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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Markets Steady as Bernanke and Paulson Testify

Tue, Sep 23 2008, 13:56 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Markets Steady as Bernanke and Paulson Testify

In his prepared speech to Senate Banking Committee, Fed Bernanke urges Congress to quickly pass the $700 bailout plan to "stabilize the situation". He said that "global financial markets remains under extraordinary stress" and "if financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse." Paul emphasized that a "continuing series" of financial institution failures must be avoided. "Decisive action" must be taken to "and comprehensively address the root cause of this turmoil" which root back to rotten debts held by financial institutions.

The financial markets are rather clam today so far, with US stocks open nearly flat. Oil retreats mildly but is still holding well above $100 level while Gold is holding above $900. Dollar remains in tight range against most major currencies today. As mentioned before, the greenback is now at an important support level. If out view that the past two week's decline of greenback is just a correction in a larger medium term rally, dollar should be forming a base in the current level and then stage a strong rebound later this week. On the other hand, further sell of in dollar will push it through key near term levels against major currencies and will invalidate this view.

USD/CAD extends weakness after released of stronger than expected CPI from Canada. Headline CPI climbed to 3.5% yoy in Aug, inline with consensus. Core CPI, climbed to 1.7% yoy, above expectation of 1.6%. Eurozone PMI data showed further deterioration in business sentiments. Manufacturing PMI tumbled sharply from 47.6 to 45.3. Services PMI also dropped from 48.5 to 48.2 in Sep.

For Crude Oil and Gold analysis, click here

More Forex Technical Analysis Reports Here.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.0276; (P) 1.0394; (R1) 1.0475; More.

USD/CAD's fall from 1.0819 extends further today and at this point, intraday bias remains on the downside as long as 1.0372 minor resistance holds. USD/CAD is expected to test trendline support at 1.0282 first and firm break will encourage deeper fall to key support level at 0.9974. On the upside, above 1.0372 will turn intraday outlook neutral and bring recovery, but short term outlook will remain bearish as long as 1.0568 support turned resistance holds and further decline is in favor after recovery.

In the bigger picture, medium term rise from 0.9056 has met mentioned cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791), but fails to sustain above so far. Break of 1.410 cluster support (50% retracement of 0.9974 to 1.0819 at 1.0397) firstly indicate that a short term top is at least in place with bearish divergence condition in 4 hours MACD and RSI. Focus now turns to 0.9974 and break will indicate that whole medium term rise from 0.9056 has completed and will have medium term outlook turned bearish again. On the upside, sustained break of 1.0819 is needed to confirm rise from 0.9056 is still in progress, otherwise, short term outlook is neutral at best.

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Published on  Tue, Sep 23 2008, 14:01 GMT