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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Dollar Weakens Again after Poor Housing & Confidence

Tue, Jun 24 2008, 14:35 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Dollar Weakens Again after Poor Housing & Confidence

Dollar weakens sharply in early US session after the release of house price data and consumer confidence. The S&P Case-Shiller home price continued to deteriorate in April with the 20-city composite index posted a record annual decline of 15.3%. Conference Board Consumer Confidence dropped sharply to a 16 year low of 50.4 in Jun, versus consensus of 56.3.

With recent poor economic data, traders are continuing to pare bets on rate hikes from Fed in the near term. Indeed, fed funds futures are showing less than 40% chance of a 25bps hike in Aug, comparing to nearly 50% a week ago. Nevertheless, all eyes will still pay close attention to tomorrow's FOMC statement. In particular, if another round of sell of in the greenback would be seen if Fed sounds non-committal or concerned with deeper economic slowdown.

Released in European session, Germany Gfk consumer confidence dropped sharply to 4.9 in Jul versus expectation of 4.6. The deterioration in consumer confidence is believed to be due to rising energy prices, deteriorating global economy and a rising Euro.

More Technical Analysis Reports Here

AUD/USD Mid-Day Outlook

Daily Pivots: (S1) 0.9491; (P) 0.9525; (R1) 0.9558; More

AUD/USD's rise from 0.9317 resumes today by taking out 0.9566 resistance and surges to as high as 0.9580 so far. At this point, intraday bias remains on the upside as long as 0.9493 support holds. Further rally should be seen to test 0.9653 high. As discussed before, with 0.9291 support remains intact, price actions from 0.9653 are still treated as a correction in the medium term up trend only. Strength of the rise from 0.9327 suggests that such correction has completed. Break of 0.9653 resistance will confirm that medium term rally has resumed. On the downside, below 0.9493 support will dampen this view and turn outlook neutral first.

In the bigger picture, rise from 0.8512 should still be in progress as long as 0.9291 support holds. Regardless of the structure, such rally is treated as part of the long term up trend from 0.4773 (01 low) and is still expected to extend further to next medium term target of 100% projection of 0.4773 to 0.8008 from 0.6773 at 1.0008 which overlaps with parity.

However, the upside momentum since making a low at 0.7675 is still far from being convincing. A break below 0.9291 support will be the first alert that rise from 0.9512, as well as that from 0.7675 has completed. This will set the stage for deeper decline back into 0.7675, 0.8870 support zone, with key long term support of 0.8008 lying in between.

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Published on  Tue, Jun 24 2008, 14:36 GMT