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Daily Trading Forecast

USD Index Still Leading

Wed, Apr 22 2009, 09:43 GMT
by Swiss e Trade Strategy Team

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While the major pairs are still caught in their trading bands, illustrated especially by the EUR / USD, the Dollar Index shows an unchanged bullish character: an unbroken uptrend, correcting its present overbought condition downwards only a little. Nothing speaks against a later revival of this uptrend from a chart-technical standpoint. Seen by the fundamentals, that could mean continued deflation in the U.S., as indicated by the recent slip of consumer prices into negative territory for the first time since 1955 (the core CPI rate is not there yet, but close to zero). Not even the surprisingly positive reading of the German ZEW Index of yesterday raised the EUR / USD much, resulting only in a mild (and short-lived) upward correction from its oversold status.

For today‘s trading, we expect renewed countermoves against the major pairs‘ overnight weakness versus the dollar, which is in unchanged overbought condition. We do not expect much volatility within the projected trading bands in the majors, as outlined below.

Intraday Market Outlook for Day Traders

EUR / USD
Currently hovering over the 1.2900 support zone, the pair is on a slight recovery move, now priced at 1.2930 in early European trading. We expect that support zone to hold in today’s trading and see more recovery mood setting in, leading to levels around 1.2990.

GBP / USD
The pound came under pressure today after the BoE left interest rates unchanged and is currently trading at 1.4535 against the dollar. The important support zone around 1.4500 could be tested today, but not broken. Recovery moves from there could lead to an upper limit at 1.4650 in today’s trading.

USD / CHF
Still defending its higher levels against the Swiss franc, the dollar is trading in a quiet market this European morning, currently priced at 1.1685. We do not expect the sideways market, defined by an upper limit at 1.1740 and a lower end at 1.1650, to be broken today.

USD / JPY
The dollar fell back against the yen in Asian trading and is currently priced 98.05, on a downside move within our expected trading range for today between 97.90 and 98.70. We see upward moves from the 97.90 support level in today’s trading.

Published on  Wed, Apr 22 2009, 09:53 GMT