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Daily Analysis Article

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Meaningful crossover in the EUR/USD

Thu, Jul 30 2009, 17:24 GMT
by Ralph Shell

ForexRazor

EUR/USD Commentary and Trade Ideas

 GBP/USD Commentary and Trade Ideas 

Traders of the GBP will probably be better off if they do not have anything but a short term conviction. The pair looks real bad on an early morning sell off to 1.6340, but then a report of a 1.3% increase in the selling price of British home turns the market around. We are now a little above 1.65, after printing a high of 1.6526. Fading the extremes when the pair wonders 60 to 90 points either side of the 1.6450 is still working. Today I'm inclined to give the market more room because of better than forecasted strength of US equities, and the possibility of buy stops in the 1.6540 to 70 area.

Bias: Neutral Bias Term: Medium Support: 1.6390 1.6300 1.6240 Resistance: 1.6490 1.6540 1.6590

USD/JPY Commentary and Trade Ideas 

 Once again yesterday's ideal buy spot of 94.50/75 was just wishful thinking and the market took off to the upside without our participation. Currently we are trading at 95.55 and clinging close to the high. Late yesterday it was reported that Japanese retail sales went down for the 10th month in a row 3% under year ago levels, but not sure this should be a big bear input to the yen. Perhaps the record US Treasury auction is part of the dollar strength as the Japanese investors sell yen and buy dollars to participate. We can only speculate but there may be another reason. Remember, the early July sell off of the USD to the yen was partially the result of massive speculative buying of the yen in the futures markets. These trades are now mostly losers, and as month end approaches there is probably some selling of the long yen. Prefer to scalp the long side from the 95.25 level and will see if there is more month end selling of the yen.

Bias: Higher Bias Term: Medium Support: 95.00 94.40 93.20 Resistance: 95.60 96.20 96.90

 USD/CHF Commentary and Trade Ideas

Early week analysis of this pair was a lot easier than now. Then we trading at 1.07, close to where the SNB had threatened intervention. Commercials in the futures market were massive longs and they have been excellent front runners of the SNB, while the specs were loaded up long the franc and short the USD. The subsequent rally above 1.09, has probably corrected some of this imbalance, but is there more to come? It looks like the 1.09 level may provide some resistance, but a retreat down to 1.08 would make reentry on the long side tempting.

Bias: Neutral Bias Term: Medium Support: 1.0800 1.0740 1.0650 Resistance: 1.0900 1.0940 1.1030

USD/CAD Commentary and Trade Ideas

With the Dow up well over 100 points and crude recovering a couple bucks a barrel, it is no surprise the CAD is coming back versus the dollar. Currently we are trading at 1.0825 after briefly trading on the high side of 1.09. It now looks like the recent sell off in the CAD was merely a correction and not a trend reversal. Records are made to be broken, so maybe we are headed for the 1.05 level. Eventually poor demand for the refined oil products such as those used in commercial transportation, will take their toll on crude, possibly to the $50/ barrel level. For the moment, however, the commodity spec appears to still be getting in. When new buyers fail to show or the existing longs get tired, there will be a different story and likely a different CAD. For the moment it is best to go with the flow.

Bias: Lower Bias Term: Medium Support: 1.0800 1.0700 1.0620 Resistance: 1.0850 1.0900 1.1050

AUD/USD Commentary and Trade Ideas 

The commodity and equity turn around today has helped the turn around in the AUD. After the high of 83.37, and the sell off to .8125 we have returned to 82.26. The longer trend is still to the upside but the bull story is old and the market is loaded with longs. No trading suggestions.

Bias: Higher Bias Term: Medium Support: .8210 .8120 .8030 Resistance: .8260 .8390 .8500

NZD/USD Commentary and Trade Ideas 

The Kiwi has bounced off the bottom, but compared to the AUD, the recovery is flat. Perhaps the central banks comments that they may reduce the current interest rate from 2.5% if economic conditions do not improve. No trading suggestions.

Bias: Neutral Bias Term: Medium Support: .6510 .6420 .6300 Resistance: .6600 .6650 .6700

Published on  Thu, Jul 30 2009, 17:31 GMT