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The Currency Futures Report

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Dollar 'Retreats' on Continued Financial Concerns

Tue, Jul 29 2008, 14:23 GMT
by Bob Kozak

Alaron

Dollar Index (DXU8):

The DX opened lower at 72.90 and rose to a morning Hi at our Pivot level of 72.99, before sliding to our initial Support level of 72.81, as Financials are under pressure after PIMCO's Bill Gross stated that there could be as much as $1.0 Trillion in writedowns before the credit crunch is over. Minneapolis Fed President Gary Stern believes the 'credit crunch' will worsen. A sell-off in equity markets weighed on the DX as it traded around our Support level through to the close of 72.86, down 21 tics. The s/t trend remains 'positive' w/ topping momentum indicators. Traders will need further conviction that the 'credit-crunch' has stabilized enough for the economy gain strength, otherwise it will continue to weigh on the DX. A lower open may find Support at 72.73 and 72.61, while an open above 72.93 should find Resistance at 73.05 and 73.25.

British Pound (BPU8):

The BP opened lower at 1.9790 after a weak Housing Report showed a -4.4% drop in home prices in July from a year earlier. Despite the weak data, a weaker DX helped prices climb to a morning Hi of 1.9878, before topping out at the daily Hi at our initial Resistance level of 1.9894. The BP drifted lower into the close to end the session at 1.9877, up 57 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/neutral momentum indicators. Traders may be measuring the weakness in the U.K. eonomy against the weakness in the U.S. economy. Today, despite the weak Housing Report, the BP's 5.0% yield was on top. A higher open should find Resistance at 1.9917 and 1.9958, while an open below 1.9854 may find Support and 1.9813 and 1.9750.

Canadian Dollar (CDU8):

The CD opened lower at .9782 and slid to our initial Support level of .9768, before rising to a morning Hi of .9798 on a weaker DX and higher oil/metals prices. Prices dropped to the support level before posting a daily Lo of .9754 and bouncing to a close of .9767, down 33 tics. The s/t trend remains 'negative' w/ weak momentum indicators. The DX will continue to be key along w/ oil/metals prices. A lower open may find Support at .9740 and ..9713, while an open above .9781 should find Resistance at .9808 and .9849.

Euro Currency (ECU8):

The EC opened higher at 1.5703 and rose to a morning Hi of 1.5728, before sliding to a morning Lo of 1.5679. Prices bounced to our initial Resistance level of 1.5704 as we begin the afternoon session. A weak Gfk Institute German Consumer Confidence report for August showed a five year low of 2.1 vs 3.6 in July, which could weigh on prices. The EC managed to bounce to 1.5720 before ending the day at 1.5714, up 61 tics. The s/t trend remains 'negative' w/ neutral momentum indicators. A higher open should find Resistance at 1.5746 and 1.5779, while an open below 1.5696 may find Support at 1.5663 and 1.5613.

Japanese Yen (JYU8):

The JY opened higher at .9311 and drift to a morning Lo of .9304, before climbing to a morning Hi of .9342 on DX weakness. Prices drifted to our Pivot level of .9330 as we enter the afternoon session. A bounce to .9341 found more sellers, which sent prices to a close of .9329 , up 36 tics. The s/t trend remains 'negative' w/ weak momentum indicators. Traders continue to monitor the 'health' of the U.S. economy and could see higher prices on a weaker DX. A higher open should find Resistance at .9355 and .9380, while an open below .9316 may find Support at .9291 and .9252.

Published on  Tue, Jul 29 2008, 14:34 GMT