Ordering even more voltage to money growth yesterday in breathtaking speed, the Fed announced another stunning stimulus program for the U.S. economy. Such action has its dangers. As economist Stanley Salvigsen wrote (in "Little Shop of Horrors," Merrill Lynch, 1985): Dr. Frankenstein (the Fed) wants to have the monster (the economy) on its feet, therefore urging his assistant Igor to add more and more power to the wiring attached to the body, until the monster jumps off the table - and eventually becomes uncontrollable (inflation*). But for now, it seems the monster wouldn’t even lift a finger, so consumer goods deflation after the ongoing asset deflation is the imminent threat, with interest rates perhaps just above zero next year. It seems that the dollar got that zero picture yesterday, suffering a bout of weakness after the announcement, driven by fears that the Greenback could become a source for carry trades. But if deflation is really taking place, the USD should grow stronger - and that is what the longer term chart picture still suggests.
*Salvigsen was right: all that followed after 1985 was one huge asset inflation, first financial assets, then real estate, finally becoming a missile out of control.
In today’s trading, we doubt the USD would trigger another down movement, breaking the lower support of its longer term sideways movement. It has tried several times to do so during its 4-week consolidation period, always in a hasty, two or three day move, only to slowly gain strength again. One of these hasty moves may now be behind us. We therefore would rather look for an opportunity to buy the USD in the major pairs, as outlined below. Note that volatility could be lower now in advance of the long Thanksgiving weekend in the U.S., as well as today’s triple data release of U.S. durable orders, personal income and personal spending, all at 14:30 CET.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair, with its advance yesterday, is now bumping into stiff resistance between 1.3050 and 1.3100. Currently trading back a little and at 1.2980, we doubt this resistance zone will be broken in today’s trading. We predict rather a range trading repeatedly filled between 1.3050 and 1.2950 on the downside.
GBP / USD
Cable is on a slight upmove right now in early European trading, attempting to attack the 1.5540 level, a resistance zone it failed to take yesterday. Currently trading at 1.5360, we don’t see the upmove continuing for long, failing again to break 1.5540. Expect a retreat from that level to support at 1.5250.
USD / CHF
In European morning trading, the dollar regained some of the territory lost yesterday against the Swiss franc. Currently trading at 1.1925, we detect a support at exactly 1.1900 and expect the upmove to continue today, perhaps from that level. That upmove most probably will be limited at 1.2040, the resistance for today.
USD / JPY
The dollar lost further ground against the yen in Asian trading and is currently trading on a major support at 95.00 in early European hours. We expect that support to more or less hold today and see rather some upmoves to the 96.00 resistance level.
*Salvigsen was right: all that followed after 1985 was one huge asset inflation, first financial assets, then real estate, finally becoming a missile out of control.
In today’s trading, we doubt the USD would trigger another down movement, breaking the lower support of its longer term sideways movement. It has tried several times to do so during its 4-week consolidation period, always in a hasty, two or three day move, only to slowly gain strength again. One of these hasty moves may now be behind us. We therefore would rather look for an opportunity to buy the USD in the major pairs, as outlined below. Note that volatility could be lower now in advance of the long Thanksgiving weekend in the U.S., as well as today’s triple data release of U.S. durable orders, personal income and personal spending, all at 14:30 CET.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair, with its advance yesterday, is now bumping into stiff resistance between 1.3050 and 1.3100. Currently trading back a little and at 1.2980, we doubt this resistance zone will be broken in today’s trading. We predict rather a range trading repeatedly filled between 1.3050 and 1.2950 on the downside.
GBP / USD
Cable is on a slight upmove right now in early European trading, attempting to attack the 1.5540 level, a resistance zone it failed to take yesterday. Currently trading at 1.5360, we don’t see the upmove continuing for long, failing again to break 1.5540. Expect a retreat from that level to support at 1.5250.
USD / CHF
In European morning trading, the dollar regained some of the territory lost yesterday against the Swiss franc. Currently trading at 1.1925, we detect a support at exactly 1.1900 and expect the upmove to continue today, perhaps from that level. That upmove most probably will be limited at 1.2040, the resistance for today.
USD / JPY
The dollar lost further ground against the yen in Asian trading and is currently trading on a major support at 95.00 in early European hours. We expect that support to more or less hold today and see rather some upmoves to the 96.00 resistance level.
