1.9780
Latest New York: 1.9750
Support 1:  1.9700
Support 2:  1.9680


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 drove trade lower overnight and rate is holding lows in early New York action. Close below the 1.9800 handle opens the door for a test of the 1.9700 handle but first a bounce is likely; SELL THE BOUNCE in my view.

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 1.9820 area during the day.


Resistance 3:  104.30
Resistance 2:  104.00/10
Resistance 1:  103.80
Latest New York:  103.43
Support 1:  103.10
Support 2:  102.80
Support 3:  102.50


Drop under the 103.00 area still labored as conditions are thin. Thursday rally seemed to lack enthusiasm. Day-traders can sell this rally and cover around the 103.10 area.

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 soon; REALLY making us wait for it.

Close under 103.00 likely to attract more selling; Tonight Tokyo CPI; no factor.

Analysis by: written by Jason Alan Jankovsky

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