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BARCLAYS CAPITAL EURO/DOLLAR: "Range trading below the 21−day average at $1.2785

Wed, Mar 4 2009, 09:35 GMT
by Benny Menashe

Finotec Group Inc.

BARCLAYS CAPITAL

EURO/DOLLAR: "Range trading below the 21-day average at $1.2785 continues. Sentiment shows the market is positioned for EUR weakness (DSI only 9 pct bullish) and the rebound yesterday from above the February low ($1.2515) suggests another day or so of ranging. However, consolidation below $1.2750/95 will not squeeze out any short positions and given event risk this week we suspect the market will continue to fixate on the range low at $1.2515. Only following a close above $1.2800 is material short covering likely to begin."

DOLLAR/YEN: "The short-term trend for USD/JPY is up and we regard the recent pullback as a buying opportunity. While allowing for a pullback to 96.35 yen, or even to the breakout level, we would continue to target 102 and higher later in the month. Intraday, the scene is set for a test of resistance at 98.90."

DOLLAR/SWISS FRANC: "USD/CHF has rebounded off the same Fibo retracement level on daily and intraday charts and this fracticality across time horizons is keeping alive our faith in the Key Day Reversal of last week. Consolidation below 1.1885 francs implies downside risk and in the coming 48 hours a break of support at 1.1615 is needed to signal that the recent bullish squeeze is over and trigger a further slide to 1.1295."

EURO/STERLING: "The 2009 trend is for marginal GBP strength, albeit in a very choppy fashion. Near-term risks are for range trading in a slowly contracting 87.85-90.60 pence range. In the bigger picture, while capped below 90.60 we would allow for a return to 85.55 in the coming weeks."

STERLING/DOLLAR: "The whipsaw of the last 24 hours was not what we were expecting and this morning we are obliged to reassess.
However, while the depth of the decline considerably exceeded our view, the general backdrop is unchanged. In the bigger picture this type of price action remains consistent with the potential unfolding inverse head and shoulders pattern and at this stage we could not rule out another two to four weeks of erratic chop. Key today will be whether the pound can recover above $1.4180; if it can then the breakout yesterday below $1.4095 was false and shorts will be squeezed and the pound rally back to $1.44."

CBCM

EURO/DOLLAR: "The offered interday tone will persist whilst resistance at $1.2720 caps, with risk seen for a failure of the $1.2535/15 support; objectives $1.2330/1.2135 target zone (Oct 08 low and 50% of the 2000-2008 advance). A recovery through $1.2720 would suggest another run at the topside of the converging $1.2535-1.2880 interweek range."

DOLLAR/YEN: "The interweek uptrend has paused for a breather, just beneath the intermediate 98.90 yen retracement target (50 percent of the Aug-Dec 08 decline). Near term consolidation within a 96.90-98.70 range (intermediate levels 97.75/98.15) is now expected to prime price for a resumption of the uptrend, with subsequent gains through 98.90 targeting 101.65/105.10."

STERLING/DOLLAR: "We will retain our mildly negative interday bias whilst resistance at $1.4325 (initial $1.4210) limits the topside, with a failure of the recent $1.3960 low expected to provoke slippage towards the $1.3850 retracement level (76.4 percent of the $1.3500-$1.4975 rally). Below $1.3850 would expose the $1.3500 Jan 09 low."

EURO/YEN: "The outlook remains constructive, with near term consolidation within a 121.80-126.10 yen range (intermediate levels 123.05/124.70) regarded as the precursor to a run at the projected 129.60 intermonth range highs (intermediate resistance 126.55). That said, we are conscious of the fact that the interweek uptrend has stalled within the 123.80/126.55 retracement zone, with a failure of the 120.30 weekly support negating the constructive view and regarded as the trigger for an 119.05/117.40 sell-off."

Published on  Wed, Mar 4 2009, 09:37 GMT