Daily Trading Forecast

When Enough is Enough

Fri, Jun 27 2008, 10:48 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG


A combination of Fed / ECB talk and higher oil prices have knocked the U.S. dollar down to multi-week lows against the world's major currencies. Oil prices today have reached new historic highs at $141.79 and, as a consequence, currency traders have priced in $150.00 oil into the dollar's exchange rate.

But in all these currency pairs, with the exception of the Swiss franc, the dollar has entered into oversold territory and further losses in the greenback have become harder to achieve. In our opinion, this scenario has set up a possible dollar rally in today's trading

Intraday Market Outlook for Day Traders

EUR / USD
The EUR / USD rose sharply to today’s morning high of 1.5782, as crude oil prices spiked to a historic high of $141.79, and is currently trading at 1.5760. We feel that the EUR / USD’s rally from its low of 1.5300 on June 13 to current levels has brought the currency pair into overbought territory. As a consequence, we would like to sell the EUR / USD at prices over 1.5800 for a target of 1.5650 with a stop at 1.5850. See chart below.

GBP / USD
The GBP / USD, like the EUR / USD, is currently at overbought levels and is currently trading at 1.9860, which is just below the resistance level at 1.9910. Also like the EUR / USD, the GBP / USD should consolidate its recent gains due mainly to higher oil prices and trade lower today. For traders taking positions in the GBP / USD, we recommend doing so from the short side.

USD / CHF
Off all the major currency pairs, declines in the U.S. dollar have been greatest against the Swiss franc. The main factor for this massive movement is the market’s appetite for risk, which recently has been declining. Currently, the USD / CHF is trading at 1.0193, just above important support at 1.0150. Against the Swiss franc, the dollar is not oversold so we feel the USD / CHF support may be tested in today’s trading with a possibility of breaking through. No specific forecast.

USD / JPY
The U.S. dollar’s failure to break above resistance at 108.33 has caused prices to fall to 106.26, which also happens to be first support. The USD / JPY is entering oversold territory and we do not feel any subsequent major losses can be expected.

EUR / USD Chart

EUR / USD

Published on  Fri, Jun 27 2008, 10:52 GMT

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