While the U.S. and Japan are already near zero interest rates, the Bank of England and this time the long-reluctant European Central Bank are expected to follow the same avenue, both cutting a further 50 basis points this week (BoE to 1/2%, ECB to 1.5%). That is not the main point why the dollar regained its strength recently, it is rather the dark and darker economic outlook in the whole of Europe, where different nations are still fighting the general crisis in different ways. Quite in contrast to the far more coherent U.S., where even nationalization is emerging, at least temporarily, as the last cure. Even the yen has lost its deflation-favored nimbus as a relative safe haven - right now there seems no alternative to the Greenback as last resort. That notion might go on as long as inflation is on the path to deflation - real signs of economic recovery (and inflation hitting back because of a major war-like money and fiscal expansion) in America will end the USD’s strength.
Despite all this, the USD is still just attacking its longer-term resistance lines in many pairs and is overbought again right now. We still do not expect these resistances to be broken in today’s trading, although the bid tone for the USD will be kept intact overall. Wait for reasonable downward correction moves today before buying the Greenback, as described below. There might be plenty opportunity for that, because 4 market-moving U.S. data are being released today, at 14:30 CET personal income and personal spending for January, and at 16:00 CET construction spending for January and the ISM Index for February.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
After testing the important 1.2550 support line in Asian trading, the pair is on a recovery path this European morning, currently trading at 1.2610. We expect more of that recovery to come in today’s trading, testing the 1.2690 level, from where further weakness may set in.
GBP / USD
Cable is trading in low volatility in these early European hours and is currently priced at 1.4210. We do not see much of a new direction in today’s hours, rather a sideways market between 1.4290 and 1.4150.
USD / CHF
Slowly gaining ground against the Swiss franc in the Asian start of the week, the dollar is in a downward correction move in early European trading, from a high of 1.1759 to the current 1.1730. We expect more of the dollar’s strength to follow in today’s trading, setting in from the 1.1720 level and leading to the resistance zone around 1.1820 / 50.
USD / JPY
In Asian trading, the dollar tested several times the 97.10 support mark against the yen and is now priced at 97.20. Unbroken in early European trading, we expect this level to hold in today’s trading, giving way to new strength towards the 98.20 level.
Despite all this, the USD is still just attacking its longer-term resistance lines in many pairs and is overbought again right now. We still do not expect these resistances to be broken in today’s trading, although the bid tone for the USD will be kept intact overall. Wait for reasonable downward correction moves today before buying the Greenback, as described below. There might be plenty opportunity for that, because 4 market-moving U.S. data are being released today, at 14:30 CET personal income and personal spending for January, and at 16:00 CET construction spending for January and the ISM Index for February.
by George Clement
Intraday Market Outlook for Day Traders
EUR / USD
After testing the important 1.2550 support line in Asian trading, the pair is on a recovery path this European morning, currently trading at 1.2610. We expect more of that recovery to come in today’s trading, testing the 1.2690 level, from where further weakness may set in.
GBP / USD
Cable is trading in low volatility in these early European hours and is currently priced at 1.4210. We do not see much of a new direction in today’s hours, rather a sideways market between 1.4290 and 1.4150.
USD / CHF
Slowly gaining ground against the Swiss franc in the Asian start of the week, the dollar is in a downward correction move in early European trading, from a high of 1.1759 to the current 1.1730. We expect more of the dollar’s strength to follow in today’s trading, setting in from the 1.1720 level and leading to the resistance zone around 1.1820 / 50.
USD / JPY
In Asian trading, the dollar tested several times the 97.10 support mark against the yen and is now priced at 97.20. Unbroken in early European trading, we expect this level to hold in today’s trading, giving way to new strength towards the 98.20 level.
