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Daily Forex Technical Report

Mid−Day Forex Technical Report − Dollar Regains Strength, Steady after GDP Revision

Thu, Nov 29 2007, 14:16 GMT
by ActionForex.com Team

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Forex Mid-Day Technical Report

Dollar Regains Strength, Steady after GDP Revision

Dollar regains strength against European majors today as correction continues. Q3 GDP growth was revised up to 4.9% annualized rate, fastest growth in four years and slightly above expectation of 4.8%. The growth rate was also much stronger than Q2's 3.9%. However, the data did little to change the view of steep slowdown in Q4 due to housing and mortgage markets problems. Jobless claims surged sharply higher to 352k, the first above 350k reading since Fed and signal a more sever deterioration in the job market. New home sales will be released later in the morning. Recent Fedspeaks will also continue with Mishkin and Bernanke featured today.

Sterling gave back yesterday's gain after dovish comments from BoE members on the testimony before Parliamentary Treasury Select Committee. Blanchflower also made clear his intent to vote for a decrease again in December, though the overall vote will still be tight. Sterling is also weighed down by steeper than expected slow down in how price growth which saw Nationwide House price Index fell by the most since Jun 95, -0.8% mom in Nov, dragging yoy rate to 6.9% versus expectation of 8.4%. Germany's job market continues to show surprised improvement. Unemployment rate dropped further from 8.7% to 8.6% in Nov, as the number of jobless fell by a further -53k. However, Eurozone Retail PMI fell for the third consecutive month to 45.9 in Nov, suggesting the majority of purchasing managers are feeling pessimistic. Euro heads to retest yesterday's low.

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

GBP/USD

Daily Pivots: (S1) 2.0657; (P) 2.0744; (R1) 2.0907; More

Cable's rebound was limited by at 2.0380, below mentioned 2.0845 cluster resistance and eased back to 2.06 level today. Short term outlook remains neutral at this moment. With 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0040) after finishing the current corrective rebound from 2.0353. Below 2.0579 support will bring retest of 2.0353 low first. However, sustained break of 2.0845 cluster resistance will indicate that fall from 2.1161 has completed and will bring retest of this high.

In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.

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Published on  Thu, Nov 29 2007, 14:21 GMT

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