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A Breather for the USD?

Fri, May 30 2008, 10:50 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG


The U.S. dollar strengthened again in Asian and early European trading today, supported by lower oil prices and weak European economic data. Several technical indicators are showing overbought conditions now, suggesting some intraday correction moves downward.

Considering the upcoming weekend close, we only would touch the EUR / USD pair with another short, and only if it trades higher during the day (see below for specifications). A good chance for a better (higher) entry point for the pair could be after the 14:30 CET release of U.S. data for personal income and personal outlays for April, where estimates are perhaps too positive for now.

Intraday Market Outlook for Day Traders

EUR / USD
The EUR / USD, currently trading at 1.5495, has entered into a downtrend but we feel a small correction is needed before further losses in the EUR / USD can be made. Wait for a correction back to 1.5540 at which point sell the EUR / USD with a target of 1.5450 and a stop at 1.5600. See chart below.

GBP / USD
We feel the GBP / USD has further downside movement today and is currently trading at 1.9725, not far from support that we see at 1.9685. If this support is broken, a minor support will next be seen at 1.9620 and from there the way to 1.9450 is clear. We advise traders to trade from the short side in the GBP / USD today and suggest short positions at over 1.9750 when possible.

USD / CHF
The USD / CHF has broken above the critical 1.0500 and is currently trading at 1.0504. This week, the USD / CHF has found solid support at 1.0225 and has made this impressive gain to today’s current level. In hourly charts, a small double-top has formed at 1.0525. That and mixed technical indicators will keep us on the sidelines today regarding this currency pair.

USD / JPY
We feel there is potential for the USD / JPY to reach 108.30 but not in today’s trading. The USD / JPY is currently trading at 105.44, very near its resistance level at 105.70. From the action we’ve seen in Asia overnight, we expect that the USD / JPY will consolidate at these higher levels and so do not expect much more movement from this currency pair today.

EUR / USD Chart

EUR / USD

Published on  Fri, May 30 2008, 10:54 GMT


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