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The Currency Futures Report

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Sterling 'Surges' on Technicals and Weaker DX

Thu, May 21 2009, 07:07 GMT
by Bob Kozak

Alaron

British Pound (BPM9):

Sterling opened higher at 1.5514 and slid to a morning Lo of 1.5471 against a weak DX, before following equity and commodity prices higher as an increase in risk-appetite sent the DX lower. A break above the 200-day MA of 1.5539 sent prices to a daily Hi of 1.5792, before trailing lower into the close of 1.5776, up 265 tics. Better technical data and buy recommendations on Sterling were contributing factors. The s/t trend remains 'positive'w/expensive momentum indicators. Ahead of a shortened Holiday trading week, longs should tighten 'stops' or buy 'puts' to reduce exposure. A higher open should find Resistance at 1.5896 and 1.6017, while an open below 1.5672 may find Support at 1.5551 and 1.5327.

Dollar Index (DXM9):

The DX opened lower at 81.79 as continued pressure from a rebound in equity markets relaxed the safe-haven need for Dollars. As equity prices rose, the DX continued lower and most other major foreign currency markets higher. Prices fell to a daily Lo of 80.90 and bounced to a day-session close of 81.07, down 98 tics. The s/t trend remains 'negative' w/ weak momentum indicators. The recovery in equity markets and commodities could weigh further on the DX, until risk-appetite decreases and the need for the safe-haven of the Dollar returns. Traders will key on foreign equity markets as a barometer for risk-appetite ahead of the day-session open. A lower open may find Support at 80.59 and 80.10, while an open above 81.46 should find Resistance at 81.95 and 82.82.

Published on  Thu, May 21 2009, 07:14 GMT