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Daily Trading Forecast

Low Volatility, Not Much in the Way of Trading Prospects Today

Thu, Apr 9 2009, 09:44 GMT
by Swiss e Trade Strategy Team

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Forex shows shrinking volatility ahead of the long Easter weekend, like the equity markets, where profit-taking has set in recently. The dollar is consolidating its gains of the week, still in a sideways movement in the major pairs, with no sign at all for a resurrection of the uptrend which was born last year. But as yesterday’s FOMC minutes revealed, the Fed remains pessimistic in its economic outlook, meaning the institution will continue the quantitative easing policy - still a bullish factor for the USD. This is supported by the chart-technical analysis done in the USD Index, which has just successfully tested its long-term uptrend on the daily basis. For now, though, it is better to concentrate on the ongoing medium-term sideways trend of the Greenback, which is approaching its upper limits soon in the major pairs. By pure chart-technical wisdom, It is not too farfetched to assume another countermove within this see-saw movement in the near future.

For today’s trading, we do not expect volatility to increase to a scale offering much in the way of trading prospects, except those narrow trading ranges projected in the major pairs below. Note the BoE’s session results for its monetary policy at 13:00 CET, which could have an effect on the British pound’s performance. The U.S. Trade Balance for February is being released at 14:30 - a slight improvement of the deficit is expected.

Due to the long Easter holiday weekend in Europe, our next forecast will appear on Tuesday, April 14.

Intraday Market Outlook for Day Traders

EUR / USD
On a recovery path in European morning trading, the pair is approaching the 1.3350 resistance point and is currently at 1.3310. We expect that resistance point to hold in today’s trading, with the market going into a trading range between that 1.3350 level on the upside and the 1.3250 mark on the downside.

GBP / USD
Cable is consolidating on lower levels right now and is currently trading at 1.4650. This is a longer-term support zone, which we see not being broken in today’s trading. Some recovery moves could set in soon, but not exceeding the 1.4740 level, giving way to a low volatility sideways market today, between 1.4740 and 1.4650.

USD / CHF
The two-day old sideways movement of the dollar is still intact in today’s European trading, with the USD currently at 1.1460 against the Swiss franc, near its lower end of the sideways channel at 1.1430. We expect some upward movement in today’s further trading, up to resistance at 1.1510.

USD / JPY
After the dollar continued losing ground against the yen in all of Asian trading, there is only a weak recovery move in European morning trading, with the market right now at 99.95. We see only slim chances for further recovery and project a downside target for today’s market at 99.30.

Published on  Thu, Apr 9 2009, 09:45 GMT