EUYRUSD's ability to close above 1.2835 yesterday confirms the short term uptrend despite the lack of US data, but a close above 1.2980 is still needed to confirm a daily/weekly uptrend.
MAJOR HEADLINES – PREVIOUS SESSION
NOK
Long NOK was the trade to be in, after Norwegian CPI core up 0.75 (YoY), slightly higher then consensus. The acceleration in CPIATE inflation was a function of clothing and imputed rentals. Data supports the Norges Bank case for speeding up the pace of tightening. We sold the break of EURNOK post FOMC at 8.2177 offer and we look for a short term target of 8.1650. We still believe further out that the pair will continue to head lower, also supported by the rebound in crude oil trading above $60 again.
UK
The BoE's post meeting statement may have left the door open to further interest rate rises, but the market view of future inflation didn't change much. In fact, 10-year break even rates remain at elevated levels. In common with the ECB, the BoE faces the possibility that anticipated inflation is getting anchored at the wrong (too high) levels. Technically we still look for a close in the NY session above 1.9145 to accelerate the upside for a possible retest of the 2005 highs at 1.9550.
FX ORDERBOOK
Euro/US Dollar
EURUSD (1.2874 @ 11:45 GMT)
Support:
1. 1.2460 daily base which coincides with 1.2465 38% retracement
2. 1.2320 double top form march 2006
3. 1.2260 bull trend line from March 2006
4. 1.1635 38% retracement (0.8350-1.3667), also low from 2005.
Resistance:
1. 1.2940 old top from August 2006.
2. 1.2980 long term inverse head-and-shoulder target.
3. 1.3175 upper bull trend channel from March 2006.
Resist.
1.3004
1.2907
1.2867
1.2874
1.2770
1.2712
1.2614
Support
British Pound/US Dollar
GBPUSD (1.9153 @ 11:45 GMT)
Support:
1. 1.8520 lower end of the bear channel from early August 2006.
2. 1.8500 daily base support.
3. 1.8325 wave high from March 2005.
4. 1.8090 wave support from July 2006.
5. 1.7330 long term bull trend support from 2001.
Resistance:
1. 1.9145 Old top from August.
2. 1.9215 old top from April 2005.
3. 1.9325 wave high from March 2005.
4. 1.9550 highs from december 2004.
Resist.
1.9263
1.9150
1.9100
1.9153
1.8987
1.8924
1.8811
Support
US Dollar/Japanese Yen
USDJPY (117.39 @ 11:45 GMT)
Support:
1. 116.50 wave low from late October.
2. 115.55 wave low from April (key level as it would take our weeky lower high/higher high, which would confirm accelerated downside)
3. 113.35 weekly base support.
4. 109.00 key support form confirmation of a monthly downward trend.
Resistance:
1. 119.20 choppy range base from early October.
2. 119.90 old top from mid-October.
3. 121.40 old top from December 2005.
4. 1250.00 50% retracement (form 147.63-101.67).
Resist.
119.86
118.96
118.44
117.39
117.55
117.18
116.28
Support
