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Daily Forex Technical Report

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Daily Forex Technical Report − Sterling Rebounds, Dollar Retreats

Tue, Jan 30 2007, 09:15 GMT
by ActionForex.com Team

ActionForex.com

Forex Daily Technical Report

Sterling Rebounds, Dollar Retreats

Sterling staged a strong rebound across the board after the National Institute of Economic and Social Research, whose clients include UK Treasury and BoE, raised its forecast for U.K. economic growth to 2.75% this year, from Oct's 2.5% forecast. Also, one more rate hike is needed to bring inflation back to BoE's target of 2%. Sterling remains firm despite a weaker than expected housing report showing Nationwide House Price Index slowed to 0.3% mom, 9.3% yoy growth in Jan. Meanwhile, dollar retreats today ahead of Jan conference board consumer confidence which is expected to rise slightly from 109.0 to 109.1.

Other focus of today include Germany inflation data. Jan CPI is expected to slow to 0.4% mom growth but with yoy growth accelerated from 1.4% to 2.2%. Similarly HICP is expected to slow to 0.4% mom growth with yoy growth accelerated to 2.4%.

The Japanese yen, despite recovering mildly against dollar, remains generally weak across the board after weak household spending that which dropped more than expected by 1.9% in Dec, comparing to consensus of 1.2% fall. Jobless rate also rose to 4.l1%. Though, Dec industrial production came in better than expectation by rising 0.7% mom, 4.6% yoy.

Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.

USD/CHF

Daily Pivots: (S1) 1.2507; (P) 1.2533; (R1) 1.2557; More.

USD/CHF continues to struggle below mentioned medium term falling trend line resistance (1.3238 to 1.2768, now at 1.2548). 4 hours MACD is dragged below signal line by the current sideway consolidation. But still, further rally is in favor as long as USD/CHF stays above 1.2486 minor support. Sustained break of the trend line resistance should bring further rise towards 1.2768 cluster resistance (61.8% retracement of 1.3283 to 1.1878 at 1.2746)

On the downside, below 1.2486 will turn intraday outlook consolidative first but pullback should be contained above 1.2422 support and bring rally resumption. A break below 1.2422 support is needed to shift focus back to the downside to 1.2374 low. Otherwise, consolidation should be brief and rally should resume sooner rather than later.

In the bigger picture, decisive break of medium term trend line resistance will also indicate that whole medium term down trend from 1.3283 has already completed at 1.1878. Further rally should be seen towards 1.2768 cluster resistance first. Decisive break of 1.2768 cluster resistance will add much weight to the case that whole corrective rise from 1.1288 (04 low) has resumed and further rally should be seen towards 1.3283 (06 high) or above.

On the downside, below 1.2374 will have the short term rising channel (now at 1.2411) taken out too and will indicate the whole rebound from 1.1878 has possible made a top after failing to break 1.2501/49 resistance zone decisively. Deeper correction should then be seen towards 1.2268 resistance turned support in such case.

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Published on  Tue, Jan 30 2007, 09:17 GMT