Renewed fears about the health of the banking system emerged, this time ignited by Eastern Europe banks, allegedly in serious trouble. The angst fire spread quickly, and again world stock markets tumbled, despite the fact that some economic leading indicators in industrial countries are showing that the contraction is losing momentum, pointing to a possible recovery later this year. The fresh trouble further encouraged the flight into the dollar, the main theme right now in the market. We reckon that the current renewed banking system sorrows will soon be over, considering the fact of massive state help worldwide and the ongoing risk-clearing process in the books of major banks. The dollar might keep its stronger attitude, though, with money flows lured by positively performing long-term U.S. bond markets.
Short term, the Greenback is still digesting its overbought situation, especially against the euro, where the EUR / USD pair is still trading on a longer-term solid support zone. Although we see this zone being broken on the downside eventually, triggering further sell stops, we are not reckoning with such an action in today’s trading, rather a continuing see-saw market, as described in the major pairs’ discussion below. Today’s market movers are: U.S. housing starts and building permits for January (14:30 CET), U.S. January industrial production (15:15 CET), speech of Fed chief, Mr. Bernanke, (19:00 CET) and the U.S. FOMC minutes (20:00 CET).
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair is currently trading at 1.2570, very near to its last November lows, which represent a major long term support line. We see some further weakness in this market, but not breaking the 1.2500 level today. After testing that level, recovery moves are due to set in today, not exceeding the 1.2640 level.
GBP / USD
Cable traded considerably lower in European morning trading, with current prices at 1.4110. We expect the weakness to persist for a while, but the downside risk is limited to 1.4050 support. From that level, a see-saw market could set in, between that 1.4050 and the 1.4120 mark.
USD / CHF
The dollar currently is on another attack move to the important 1.1770 resistance level, now priced at 1.1740 against the Swiss franc. We do not see that resistance being broken today on the upside and expect a sideways market between 1.1770 and 1.1670.
USD / JPY
In an upmove in late Asian and early European trading, the dollar is currently trading at 92.50 against the yen. This is the third attack on the 92.70 resistance level, which the dollar has failed to break so far. We expect setbacks from there, bringing the market back to the 92.10 level.
Short term, the Greenback is still digesting its overbought situation, especially against the euro, where the EUR / USD pair is still trading on a longer-term solid support zone. Although we see this zone being broken on the downside eventually, triggering further sell stops, we are not reckoning with such an action in today’s trading, rather a continuing see-saw market, as described in the major pairs’ discussion below. Today’s market movers are: U.S. housing starts and building permits for January (14:30 CET), U.S. January industrial production (15:15 CET), speech of Fed chief, Mr. Bernanke, (19:00 CET) and the U.S. FOMC minutes (20:00 CET).
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
The pair is currently trading at 1.2570, very near to its last November lows, which represent a major long term support line. We see some further weakness in this market, but not breaking the 1.2500 level today. After testing that level, recovery moves are due to set in today, not exceeding the 1.2640 level.
GBP / USD
Cable traded considerably lower in European morning trading, with current prices at 1.4110. We expect the weakness to persist for a while, but the downside risk is limited to 1.4050 support. From that level, a see-saw market could set in, between that 1.4050 and the 1.4120 mark.
USD / CHF
The dollar currently is on another attack move to the important 1.1770 resistance level, now priced at 1.1740 against the Swiss franc. We do not see that resistance being broken today on the upside and expect a sideways market between 1.1770 and 1.1670.
USD / JPY
In an upmove in late Asian and early European trading, the dollar is currently trading at 92.50 against the yen. This is the third attack on the 92.70 resistance level, which the dollar has failed to break so far. We expect setbacks from there, bringing the market back to the 92.10 level.
