The dollar outlook this week can be summed up by the reports from major central banks as to the positions of their reserve currencies and the CFTC report of futures positions held by large institutional traders. The latest weekly CFTC report of traders' positions shows an increase of short dollar positions against every major and commodity currency with the exception of the yen. Also, a number of central banks reported that they have allocated a larger portion of their reserves in currencies other than the U.S. dollar. This indicates that the dollar's long-term outlook is lower and shorter-term we can expect a sharp rally in the dollar if only a portion of the historically high number of short dollar positions in the futures markets are covered.
We expect any dollar rally due to short covering will be first preceded by a sell-off in the equity markets.
by Steve Nigg
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD fell in Asian trading to a daily low of 1.4677, only to recover in early European trading, and is currently priced at 1.4765. The euro recovery began when European share markets opened in positive territory and have since gained from there. With the Columbus day holiday in the U.S., we do not expect much action and see the rest of today's range between the low at 1.4677 and minor resistance at 1.4800.
GBP / USD
Sterling failed to rally this morning in Europe along with the euro and Swiss franc and is currently tradng at 1.5804. Despite the dollar's oversold position against the pound, we see further deterioration in cable prices and think a retest of today's low at 1.5728 is possible, especially if equity markets continue their rally.
USD / CHF
After trading at a high of 1.0352 today, the USD / CHF fell to trade currently at its daily low of 1.0277. An important support level lies at 1.0254 and we feel a test and possible break of this level is possible in today's trading. The only factor in support of the USD / CHF is fear of intervention by the SNB.
USD / JPY
The USD / JPY is the only currency pair to hold on to its gains in Asian trading and is currently priced at 90.07. We think it is doubtful that prices will remain over the 90.00 handle and see the Asian rally as a good opportunity to sell the USD / JPY at current prices or higher and later to cover the short at 89.60.
We expect any dollar rally due to short covering will be first preceded by a sell-off in the equity markets.
by Steve Nigg
Intraday Market Outlook for Day Traders
EUR / USD
The EUR / USD fell in Asian trading to a daily low of 1.4677, only to recover in early European trading, and is currently priced at 1.4765. The euro recovery began when European share markets opened in positive territory and have since gained from there. With the Columbus day holiday in the U.S., we do not expect much action and see the rest of today's range between the low at 1.4677 and minor resistance at 1.4800.
GBP / USD
Sterling failed to rally this morning in Europe along with the euro and Swiss franc and is currently tradng at 1.5804. Despite the dollar's oversold position against the pound, we see further deterioration in cable prices and think a retest of today's low at 1.5728 is possible, especially if equity markets continue their rally.
USD / CHF
After trading at a high of 1.0352 today, the USD / CHF fell to trade currently at its daily low of 1.0277. An important support level lies at 1.0254 and we feel a test and possible break of this level is possible in today's trading. The only factor in support of the USD / CHF is fear of intervention by the SNB.
USD / JPY
The USD / JPY is the only currency pair to hold on to its gains in Asian trading and is currently priced at 90.07. We think it is doubtful that prices will remain over the 90.00 handle and see the Asian rally as a good opportunity to sell the USD / JPY at current prices or higher and later to cover the short at 89.60.
