The dollar's fall overnight in Asia prompted central banks in South Korea, Taiwan and the Philippines to intervene in the currency markets. The euro is the main beneficiary of the dollar's fall and is also trading higher against most of the world's major currencies in early European trading. The only barrier to the euro's rise may come from ECB president Trichet's speech today if he moans about dollar weakness.
Market volume is currently low while everyone awaits the BOE and ECB, who will set interest rates today at 13:00 CET and 13:45 CET respectively. Trading volume will increase only after the interest rate announcements and Trichet's speech.
by Steve Nigg
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD reversed its two-day downtrend to trade higher in Asia and is currently priced at 1.4766, up from 1.4685 at the European close yesterday. A test of recent highs at 1.4845 is possible today or tomorrow. The 1.4845 level is also important because it is a double top on daily charts.
GBP / USD
Despite calls for lower prices by many repected analysts, cable has broken out of its recent range and is currently trading up at 1.6040. No change is expected at the BOE's interest rate meeting today at 13:00 CET. We expect prices to hold above the important 1.6000 level today and may test 1.6100 today or tomorrow.
USD / CHF
Currently at 1.0260, the USD / CHF looks likely to test the 1.0200 level soon. Important for USD / CHF trading is the level of EUR / CHF prices (currently 1.5160) and any move below 1.5100 may force the SNB to intervene in the market as it did last week.
USD / JPY
The odd man of currency pairs, the USD / JPY, has been following its own course for much of this year. Currently trading lower at 88.27, the USD / JPY seems bound to test yearly lows at 87.12 sometime soon. The only barrier to the USD / JPY decline may come from fear of BOE intervention despite Japan's new government's lack of concern over the yen's price.
