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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Market Remains Cautiously in Range Ahead of Tomorrow's GDP and FOMC

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

ActionForex.com

Forex Mid-Day Technical Report

Market Remains Cautiously in Range Ahead of Tomorrow's GDP and FOMC

Dollar's consolidation against majors continue after better than expected consumer confidence data. The Conference Board's Consumer Confidence index unexpectedly rose to 110.3 in Jan, beating expectation of 109.1. Prior month's index was also revised upward to 110.0. The index suggests that consumer optimism increased in Jan should be reflected in stronger consumer spending onwards. Reaction is muted as traders remain cautious ahead of more important economic events in the coming days including Q4 GDP, FOMC announcement, ISM Manufacturing Index as well the Non-Farm Payroll report.

The Japanese yen and Swiss Franc remains pressured on carry trade theme. EUR/CHF surged to new record high of 1.6253 earlier today while USD/CHF continues to hover near to last week's high of 1.2563. Earlier today, Sterling rebounded after NIERSR raised forecasts for UK economic growth and expect one more hike from BoE. But the rebound was short lived as Sterling gives back it's earlier gain against dollar entering into US session.

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

EUR/USD

Daily Pivots: (S1) 1.2913; (P) 1.2939; (R1) 1.2980; More

EUR/USD remains bounded in tight range today. As discussed before, recovery from 1.2876 has pushed EUR/USD above 1.2935 resistance with 4 hours MACD pushed above signal line, suggesting that a short term low is in place. Further recovery cannot be ruled out as long as EUR/USD stays above 1.2905 minor support. Break above 1.3000 resistance will indicate that the consolidation from 1.2865 is indeed still in progress. In such case, focus will be back to 1.3042 high and 1.3052 cluster resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057).

But, on the downside, below 1.3905 will indicate the recovery has completed and bring retest of 1.2865 low and then trend line support at 1.2845. Break will confirm that whole fall from 1.3364 has resumed for next downside target of 1.2760 support.

In the bigger picture, an important medium term top could be in place at 1.3364 already, with bearish divergence condition in weekly MACD and RSI. Sustained break of 1.2760 support, which will also have medium term rising channel line (now at 1.2748) taken out too, will add much weight to the case that whole medium term up trend from 1.1639 has completed. Focus will then be on 1.2483 cluster support (50% retracement of 1.1639 to 1.3364 at 1.2502). Decisive break of 1.2483 cluster support will confirm this case and have medium term outlook turned bearish.

However, decisive break of 1.3052 cluster resistance will indicate the fall from 1.3364 has possibly completed after drawing support from resistance line (1.2978 to 1.2937, now at 1.2845). This will also save the case that medium term up trend from 1.1639 is still in progress with EUR/USD kept inside the rising channel. Break of 1.3296 resistance will suggest the rise from 1.2483 has possibly resumed and EUR/USD could make a new high above 1.3364 before finally making a top on above mentioned bearish divergence condition in weekly chart.

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Published on  Tue, Jan 30 2007, 15:31 GMT