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Daily Trading Forecast

USD Trading on Edge of Support

Tue, Jul 21 2009, 09:56 GMT
by Swiss e Trade Strategy Team

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Still positive stock markets brought the dollar near its long-term support zones against the majors, best illustrated by the EUR / USD pair, just hovering below the 1.4200 zone again. Considering that the equity markets may now be somewhat overheated by optimism, and looking at the quite oversold position of the USD, we estimate recovery moves for the Greenback this week. Today and tomorrow, the Fed’s Mr. Bernanke will address first the financial committee of the House of Represetatives and then that of the Senate for his half-year report of monetary policy, usually a market-moving factor. Any hint in his speech of stopping, for example, the quantitative monetary easing would strengthen the USD.

Otherwise, this week has not much economic fundamental data on schedule. The oncoming holiday season already has some slowing effect on volatility, too. For today, we expect the USD to make recovery moves against the majors, as explained below in our daily trading band projections.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
Since the beginning of June, the pair has repeatedly tried to attack the 1.4200 / 1.4300 resistance line, as again this European morning, and is currently trading at 1.4210. Heavily overbought as the market is, we think rather of a retreat today, to the 1.4090 support zone.

GBP / USD
Cable is on some down correction moves in the early European hours, back from highs around 1.6550 to now 1.6420. We expect more of that down correction to come today, to levels around 1.6350.

USD / CHF
After sitting on its long-term support zone of 1.0700 against the Swiss franc, the dollar recovered slightly to 1.0717 in early European trading and is currently at 1.0680. We see more steam developing today in that movement, to a maximum of 1.0850.

USD / JPY
For once, the dollar is moving in harmony compared with the other pairs against the yen, currently recovering in late Asian and early European trading and right now at 94.15. We do not see much more of that recovery to come today and expect later another downmove to the 93.80 level.

Published on  Tue, Jul 21 2009, 09:58 GMT