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Daily Trading Forecast

Dollar Regaining its Strength

Tue, Jan 6 2009, 10:45 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG

A good start into 2009 for equity markets helped the dollar to regain its strength, especially against the Euro yesterday. This may look like a continuation of the uptrend for the USD which began 5 months ago - but we are not that far yet. A downside break of the $1.28 level of the euro is needed to confirm such a development. Two fundamental expectations could lead to that. First there is the outlook for a shrinking interest rate differential in the euro, which is still substantial. The second point concentrates on concerns for countries like Italy and Greece in the Eurozone for example, where investors now require a substantial premium for these countries’ bonds over German ones which offer the best security within the zone. This is the first time since the introduction of the euro that bonds of member countries are differentiated by the financial world to such an extent.

Within some down corrections for the USD, we see it upholding its newly-gained firm tone in the major pairs for today’s trading, as described in detail below. Note today’s U.S. release of the ISM Services Index for November and U.S. Factory Orders, both at 16:00 CET. More important could be the FOMC minutes at 20:00 CET.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
Losing further ground in both Asian and early European hours, the pair is now priced at 1.3435. We are looking forward to sell this market today at prices above 1.3500, for a day’s target of 1.3350.

GBP /USD
Picking up some volatility in early European trading, cable is currently on the attack at the 1.4770 resistance level, now priced at 1.4715. We do not see this 1.4770 level being substantially broken on the upside and rather expect another drop to levels around 1.4600.

USD / CHF
Continuing its uptrend in European morning trading, the Dollar is currently priced at 1.1185 against the Swiss franc. We see this uptrend continuing in today’s trading while undergoing some correction moves, but expect prices above 1.1120 to hold. Eventually prices above 1.1200 are possible.

USD / JPY
The dollar strengthened further against the yen in early European trading, after having broken the 93.50 resistance level, which now becomes support in today’s trading. Currently priced at 93.71, we may see a testing of 93.50 support, which would then lead to again higher levels.

Published on  Tue, Jan 6 2009, 10:48 GMT