The USD, having received its first blow last Thursday by the remarks of the president of the ECB, ran into even more negative news Friday, not only such as bad U.S. economic data and soaring oil prices but renewed fears that the credit crunch might not be over even by now, reflected in the stock market`s bear moves. Renewed negative sentiment tends to stick, justified or not, not to be ignored by everyone involved in short-term trading.

For today, we expect correction moves in all of the majors, due to the significantly overbought / oversold situations (see specific comments below), and would take advantage of such moves to place a buy in the EUR / USD. Until tomorrow, there are no important data releases (except USD / CHF, Switzerland`s Roth to speak at 16:00 CET) to "disturb" the technical picture we describe below in detail.

Intraday Market Outlook for Day Traders

EUR / USD
Having easily broken previous resistance, the EUR / USD is now on its way to a new resistance zone between 1.5820 and 1.6000 and is currently trading at 1.5800. Since the pair is significantly overbought right now, we expect some consolidation/downward correction for today. We consider the 1.5700 level a good buying point, with a target of 1.5820 and a stop at 1.5660. See chart below.

GBP / USD
Currently trading at 1.9740 and overbought, the GBP / USD is meeting a massive resistance zone between current prices and 1.9800. Wait for a meaningful correction before entering any long positions. No specific forecast.

USD / CHF
An upward correction might be in the cards today for the USD / CHF, which could lead to the 1.0240 level. However the 16:00 CET remarks by the Swiss National Bank president, which are expected to be hawkish and to mirror Mr. Trichet’s, could send this pair into another downward spiral. We are standing aside for today.

USD / JPY
Against the Japanese yen, the dollar suffered least. The pair really has its own dynamic, i.e. showing inherent weakness of the yen, and is currently trading at 105.70. Traders eager to buy the pair should wait for a correction at least to the 105.30 level. No specific forecast.

EUR / USD Chart

EUR / USD