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Daily Forex Technical Report − Dollar Stabilizes but Looks Vulnerable

Fri, Jul 11 2008, 08:04 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Dollar Stabilizes but Looks Vulnerable

Dollar stabilizes a bit from yesterday's selloff as focus now turns to consumer confidence data to be released today. University of Michigan consumer sentiment is expected to plunge further to a 28 year low of 55.5 in Jul. May trade balance will also be released and is expected to show widened deficit of -62.1B due to rise in petroleum imports. Import price index is expected to show further acceleration to 18.6% yoy in Jun. technically speaking, AUD/USD is so far leading the way in majors' rally against dollar but is still struggle around a structural resistance level at 0.9639. EUR/USD's rise yesterday was taken as another signal that the corrective recovery in dollar has already completed. After all, more downside is in favor in the greenback in near term.

Another major focus of the day will be Canadian employment report which is expected to show 10k expansion in the job market in Jun with unemployment rate steady at 6.1%. New housing price index is expected to show a mere 0.1% gain in May. Trade surplus is expected to climb to 5.2B in May. Recent development suggests that USD/CAD is still bounded in consolidation started from 1.0322. While further fall cannot be ruled out, downside potential should be rather limited and we're still expecting the pair to resume rally towards upper end of medium term range near to 1.3078.

Released earlier today, Japanese industrial production rose 2.8% mom, 1.1% yoy. capacity utilization rose 2.2% in May. Consumer confidence dropped less than expected to 32.9 in Jun. Germany wholesale price index climbed 0.9% mom, 8.9% in June, inline with consensus.

More Technical Analysis Reports Here

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.9561; (P) 0.9600; (R1) 0.9657; More

AUD/USD's rise from 0.9475 extended further as expected and is now pressing mentioned 0.9639 resistance. At this point, intraday bias remains on the upside as long as 0.9578 minor support holds. As discussed before, correction from 0.9667 should have completed with three waves down to 0.9475. Break of 0.9639 resistance will indicate that rise from 0.9327 has likely resumed for next upside target of parity. On the downside, below 0.9578 will argue that consolidation in AUD/USD is probably still in progress and will turn intraday outlook neutral again.

In the bigger picture, with 0.9291 support intact, followed by break of 0.9653 key medium term resistance, the whole up trend from 0.8512 could have resumed. 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 0.9327 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  Fri, Jul 11 2008, 08:11 GMT