One should never talk of "balanced trade," because fundamental change happens too often, and unexpectedly. This is the case longer term, with the USD trading higher against other currencies despite the U.S.'s huge trade deficit. In European morning trading at the start of the wee,k the Greenback is continuing to strengthen, moderately but steadily. But this is only a corrective move, as we have seen many times in the past months.

For today‘s trading, we still see some more upward momentum in the USD, as explained in the major pairs listed below. Note that the speech of ECB president Trichet today, at 14:00 CET in Madrid, addressing the conference of the New Economic Forum, may have some influence on the currency markets.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
The pair is still under pressure this European morning, currently trading at 1.3860. We see some upward corrections, but not beyond the 1.3890 level, and later more downward movement to a maximum of the 1.3770 daily support level.

GBP / USD
Above support levels, the pound is hovering in quiet trading in the early European hours, right now at 1.6470. We expect selling pressure to emerge today, bringing the pair down to levels around 1.6350.

USD / CHF
The uptrend of the dollar against the Swiss franc continued in early European trading, with the market right now at 1.0870. We see the resistance level at 1.0890 broken in today’s trading, and eventually the 1.0920 resistance will be tested.

USD / JPY
In late Asian and early European trading, the dollar has remained in a narrow sideways trading band between 96.20 and 95.80, right now priced at 95.95 against the yen. We do not see much recovery potential for this market today, but we see it going into a slight bid tone, leading to levels around 96.20.