The U.S. House and Senate agreement to go forward with the stimulus package calmed nervous Wall Street while bond markets continued to rise, partly reflecting the Fed’s policy of "quantitative easing," a euphemism for printing money. But even under such an aspect, the USD remains in its narrow range trading, especially against the euro, despite the fact that the European currency still carries a substantial interest rate differential. Of course, euro interest rates are expected to decline as well, but that is only part of the story. After an ECB member spoke of the "urgent necessity" to cut rates in view of the European economy almost being in free fall, speculations increased that even the ECB has to use quantitative easing eventually, once it has joined the club of near zero interest rates (JPY, USD, CHF). That might be an exaggeration, because an action like that is certainly not the ECB’s cup of tea.
For today’s trading, despite a steep fall due to stop-loss selling this morning, we expect a break out on the upside for the EUR / USD pair, based on a special chart formation. The 30-minute chart is showing a 3-day wedge, lower highs and higher lows, a formation which calls for a decision soon. See the details below. Note the 14:30 CET U.S. retail sales for January, and the EU speech by the ECB’s president Trichet at 19:00 CET today.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair ran into stop selling in European morning trading, having tested the upper line of the now 3-day-old wedge formation. Currently trading on support again at 1.2830, we see another up movement in the making today. 1.2910 is the first mark to be reached and, after breaking that, we expect a decisive move to the 1.3020 level, breaking the upper wedge line.
GBP / USD
Stop selling in early European trading brought cable quickly lower to the present 1.4170. Currently consolidating its lower levels now on a longer-term support line, we are reckoning with upmoves in today’s trading, to 1.4290 at least.
USD / CHF
The dollar moved up in European morning trading in low volatility against the Swiss franc. Currently trading at 1.1620, we do not expect the move to go far today, most probably meeting resistance at the 1.1670 resistance line. The setback from there will find support at 1.1560.
USD / JPY
Against the yen, the dollar fell further back in late Asian and early European trading, with the market at 89.90 right now. We see a downmove in the making, possibly hitting stop-loss selling around the 89.75 level.
For today’s trading, despite a steep fall due to stop-loss selling this morning, we expect a break out on the upside for the EUR / USD pair, based on a special chart formation. The 30-minute chart is showing a 3-day wedge, lower highs and higher lows, a formation which calls for a decision soon. See the details below. Note the 14:30 CET U.S. retail sales for January, and the EU speech by the ECB’s president Trichet at 19:00 CET today.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair ran into stop selling in European morning trading, having tested the upper line of the now 3-day-old wedge formation. Currently trading on support again at 1.2830, we see another up movement in the making today. 1.2910 is the first mark to be reached and, after breaking that, we expect a decisive move to the 1.3020 level, breaking the upper wedge line.
GBP / USD
Stop selling in early European trading brought cable quickly lower to the present 1.4170. Currently consolidating its lower levels now on a longer-term support line, we are reckoning with upmoves in today’s trading, to 1.4290 at least.
USD / CHF
The dollar moved up in European morning trading in low volatility against the Swiss franc. Currently trading at 1.1620, we do not expect the move to go far today, most probably meeting resistance at the 1.1670 resistance line. The setback from there will find support at 1.1560.
USD / JPY
Against the yen, the dollar fell further back in late Asian and early European trading, with the market at 89.90 right now. We see a downmove in the making, possibly hitting stop-loss selling around the 89.75 level.
