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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Euro Pulls Back as Trichet Has No Bias, Dollar Rebounds

Thu, Jul 3 2008, 13:14 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Euro Pulls Back as Trichet Has No Bias, Dollar Rebounds

Euro is sold off against the dollar, which in turn boosted the dollar for a rebound, after ECB Trichet said that the current monetary stance after today's rate hike is enough to achieve ECB's objective of price stability and he has no bias now. The markets take that as a signal that today's 25bps hike to 4.25%, is really a one off event and Euro was sold off on profit taking after rumor became news.

On the other hand, dollar was supported after Non-farm payroll report in Jun was close to consensus. Job markets gave up -62k jobs in Jun, close to expectation of -60k. Unemployment rate was unchanged at 5.5%. Jobless claims rose again to 404k. At least, the report isn't much worse than expected.

While dollar did recovers impressively today, the overall short term bearish outlook doesn't change. Traders are still continuing to pare bets on near term rate hike from Fed in near future. Also, dollar will continue to be pressured by surging oil prices, which made another record high above $145 a barrel today. Technically speaking, there is no confirmed signal in major pairs yet.

Next focus will be ISM non-manufacturing index which is expected to remain mildly expansionary at 51 in Jun.

Earlier today, Pound was sent lower against dollar and Euro after UK Services PMI hit lowest level in seven year at 47.1 in JUn. Services PMI in Eurozone dipped to contraction region of 49.1 too. Retail sales, though, unexpectedly rebound from at 1.2% mom, with yoy rate back to positive at 0.2%. Swiss CPI was unchanged at 2.9% yoy in Jun. Australian trade balance turned deficit at -956M in May.

More Technical Analysis Reports Here

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.5810; (P) 1.5849; (R1) 1.5921; More

EUR/USD retreats sharply in early US session and break of 1.5775 minor support indicates that an intraday top is already in place at 1.5908. Intraday outlook is turned neutral for the momentum with bias mildly on the downside for deeper pull back to inner rising channel support (now at 1.5721). Nevertheless, downside should be contained by 1.5651 resistance turned support and bring another one more rise. As discussed before, prior break of 1.5843 resistance is taken as the second signal that consolidation from 1.6019 has completed at 1.5302 already. Retest of 1.6019 record high should be seen. Break will confirm medium term up trend has resumed.

In the bigger picture, a medium term top is in place at 1.6019 after meeting 1.6 psychological resistance. Above 1.5843 indicates that such consolidation has likely completed at 1.5302 already. Further decisive break of 1.6019 will confirm this case and bring rise to 61.8% projection of 1.4309 to 1.6019 from 1.5284 at 1.6341 first. On the downside, while another setback cannot be ruled out before completing the consolidation, downside should be contained above 1.5302 support. Break of this support level is needed to switch to the case that price actions from 1.6019 are developing into deep correction to test 1.4966 cluster support.

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Published on  Thu, Jul 3 2008, 13:31 GMT