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Daily Trading Forecast

More Recovery Potential for Euro Today

Tue, Feb 3 2009, 10:37 GMT
by Swiss e Trade Strategy Team

Swiss e Trade AG  |  View company's profile

It might still be too early to say but, with the monthly U.S. economic data showing some stabilization signs now, there is growing sentiment in the markets that the worst might be over. True, most indicators such as the IMS survey yesterday still point to a contraction in the business cycle, but at least they are not changing from bad to worse. Such a scenario, i.e. possible economic turnaround, puts a lid on the USD’s recent strength, at least in the present day-to-day trading. Meanwhile, the market reckons with the possibilty of another interest rate cut by the ECB and the BoE (Thursday). While the BoE most certainly will cut, the ECB most likely will not, citing the remarks of Mr. Trichet, "We will not reconsider before March."

For today’s trading, we expect a continuing selling tone in the USD, especially against the euro and to a lesser degree the CHF, as explained below in detail for the major pairs. Note today’s U.S. pending home sales index for December (16:00 CET), where stabilization is expected after the previous declines.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The pair is consolidating its higher levels in this European morning, trading currently at 1.2825. Right now there is some slight weakness in the market, most probably testing the 1.2800 support level. From there a further recovery move could set in, finding resistance at 1.2950 today.

GBP / USD
A trading range between 1.4270 and 1.4150 continues to dominate cable in early European trading, currently priced at 1.4190. We expect the market soon to find support at the 1.4150 level, which we see as a springboard for further upmoves toward the upper side of the trading channel.

USD / CHF
In a moderate bid tone, the dollar is trading slightly higher against the Swiss franc in early European hours and is currently priced at 1.1650. We do not expect the market to exceed the recent highs around 1.1700 for today, rather testing the support level at 1.1580.

USD / JPY
The dollar continues to trade in very low volatility against the yen, with no real signs for a new directional change. Currently trading at 89.50, we project just a narrow trading range for today, between 89.80 and 89.30.

Published on  Tue, Feb 3 2009, 10:38 GMT