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Daily Trading Forecast

USD Index Meets Support

Tue, May 26 2009, 09:44 GMT
by Swiss e Trade Strategy Team

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The trade-weighted Dollar-Index, which provides the best indicator for the dollar‘s future direction, seems to have found some firmer footing after its fall for the last 20 days. The dollar is now not only testing long-term support zones, it is also oversold in the weekly, daily and 4-hour charts as measured by many indicators. Granted, the fundamental inflation-prone outlook for the Greenback does not speak for much recovery. But Forex is not a one-way street, and fundamental opinion change happens to be quick and usually unforeseen. Let us not forget, the trade partners of the dollar are not in a much better situation than the U.S., facing quite similar outlooks for their economies. It needs only some additional signs from their side of more intensive fiscal and monetary expansion, based on increasing political pressure or social unrest, especially in Germany and France, to trigger an upward reaction in the USD.

In today‘s trading, there are no market-moving data scheduled, perhaps only the U.S. consumer confidence index for May, at 16:00 CET. We expect a trading band for the USD to be on an upward slope, as described in the major pairs below.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The pair lost ground this European morning and is currently trading at 1.3890, about to test an intermediate support zone around 1.3850. We see the 1.3850 support being broken in today’s trading, leading eventually to prices below the 1.3800 level.

GBP / USD
Cable is hovering above its longer-term support area at 1.5750 in early European trading, right now priced at 1.5785. We expect lower prices in today’s trading, reaching levels around 1.5700, while the upside is limited at 1.5830.

USD / CHF
Upside potential in the dollar emerged in early European trading, with current market prices around 1.0910. After some minor downward corrections, we see more of this upmove to come today, testing the 1.1000 resistance line.

USD / JPY
After a dull Asian session, the dollar strengthened against the yen in this European morning and is currently trading at 94.95. While some consolidation now might follow, we see this strength remaining in today’s trading, to a maximum of 95.50.

Published on  Tue, May 26 2009, 09:45 GMT