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Daily Forex Technical Report

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Daily Forex Technical Report − Euro and Sterling Hardest Hit in Dollar and Yen Rally

Wed, Oct 22 2008, 07:46 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Euro and Sterling Hardest Hit in Dollar and Yen Rally

Dollar continues to maintain strong momentum today on a couple of factors with dollar index soaring to as high as 85.91. Firstly, there are increased speculations that other major central banks in the world will cut rates faster than Fed. Markets are pricing in another 75bps cut from ECB by Jun next year even though ECB has already cut 50bps on Oct 8 by in a coordinated effort with other central banks. Sterling is additionally pressured after BoE Governor King said in a speech that the UK economy is entering a recession. Another round of selling in the global stock markets and commodities also provides additional boost to the dollar. Crude oil dives below $70 again while gold extends recent weakness to below $760 level.

In the forex markets, EUR/USD fell below 1.28 for the first time since Nov 2006. GBP/USD also dives to as low as 1.6203 while USD/CHF surges to as high as 1.1693. The Japanese yen also benefits from risk aversion with EUR/JPY and GBP/JPY breaking through this month's low. Technically speaking, Euro and Sterling are hardest hit today. Aussie is relatively steadier so far but will likely catch up soon.

The economic calendar is also rather light today. Australian CPI rose more than expected by 1.2% qoq in Q3, pushing yoy rate to 5.0%, highest since 1995. Japan all industry index dropped more than expected by -1.8% in Aug. BoE minutes is expected show unanimous vote for the 50% rate cut on Oct 8. Canadian retail sales is expected to be dropped -0.2% mom in Aug, with ex-auto sales flat. Canadian leading indicators is expected to be flat in Sep.

More Forex Technical Analysis Reports Here.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.6501; (P) 1.6851; (R1) 1.7054; More

GBP/USD's fall extends sharply further after taking out 1.6786 low and reaches as low as 1.6203 so far. At this point intraday bias remains on the downside as long as 1.6604 minor resistance holds. Next downside target is 100% projection of 100% projection of 1.8668 to 1.6786 from 1.7630 at 1.5748. On the upside, above 1.6604 will indicate that an intraday low is in place and bring consolidation. But recovery should be limited below 1.7136 resistance and bring fall resumption.

In the bigger picture, the down trend from 2.1161 is still in progress. Firm break of mentioned long term fibonacci level of 61.8% retracement of 1.3680 to 2.1161 at 1.6538 now set the stage for deeper decline to next long term cluster support, which is 76.4% retracement at 1.5446 and 261.8% projection of 2.1161 to 1.9337 from 2.0158 at 1.5383. On the upside, a break above 1.7630 resistance is needed to indicate that a medium term bottom is formed. Otherwise, medium term outlook remains bearish.

For Crude Oil and Gold analysis, click here

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Published on  Wed, Oct 22 2008, 07:56 GMT