Daily Trading Forecast

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Crumbling Oil Price Renders USD Some Help

Wed, Jul 23 2008, 10:54 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG


Yesterday`s sharp drop in the oil price came as a relief not only to the battered Greenback but helped all financial markets to shake off at least temporarily their main fear of it`s Nr. 1 enemy, inflation. Whether this positive development will be gaining more momentum one cannot say at this stage and time of the year. Lower volume summer markets have their own special behaviour. However, fact has it that the USD remains influenced by oil price and financial markets development, for the good or bad. So far, the forex`s majors only consolidated the hastily achieved levels in late asian and early european trading.

For today we expect the positive bias for the USD to remain intact, as described in detail for the majors below, provided that the oil price does not throw another spanner in the works again.

Intraday Market Analysis for Day Traders

EUR/USD

After falling through the support level at 1.5790 the pair entered a lower trading range. Currently at 1.5720, we see today`s trading band between 1.5650 and 1.5780. Traders wishing to take a short position sould wait until the resistance level at 1.5780 might be tested again, which we expect to hold in today`s trading.

GBP/USD

Cable has managed to fall below its important "handle" 2.0000 level again, which repeatedly became support or resistance over the last 5 sessions. Currently at 1.9940, another important support level, we do not see major renewed selling pressure. On the upside, the 2.0000 level might hold in today`s trading.

USD/CHF

Currently at 1.0340, near a strong resistance level, the USD tries to enter a higher trading band against the Swiss Franc, which we see to marerialise only slowly though. If 1.0345 is broken, the next hurdle of 1.0400 must be taken. We do not see that happen today.

USD/JPY

The pair reacted with some lower volatility than other majors to the falling oil price. The USD against the yen tries to attack the all important resistance zone between current prices at 107.80 and 108.50 on the upside. We expect the USD/JPY to trade with lower volatility within this band today.



Published on  Wed, Jul 23 2008, 10:59 GMT


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