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Daily Trading Forecast

Dollar Unimpressd by Wall Street's Post−Election Blues

Thu, Nov 6 2008, 11:05 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

At least here the financial world was in order in this otherwise cock-eyed year, with Wall Street dropping typically the day after a Democratic victory. The dollar reacted at the same time with some gains, but only during the European morning showing some weakness. So whatever happens in stock markets, the basic outlook for the Greenback remains intact: currently in a correction/consolidation phase and, once this so far young phase has ended, the U.S. currency will begin another rally, based on interest rate expectations, when the U.S. economy is on better footing than it is now. In early afternoon, the BOE and ECB will decide whether or not to lower interest rates (13:00 and 13:45 CET). The markets expect both banks to lower rates by 0.50%.

For today’s trading, we see the slight selling tone for the USD continuing in the major pairs, as explained in detail below. There are no real market movers among the economic data scheduled today, which allows the concentration on pure market- and chart-technical factors.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The renewed weakness of the pair yesterday found its turnaround in early European trading, now in an upmove towards resistance at 1.2980 and currently trading at 1.2916. We see this upmove testing the 1.2980 level, where again a downswing can set in bringing the pair down to support at 1.2830.

GBP / USD
Cable continues to trade within the range of 1.6150 on the upside and 1.5800 on the downside. Currently priced at 1.5935, there is a bid tone for the pair which could well continue in today’s trading until resistance at 1.6150 is again reached. The selling mood we see setting in from there could be established not sooner than in late trading hours today.

USD / CHF
The dollar is still trading within the range of 1.1560 / 1.1740 against the Swiss franc and is currently in an upmove and priced at 1.1665. We see this bid tone for the dollar continuing, after a downward correction to the 1.1630 level, soon to set in. In later trading, the 1.1740 resistance level might be tested again.

USD / JPY
Still trading near a solid support zone between 97.50 and 97.00, we do see much more downside risk for the dollar against the yen. Currently priced at 97.75, a test of the 97.50 support is possible before the upper end of today’s projected trading range at 99.20 is tested.

Published on  Thu, Nov 6 2008, 11:06 GMT