Despite considerable chatter from central bankers over the last two weeks, the G8 nations could not agree on a statement about the low value of the U.S. dollar as was expected from their meeting last weekend. As a consequence, the dollar has started this week's trading on a soft tone.
Longer term, though, we feel it is only a matter of time before the dollar will break through support against the Euro and the British pound and rally above resistance against the yen and Swiss franc.
An important factor to this scenario remains the level of oil prices which will probably continue to trade in a choppy fashion before heading lower.
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD has recovered from its low in Asia at around 1.5340 to trade currently at 1.5426. We feel resistance at 1.5465 will hold any Euro advances in today’s trading and that the overall EUR / USD trend is pointed downwards. This downward movement must first be confirmed by a break of long-term and very important support at 1.5280.
GBP / USD
The GBP / USD is currently trading at 1.9601, after recovering from lows made in Asian trading seen at 1.9413. This recovery in the GBP / USD is taking prices up to first resistance, which we see at 1.9635 and which we expect to hold in today’s trading. We feel cable has more potential on the downside but want to see confirmation of the downtrend with a break of support at 1.9375. In the meantime, watch for choppy trading.
USD / CHF
The USD / CHF, currently trading at 1.0460, is now in an uptrend that began on June 9. Using the Swiss franc as the funding currency side of a carry trade has supported the USD / CHF in recent days and, if the stock markets continue to rise, we feel more carry trade positions will be established, driving the Swiss franc lower. Today, we see prices trading between 1.0400 and 1.0540.
USD / JPY
The Japanese yen has also suffered from carry trades driving the USD / JPY upwards to the current level of 108.34. This level is right at important resistance, which can be seen on the daily charts. We’re not certain there is enough momentum today to drive prices up through this resistance level and advise traders to stay on the sidelines until a convincing break above this resistance level can be confirmed.
Longer term, though, we feel it is only a matter of time before the dollar will break through support against the Euro and the British pound and rally above resistance against the yen and Swiss franc.
An important factor to this scenario remains the level of oil prices which will probably continue to trade in a choppy fashion before heading lower.
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD has recovered from its low in Asia at around 1.5340 to trade currently at 1.5426. We feel resistance at 1.5465 will hold any Euro advances in today’s trading and that the overall EUR / USD trend is pointed downwards. This downward movement must first be confirmed by a break of long-term and very important support at 1.5280.
GBP / USD
The GBP / USD is currently trading at 1.9601, after recovering from lows made in Asian trading seen at 1.9413. This recovery in the GBP / USD is taking prices up to first resistance, which we see at 1.9635 and which we expect to hold in today’s trading. We feel cable has more potential on the downside but want to see confirmation of the downtrend with a break of support at 1.9375. In the meantime, watch for choppy trading.
USD / CHF
The USD / CHF, currently trading at 1.0460, is now in an uptrend that began on June 9. Using the Swiss franc as the funding currency side of a carry trade has supported the USD / CHF in recent days and, if the stock markets continue to rise, we feel more carry trade positions will be established, driving the Swiss franc lower. Today, we see prices trading between 1.0400 and 1.0540.
USD / JPY
The Japanese yen has also suffered from carry trades driving the USD / JPY upwards to the current level of 108.34. This level is right at important resistance, which can be seen on the daily charts. We’re not certain there is enough momentum today to drive prices up through this resistance level and advise traders to stay on the sidelines until a convincing break above this resistance level can be confirmed.
