2008 ended with low volatility and a stabilizing USD, an exceptional situation for that time of the year when the USD usually suffers a seasonal bout of weakness. Considering the euro’s strength against other currencies with its sizeable interest rate differential, one might wonder when the dollar will eventually give in, like the British pound has, now almost at parity versus the euro. The EUR / USD pair is now trading on good support levels after a sudden drop this European morning, with the chance of a good upmove in today’s trading.

Accordingly, and considering the still somewhat thin market, we would only trade the EUR / USD today, as outlined below. There are no market-moving data releases scheduled for today, but renewed interest rate discussions at the beginning of the year are possible. The Bank of England, for instance, is expected to lower rates again soon, by 50 basis points.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
In a thin market, the pair suffered a sudden drop this European morning and is currently trading at 1.3670, consolidating its lower levels. Due to the now tested longer term support and the oversold situation, we see a chance for an upmove coming today, to levels at around 1.3790.

GBP / USD
Cable continued its see-saw market in early European trading in narrow ranges and is currently priced at 1.4520. We see the upper range for today limited to 1.4590 and the downside to 1.4470.

USD / CHF
The dollar strengthened against the Swiss franc in early European trading to currently 1.1015, just about to test a longer-term resistance zone at 1.1050. We do not see this zone being broken in today’s trading, and expect a down movement to 1.0890.

USD / JPY
The dollar continued its upmove against the yen in European morning trading and is currently priced at 93.00. We expect a continued consolidation of the higher levels in today’s trading, with the downside risk limited to 92.50.