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GBP/USD's upmove started to gain traction last week and we look for further gains this week

Wed, May 27 2009, 07:51 GMT
by Benny Menashe

Finotec Group Inc.

OMMERZBANK

EURO/DOLLAR: "EUR/USD saw a strong rally higher last week that has managed to erode the 55-week moving average resistance at $1.3975.
The next two key resistance points on the topside are $1.4185 (multiple time horizon fibo) and then $1.4435. This latter level would represent an approximate return to point of break down, from its previous six-year channel and a resistance line connecting the September and December 2008 peaks. It represents the maximum upside that we expect to see prior to failure. The previous highs at $1.3740 maintain the interday bid tone.

DOLLAR/YEN: "Our attention is on the 93.55 yen/March low, this is now exposed. USD/JPY has started to erode the 50 percent retracement support at 94.30 and the short term outlook is dominated by the short term downchannel, which offers resistance today at 94.65. This is reinforced by the 100-DMA at 95.37. Interday risk remains on the downside, we target 93.55, 92.60 then 90.50."

DOLLAR/SWISS FRANC: "USD/CHF last week saw quite an acceleration on the downside and starts this week looking fragile. The market will shortly encounter a strong zone of support in the 1.0720/1.0675 franc region. This represents a double Fibonacci retracement and the one-year uptrend; we would expect to see some profit taking feature here and would cover short positions. The negative interday outlook will persist whilst resistance at 1.1060/90, 1.1115 caps the upside."

EURO/STERLING: "Attention this week will remain firmly on the 200-DMA and this year's low at 86.55/86.40 pence. These are now considered to be exposed. The outlook remains negative, with losses through the 86.40 (February 2009 low) targeting 85.00 (61.8 percent of the October-December 2008 rally). Resistance lies at 88.65 ahead of 89.10, this latter zone represents the 23.6 percent retracement of the March-May sell-off and the two-month resistance line, while capped here the market will remain directly offered."

STERLING/DOLLAR: "GBP/USD's upmove started to gain traction last week and we look for further gains this week. The interday outlook will remain directly positive above $1.5520/45, the 200-DMA. The move higher has driven in part by GBP demand on the crosses and this is likely to also be a feature this week with EUR/GBP still negative. Initial upside targets are $1.6120/1.6395 en route to the more significant $1.6425 level (38.2% of the November2007-January 2009 decline)."

EURO/YEN: "Following its bounce from its five-month uptrend, EUR/JPY spent most of last week consolidating sideways. We hold a negative near term bias within in the converging 128.00-133.55 yen interweek range extremes, with a failure of the local 131.85 support expected to trigger initial losses towards 130.90 then 129.80. The bigger support/target is located at 126.90, which is regarded as the weekly close barrier to a deeper 122.95/121.75 decline."

SOCIETE GENERALE

EURO/DOLLAR: "EUR/USD may dip back to $1.3735, or even to the lower end of the short-term rising channel, which comes at $1.3620 today, before heading north again. EUR/USD has stabilised around the $1.4000 psychological resistance level, which coincides with the upper end of the short-term rising channel.
"We continue to think that a down-move is likely in the near future to consolidate the impressive bounce on $1.3425. In that case, we may see a move down to the $1.3735 pullback level, or at most to the lower channel line which comes at $1.3620 today, before EUR/USD heads north towards the $1.4165/85 region, or even the December 2008 high of $1.4360. EUR/USD should then attempt to reverse downwards."

DOLLAR/YEN: "96.70/80 yen should contain any extension of the recovery from 93.85 and force USD/JPY to head south again. After breaching the lower end of the short-term declining channel, USD/JPY has turned higher and retraced part of the recent sell-off.
"This up-move may not be over yet and we may see a return to the 96.70/80 resistance area in the next few days before USD/JPY points back to the mid-March low of 93.55. The expected break below this low would argue in favour of an extension of the decline initiated at 101.45 in early April to the January low of 87.15. The 92.40/60 region should be the first major support on the way."

EURO/YEN: "Last week's high of 134.85 yen should cap the upside and force EUR/JPY to point back to the late April low of 124.40. EUR/JPY has broken above the 131.85/132.40 resistance area, but we continue to think that the recovery from 127.00 is corrective.
"We expect last week's high of 134.85 to contain any additional rise and force EUR/JPY to head south again. A break below last week's low of 127.00 should call for a down-move to the late April low of 124.40, or even to the 121.75/80 region -- mid-term Fibonacci retracement and early March low)".

Published on  Wed, May 27 2009, 07:54 GMT