It is not the 50 basis point interest cut to 2.00% by the ECB that was crucial yesterday, it was the question of whether the ECB would mention that they are willing to cut further if necessary. This is confirmed now with the remarks of Mr. Trichet, projecting a very pessimistic economic outlook for the Eurozone. This is now in contrast with the U.S., where central bankers already see the light at the end of the tunnel. Provided it is not the light of an oncoming train, the U.S. economy should crawl slowly out of the worst by mid-2009. The chances for a further reduction of the US$-euro interest rate differential are intact therefore, and with that a further decline of the euro longer term.
The short-term intraday business is quite a different matter though. The euro is oversold against the U.S. dollar, an upward reaction during the next days seems likely. In Asian trading and today’s early European hours, one of these correction moves has already set in. We expect more to come in today’s trading, and therefore are following a sell on strength stance for the USD, as explained below in detail. Note today’s U.S. CPI and core CPI for December at 14:30 CET, as well as U.S. industrial production and capacity utilization in December at 15:15 CET.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The euro recovered further in late Asian and early European trading, currently priced at 1.3230 against the dollar. We expect more of these moves to come in today’s trading, although from lower levels. The next buying point could be the 1.3190 support level. The upper side for today is limited at the 1.3310 resistance level.
GBP / USD
Cable developed a rare strength yesterday, and continued this tendency in European morning trading. Currently at 1.4920, the pair is about to meet some intraday resistance and therefore prune to some downward corrections, which would find support at 1.4850. From there, another upward swing is possible, leading to 1.5050.
USD / CHF
The resistance point around 1.1250 for the dollar against the Swiss franc is now firmly established in today’s trading. With the market at 1.1210, we therefore do not see much of upside potential, and rather anticipate a test of the 1.1130 support level.
USD / JPY
The dollar overran the 89.90 resistance point against the yen in late Asian trading, and is currently priced at 90.40 in European morning trading. The next resistance on the upside is 91.20, which we see being tested in today’s trading.
The short-term intraday business is quite a different matter though. The euro is oversold against the U.S. dollar, an upward reaction during the next days seems likely. In Asian trading and today’s early European hours, one of these correction moves has already set in. We expect more to come in today’s trading, and therefore are following a sell on strength stance for the USD, as explained below in detail. Note today’s U.S. CPI and core CPI for December at 14:30 CET, as well as U.S. industrial production and capacity utilization in December at 15:15 CET.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The euro recovered further in late Asian and early European trading, currently priced at 1.3230 against the dollar. We expect more of these moves to come in today’s trading, although from lower levels. The next buying point could be the 1.3190 support level. The upper side for today is limited at the 1.3310 resistance level.
GBP / USD
Cable developed a rare strength yesterday, and continued this tendency in European morning trading. Currently at 1.4920, the pair is about to meet some intraday resistance and therefore prune to some downward corrections, which would find support at 1.4850. From there, another upward swing is possible, leading to 1.5050.
USD / CHF
The resistance point around 1.1250 for the dollar against the Swiss franc is now firmly established in today’s trading. With the market at 1.1210, we therefore do not see much of upside potential, and rather anticipate a test of the 1.1130 support level.
USD / JPY
The dollar overran the 89.90 resistance point against the yen in late Asian trading, and is currently priced at 90.40 in European morning trading. The next resistance on the upside is 91.20, which we see being tested in today’s trading.
